Your Pot of Gold

How providers can leverage software systems to increase billing efficiency and maximize cash flow.


Just like what has been a very wet summer for much of the country, the HME industry’s funding forecasts seem to always include more rain. Competitive bidding is already on the move once again, while providers are still grappling with the 9.5 percent cuts to multiple product categories the industry agreed to absorb last summer in order delay the previous implementation of competitive bidding.

Add other cuts to the mix, such as the 36-month oxygen rental cap, or increased costs, such as those for accreditation or surety bonds, and providers might start wondering why there’s a little black rain cloud constantly following them around.

That said, there is one ray of sunshine in the picture: HME software systems. While most HME software systems originally began as billing systems, over the years they have expanded to help automate and streamline other aspects of HME provider operations, so that they are now tools that manage entire HME businesses. And because of that expansion, the billing capabilities of HME software have likewise evolved to the point that they are almost indispensable.

Such is the case for Lafayette Mobility and Service (Lafayette, Ind.), a small provider focused on mobility products with a major portion of its funding coming from Medicare, says its owner Melony Vanhook. With only one other person beside herself to run the entire business, Vanhook says saving time and money through the enhanced billing efficiency of software is crucial. The business just implemented a software system in spring and has already seen almost overnight improvement.

“Before that, I did everything by hand,” Vanhook says. “We weren’t filing electronically or anything. We’re a pretty small operation, so it was manageable in the beginning, but more and more it was getting harder to do everything that needed to get done. Also, the turnaround time for payments from Medicare could drag on and on. Now we’re getting much faster turnaround.”

Vanhook adds she seeing a reduction in DSOs within two months of implementing the system.

Likewise, software is vital to the financial health of HME provider Street Home Medical Inc. (Warner Robins, Ga.), according to Ron Street, the company’s CEO. “It’s extremely critical,” he says. To be viable you have to have software these days. It’s not like the old days, when we sat at the kitchen table and hand wrote out the claims and then sent them to Medicare — and that’s how I started. We’ve come a long way since then.”

Street says that in 2006, his DSOs were ranging from 119 days to 176 days, but this year, for the period of April, May and June, his DSOs were at 33 days. “That is unheard of in our industry,” he says. “And in November of 2008, my DSO was down to 24 days, and denial of claims were 9 percent — and most of those were due to duplicate claims.”

Fast Processing

Those reduced DSOs essentially come from one asset that software delivers: faster processing.

“One of the biggest challenges we hear is being able to get the claims out quickly,” says Spencer Kay, president of HME software company Fastrack Healthcare Systems Inc. “From the time the order comes in to the time the provider submits the claim.”

One of the problems is the sheer complexity of billing. The amount of minutiae, as well as the follow up required can be staggering unless a provider can automate processes. Especially if the provider has a small staff charged with trying to control the process.

“And part of the process could be out of their control,” Kay says. “Even with the prodding and constant calling, there’s only so much you can do to make a doctor sign off on a form. There are certain things that interfere with the process that they have no control over. And that’s a frustrating piece of this. But even that can be automated in ways, too, using computer systems.”

In many ways, the key impetus for providers’ adoption of software systems to manage their billing comes down to paper — there is simply too much of it. “The problem is tracking all that paperwork,” Kay says. “Making sure that a form that went out to a doctor came back and that people in billing have been notified so that they can go ahead and bill. That’s just one example of the many things that can happen to delay this process.”

For Lafayette Mobility and Service, Vanhook says that simply having a system that streamlines data entry processes carves out huge delays that would be incurred through a paper process.

“Being able to enter all our patient information to file a claim takes a third of the time it used to,” Vanhook says.

Essentially, the system should guide billing staff through not only the process, but the process should be tailored to the individual billing sources, says Brian Williams, marketing manager of HME software company Computer Applications Unlimited Inc. “If the software helps you with some of those ‘checks,’ it will go after the correct procedure based on the product that your selecting for that order,” he explains. “So you initially have edits at the intake level to get an order through that is going to be payor friendly.”

