Computer Software Update

Probably the biggest bottleneck in the process of entering an order and getting a claim paid is the generation and management of documents. Three separate issues are involved: generating documents, tracking documents not returned and storing documents.

Many HME businesses struggle with all of the documentation that is required to deliver a patient's order. This includes printing not only a delivery ticket, but also an assignment of benefits, release of information, HIPAA acknowledgment, rental agreements and equipment instructions. If software can print all of these documents when the delivery ticket is created, you can streamline the delivery process.

Once documentation requests have been generated, it is important to be able to track the status of each document. Many times it takes longer to get these documents back than it takes to get the claim paid. Your HME software program should track documents that you have generated but not yet received. These reports should be organized by doctor so that you can follow up with the physician's office. It is vital that your software program be able to print out a report for each of these document types sorted by doctor.

Once you have received the required documents, you need to store and retrieve those documents in an effective manner. Paper files consume a large amount of space and much time is spent retrieving files. Many software providers now offer integrated document imaging to store and scan documents with their associated carriers, doctors, items, serialized items, patients, orders and claims. With document imaging, locating, accessing and printing needed documents is a mouse click away.

A large part of providing quality care for patients involves having the right inventory on hand when needed. Walking front end and warehouse aisles to see what items you are low on or out of stock of, is no way to do inventory management. You need an HME software program that manages your inventory for you. A good inventory management system should allow you to establish minimum and maximum stock levels. In addition, the software should automatically track how many orders are currently on hand and how many orders are awaiting delivery confirmation. Your software program should have integrated purchase orders that will compare net quantity to your minimum stock level. If the net quantity is below your minimum stock level, then your purchase orders system should "suggest" ordering additional products. Likewise, a good purchase order system should allow you to receive all or part of the quantity ordered. If the item being received is a serialized item, then the system should automatically create serialized records with minimal input from you. A major part of quality assurance includes the ability to track lot numbers as well. Your software should be able to schedule maintenance visits and keep a history of those visits. These are requirements by most, if not all, accrediting agencies.

To operate a viable quality business, you must have a handle on your accounts receivable. There are at least four areas that you must address to accurately know the status of your accounts receivable.

  • Documentation — The first bottleneck on cash flow are claims that are being held for which you are waiting on documentation. See the document management section above for areas you must track.
  • Primary insurance payment — Once you receive the required documentation, you can then bill your primary carrier. This amount is typically 80 percent of your revenue, so it is vital that it is monitored correctly. This process can be sped up by billing via electronic claims. Denials are usually due to missing or incorrect information. Much of this can be addressed by training your staff well on your software and carrier specific billing rules and regulations. Your software should be able to print an Aged Accounts Receivable report by carrier, as well.
  • Secondary insurance payment — For patients with at least two insurance carriers, this amount typically accounts for about 20 percent of your revenue, usually your profit on the sale or rental. With the exception of Medicare, few primary carriers will forward the claim and their payment information to the patient's secondary carrier. This means to collect your final 20 percent, you must bill the secondary carrier either on a 1500 form or electronically. With the new ANSI X12 format, some HME software vendors have the ability to generate secondary electronic claims to carriers to speed up payment.
  • Patient payment — The final place where AR can accumulate is with the patient. This can be a combination of cash items, items not covered by carriers, deductibles and co-payments. This also can tie up your profit on a sale or rental. You need to be able to create aging reports by patient.

One good measurement of how well you are managing your AR is by looking at your days sales outstanding. This is the time from when you provide the product to the patient until you receive complete payment. The average in the HME industry is 70 to 80 days.

By managing all of these areas, you can operate a more profitable and better quality business.

This article originally appeared in the November 2005 issue of HME Business.

About the Authors

Bob Radvanovsky, CISM, CIFI is a member of the Chicago Chapter of the FBI?s INFRAGARD organization, and is an active participant with several online security-focused magazines and discussion forums. He has an MS in Computer Science from DePaul University in Chicago. He has been awarded several professional certifications in the fields of information technology and security, including that of Certified Information Forensics Investigator for specialization in criminal IT forensics management. He has special interests and knowledge in matters of critical infrastructures, and has published a number of articles and whitepapers on the topic. He has been significantly involved in establishing security training and awareness programs through his company, Infracritical.

Deborah V. DiBenedetto, MBA, R.N., COHN-S/CM, ABDA, is president of DVDiBenedetto & Associates Ltd. and president of the American Association of Occupational Health Nurses and senior consultant for Medgate Inc. She can be contacted at (914) 771-5152, or by visiting

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