Another key aspect to fast billing is speeding up the ways in which providers interface with key partners in the homecare process, such as physicians. CMN management is key, says Dave Cormack, president and CEO of HME software provider Brightree LLC. “I talk to owners of DME companies and I ask them how long does it take from the date of services to you being able to actually send a bill,” Cormack says. “Twenty five to 30 days [they say]. We’ve built into Brightree the ability to send from your desktop a fax with the CMN barcoded to physicians. And when they send it back, it alerts the provider that a CMN is there for review, and stores it in the document imaging system.”

Cormack further explains that the system will alert the provider’s staff after a certain number of days if the CMN has not been approved so that they can follow up and remind the physician.

Electronic Claims

Implementing software to track and manage that process and move the claim to submission on a much quicker turnaround is a key benefit, but the next step is to actually submit the claim. Here, too, software can help by electronically connecting with funding sources in order to submit claims, rather than handling the process via paper and snail mail.

However, this is not as easy as it sounds. For instance, Medicare, which obviously makes up the lion’s share of funding for most HME providers, still handles its electronic claims submissions via dial-up modem, rather than on the Internet. This can be maddening for providers when a claim submission gets cut short because the modem connection gets dropped. Conversely, most state Medicaids and nearly all private payor insurance handle claims submissions via the Internet, which is obviously much faster.

In any case, payors for the most part are demanding that providers interface with them via software. “Paper is no longer an accepted solution,” Wolf says. “They don’t want to handle paper either. It’s too costly and too error prone.”

Even Medicare and Medicaid are centralizing claim submittals. In an effort to streamline and standardize electronic claim filing, CMS requires providers to submit their electronic claims via its common electronic interchange (CEDI) for processing, which is being run by CMS contractor National Government Services Inc. (NGS).

“They’re pushing everything through a single point of entry,” says Kelly Wolf, vice president of key accounts for HME member services organization the VGM Group, which provides a variety of its member services over the Brightree software network.

That said, the single point of entry isn’t always reliable. Dropped connections and password resents are a maddening fact of life when dealing with CEDI, despite the current administration’s push for increased electronic automation of healthcare in the form of electronic patient records and the like.

“It is slow,” Wolf adds. “Providers are forced to batch everything. Think back to when you used to download with a modem. How long did it take you to get something?”

In any case, with a good HME billing tool, a provider doesn’t necessarily have to put up with those headaches, as claims can be sent in batches to Medicare overnight, or through a software provider’s network

The goal is to make the process invisible. In most systems, the provider enters in billing information for all its funding sources, as well as the information on its patients. When that provider has a claim to a specific payor, the software takes care of formatting that electronic claim for the payor.

“It’s all in the setup of that electronic payor so that you’re going directly to that payor because that is taken care of behind the scenes,” Williams says. “The software keeps that information — your submitter ID, your login, your password, all that — so that the payor knows who the submitter is.”

Likewise when the payment confirmation information is sent back from the payor, that too is standardized. Again, the goal is for the transaction to be invisible and to focus on what is most important: ensuring it takes place, and giving providers the feedback that it has, Cormack says.

“Imagine if this was a forms-based process,” he says. “Instead of getting the same standard form back from the payor, you would get a different form back every time. What we’ve done is built an intelligence in to ‘normalize’ that data so that we can, with confidence, allow the customers to automatically post 90 percent of those payments.”

Still there are going to be variations between payors that even software cannot necessarily address. Providers need to keep those nuances in mind.

“It’s not universal,” says Brad Heath, operations and compliance coordinator for Family Medical, a provider in Dunn, N.C. “With Blue Cross, here in North Carolina, your first claim is all paper, and then after that it goes electronic. With Medicaid, you have to have prior authorization on a lot of items, or, your modifiers are not the same.”

Verifying Claims

Given the “hang ups” of CEDI, and providers having to batch claims, the onus is on providers to ensure that claims are filed correctly the first time around. Here again, software can help by verifying claims to ensure they will pass muster.

“What they want to do is have as clean a claim going in as possible, and when that occurs, the DSOs drop,” Wolf says. “Clean claims equal faster payment. And a billing system that allows you to have quicker, cleaner claims into the payor equates to better cash flow.

“That’s why a lot of people are looking for an electronic solution that is more streamlined and alerts them when a claim is not going anywhere due to this, this and this,” Wolf continues. “So if you can have a system take care of everything but the problems [with a claim], now we’ve really saved time and money for both parties.”

It also helps to double-check the system, says Family Medical’s Heath.

“We break our claims down by payor,” he says. “It’s not enough for an order to be delivered and then you hit the button that says, ‘okay, we’re ready to bill this.’ Somebody has to go back and QA that order to ensure you have the documentation you need, and make sure that any modifiers are correct.

“Then you will see a reduction in denials,” Heath adds. “And if you get a reduction in denials, that is a faster way to reduce your DSOs than confirming or billing an order faster.”

Also a software system should not only help the provider ensure clean claims, but help a provider when the claim is denied, says Lorraine Lodigiani, business development manager for MedAct Software Inc., which makes MedAct, an HME software system. The system should walk the provider through the audit and appeals processes.

“It’s a good blend of both scrubbing the data and understanding the audit process,” she says.

And let’s not forget to get paid. Providers also need to leverage their systems to not only verify claims, but verify payment, as well. It’s an important element that can sometimes get overlooked in a manual process.

“You always hear about clean claims,” Lodigiani says. “Yes that’s important, but once you submit it, but it’s actually the full circle of making sure that those payments are posted automatically. If it’s left to manual process sometimes it might not happen or is inaccurate.”


Another way to boost that cash flow is through collections. Increasingly providers are looking to patient copays to ensure the financial health of their businesses, and here too, HME software can help. They might be small, but they add up in a big way, Heath says.

“As the old saying goes, if you manage your pennies, your dollars will manage themselves,” he says. “The small providers, we need our 20 percent, and the quicker we can get the 20 percent that’s what the pays the bills. The 80 percent that we get from our carriers is what covers the expense – the equipment, the tech time. In order to make a living, to make a profit, we need that 20 percent.”

Using software, Street says Street Home Medical can keep pace with its EOBs and bill in a timely fashion to collect that 20 percent copay.

“Good collections start at intake,” Street says. “If you do your intake right, that’s what ensures you get paid later and reduces collections costs and efforts. When that person answer the phones and takes that referral, the collections process has started, if you’re doing it right.”

And if the provider doesn’t handle their collections on their own, they can integrate their software system to work with third party A/R offerings to boost their cash flow, Lodigiani says.

“We have third-party solutions we integrate with,” she says. “We work with A/R Allegiance that is a collection, revenue-cycle management team, as well as RemitData. So we take a holistic approach that encompasses the whole DME workflow to get paid faster, and that includes collections.”


Given the complexity of billing various healthcare payors, there is a lot of information to stay on top of, and simply monitoring the status of claims can be almost impossible without software. So another key element of electronic billing and claims management software is reporting. 

Street says he relishes the reporting feedback he gets from Fastrack on how Street Home Medical is performing, because it summarizes all the key metrics he uses to measure his business performance on one screen. (Fastrack, Brightree, CAU and Medact all provide a ‘dashboard’ screen with these summaries.)

“The dashboard is instrumental,” he says. “I can track referrals, billed amount, receivables, my sales people — and that is great for morale, because we can have competitions to see who had the best sales during the month. ”

Lafayette Mobility and Service’s Vanhook says she values the ease of having everything at her fingertips: “I just get online and find the information that I need as far as when I filed a claim and where it stands.”

Prior to installing her software, looking up such simple information would have been a chore. “There’s no comparison,” Vanhook says. “I might have thought about it, but I’d write it down and get to it when I had some time. Now, it doesn’t take any time to find out where things are.”

Key reports that Vanhook says she relies are billing reports to see when she billed: “I don’t bill every day; I try to do it twice a week. I can check and see when bills went out and how many days out they are to see how if there’s anything else I need to do with it.

“And then also just seeing where all my accounts are,” she adds. “If I’m getting payments I should be getting — whether they’re personal payments, insurance payments, Medicare payments — the software has just really streamlined everything.”

And if there is a problem with billing, the software is going to point it out. That’s important given that those problems don’t always get addressed in a manual process. “You can’t fix it, if you haven’t measured it,” Heath says.


One thing all providers using HME software can agree on is that support is critical for a smooth implementation and quick ramp up in terms of using the system’s billing features.

“Once [a software company] gets you signed on, if you can’t communicate with their support team, then you’re throwing money away,” Heath says. “The support team is a huge issue.”

Support that is just a phone call away is critical, according to Vanhook. Providers should work with a software vendor they know is going to be able to provide speedy response to their questions or problems. Even better, having a dedicated support staffer can provide the high-touch service a provider new to software might need, she says.

“The support is the real strong part,” she says.

“Technical support is instrumental,” Street adds, echoing Vanhook’s advice to seek speedy help. “You ask a question, and their response time is in minutes. We don’t have to wait days for answers.”

Likewise, training also is important. It should not only provide a clear understanding of the system, but should also be done on the provider’s terms given how frenetic some providers’ schedules can get, Vanhook says.

“I opted for over-the-phone training so that I could work at my own pace,” she explains. “If I wanted to do training three times a week, I could. If I was too busy to do that, I could just call and reschedule. It was very much at my convenience.”

Vanhook says that given how much HME software systems can do, there can be a lot to learn, but the lessons are well worth it: “It’s a little overwhelming when you’re being trained, because there is so much information, but just hang in there, because once you get a couple customers in the system and you get everything you need entered, it’s very easy to do, it saves a ton of time, and your turnaround time is much quicker.”

That said, a system should mesh well with a provider’s business practices, and make for a good fit, says Family Medical’s Heath.

“I had a person in my A/R department that once said ‘If you go into a stranger’s kitchen, you don’t know where the glasses are, but it’s a good guess that they’re somewhere near the sink,’” he says. “A good software package should be the same way. You might not know where everything is when you first step into it, but it shouldn’t be so complicated that you can’t get around in a few areas.”

Dealing with change

Another key aspect to a successful software implementation is that a good system will help providers keep pace with change in the industry, patient needs, and especially the regulatory environment, says Street Home Medical’s Street. When the system is updated, so is the provider.

“You can’t keep up with the changes as fast as they can,” he says. “Once you learn the rules and the regulations [the funding sources] change everything. If our fee schedule in Georgia changes, we get a new fee schedule within days of the change.

“If your software doesn’t keep up, then your business isn’t going to keep up,” Street adds. “That’s just the way it works.”

A good software provider will have staff that understand the industry and are monitoring it for key changes so that they can enhance their product for the providers using it. The result is not just a tool to help providers run their business, but a lynchpin in its success.

For Street, the value of a good HME billing system is felt all the way through his entire business, down to the very bottom line: “I wouldn’t be in business today without a good software program.”


Points to Take Away

  • Software has become an indispensable way for providers to maintain cash flow in a down funding environment.
  • It helps providers reduce their DSOs by speeding up the billing processes.
  • Other key ways it helps providers are through electronic claims filing, verifying claims and reducing denials, automating processes.
  • It also helps providers ensure they get paid, as well as follow up on copays.
  • Keys to successful software implementations include ensuring solid support and training, as well as securing a system that can evolve with the industry and provider needs.


This article originally appeared in the August 2009 issue of HME Business.


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