Revene Cycle Management Hits HME
Providers are taking a "from the ground, up" approach to how they manage their revenues. What's the right strategy? What tools can help?
- By David Kopf
- May 01, 2018
You’ve heard this a million times before: both Medicare and private reimbursement are forcing providers to rebuild their businesses from the ground, up. It’s a concept so repeated at industry conferences, in the trade press, and on social media that it’s starting to sound cliché. However, it’s also true.
The question is how do providers build, and where do they start. Smart business strategists will say that process begins with how they manage their revenue. Fortunately, there’s been a good foundation built in this regard in larger healthcare organizations. Several years ago, entities such as hospitals and health plans started defining and refining the practice known as revenue cycle management, and it helped them optimize, and perhaps revolutionize, their businesses’ incomes.
For starters, RCM is not billing. Billing is the process of filing claims with reimbursement sources such as Medicare or private payer plans and then following up with those funding sources to ensure the claims get reimbursed. RCM is broader. RCM does encompass billing and claims management, but it also optimizes how claims denial is handled, how patient copays are collected, and how much staff time is expended on claims. RCM tracks the revenues and costs related to a patient’s interaction with the healthcare organization from the beginning and end of the process. RCM is the umbrella under which all revenues are managed and maximized.
Not surprisingly, a variety of software tools, standardized business processes, and workflows evolved from the growth of RCM within larger healthcare organizations.
And now, RCM has come to HME. In fact, in some ways, it has been here, thanks to the software systems and services that have proliferated in the HME industry. Those systems have helped providers fine-tune their billing and claims management and increase operational efficiencies, and that has helped providers cut costs and boost margins.
However, starting a couple of years back, HME software makers have worked with provider businesses to start defining how RCM should work in the HME industry to help providers to completely rebuild their revenue performance — not just refine their billing. Just like in a hospital, RCM needs to be an umbrella practice in the HME organization.
“Most HME providers think of RCM in terms of billing, but my argument is that this falsely indicates that billing is an island that can manage and increase collections all by themselves,” says Wayne Bailey, director of client services for HME software company Bonafide Management Systems. “This is just not true. RCM must involve intake (CSRS checking eligibility, same or similar, Part A denials, physician PLECOS), delivery (correct product, correct HCPCS, correct compliance, correct training), invoicing, sending claims, posting, sending secondaries, and working denials. My point is that if you think of RCM as a “billing” function instead of a “business” function, you’re missing out.”
Why the Change?
In the past, RCM has been a non-issue and a non-entity in the world of home medical equipment. That was back when reimbursement was generous, and providers didn’t have to pay nearly as much attention to cash flow and overhead structure as they do now. Today, it’s a whole new ballgame, and providers need a new strategy, according to Bailey.
“It was easy to not worry about RCM when the industry enjoyed margins in the 50 percent range,” Bailey says. “With high margins, HME providers didn’t need to use sophisticated management tools. … When the industry was flush, claims were sent, and DME providers hoped they would get paid. Billers were not tightly managed or monitored, and very few technical systems were in place to enable an enterprise view of billing efforts and results.”
All that has changed now, thanks to competitive bidding. Now providers need to implement new business practices if they want to survive and thrive despite reimbursement cuts, audits, and other funding pressures that not only tighten margins but increase the cost of business through more extensive documentation procedures, etc.
One thing is for certain: traditional HME management approaches won’t suffice.
“Management lacks visibility to what to do, so it’s left to the operators and staff members to do a lot of manual work, and try to extract information then, to figure out what they’re going to work on next,” says David S. Golen, Vice President of Business Development for HME software company Universal Software Solutions. “And a lot of is manual work, calling insurance companies, following up on claims.
The goal with RCM is to automate this. To create a structure using both technology and well-defined workflows — to bring some order to the chaos.
“The people who are working on [revenues and claims], know what needs to be touched, why, be able to sort them in different orders to get to the highest dollar, the ones that are getting closest to timing out — all the things that would cause you to want to work on something faster than the next thing,” Golen says. “But again, that needs to be done in a very visible manner on your screen, not relying upon you digging to find it.”
“HME providers don’t have control over the maximum reimbursement rates, but they do have control over their billing workflow and systems,” Bailey explains. “They are able to manage their businesses using the latest tools and software so that they can maximize the reimbursement on every single item and make the tight margins work for them.”
“Today’s HME providers need advanced RCM in order to survive on today’s tight margins,” Baily adds. “Today’s margins are extremely stringent … This means that HME providers must have highly-trained employees using highly sophisticated workflow software to maximize tight margins.”
Money on the Table
Clearly, maximizing money per-claim and per-patient is the name of the game, but, at present, providers aren’t effective RCM organizations. In fact, they’re leaving a lot of money on the table, according to Joey Graham, vice president of Prochant, a consulting firm that specializes exclusively in helping HME provider business with RCM.
“It’s an industry wrought with landmines that providers stumble upon all the time,” Graham says. “Providers a lot of times end up not properly managing their revenue cycle and having really smart work lists and work queues for their collections teams and other teams to work on, things just fall through the cracks in the sense of past timely filing denials or past-appeal-limit denials, which are two things that every DME owner, it’s at the top of their hate list. We can’t stand these things. They don’t like write-offs, for one thing, because that’s bad debt, but it’s past timely filing, that’s the most preventable denial there is. It’s salt in the wound.”
Providers need to be focusing on connecting the filing limits to the insurance companies and take that information to build smart work queues for their collections teams, according to Graham. However, he says most providers instead have their staff specialize by payer and focus on high- to low-dollar balance. It makes sense — but only to a point.
“When you don’t take timely filing into that picture, stuff falls through all the time,” he explains. “Maybe it’s a mid-dollar claim and it just gets far enough on the list, they don’t get to it for 30 days, by the time they touch the claim it’s past-timely because it was maybe UHC with a 45-day filing limit.”
So what is causing providers — businesses that are desperate to capture any and all revenue — to leave money on the table? As mentioned earlier, running an HME business is not the same as running a hospital, and thusly there are RCM challenges and obstacles that are unique to the homecare industry. One of them is staff bandwidth.
“I think one of the biggest challenges is most providers just don’t have the means to staff appropriately to manage the revenue cycle,” Prochant’s Graham says. “We’re talking about high-volume, low-dollar claims. When you compare that to pretty much any other aspect of the medical industry, you see much higher dollar claims.
“Whereas in DME, especially like a nebulizer provider or provider doing a lot of walkers and wheelchairs, you’re talking about $10, $20, $30 claims times several thousand, tens of thousands,” he continues. “[Providers] don’t have the staff and the wherewithal to touch all those claims and touch all that AR and keep it clean. Then it ends up piling up, making a mess essentially, in their billing system.”
And when providers can put those kinds of the staff resources in place, it doesn’t come cheap.
“Another aspect of the staff side is the whole management of a billing department and managing all these people, people needing paid time off, maternity leave, all these other things come up, people get sick, people quit,” Graham says. “As a provider, you want to be able to focus on your patient base. That’s really what our core focus is, is to enable providers or empower providers to focus on outstanding patient care. They are not in this business to manage a whole back office with 20, 30 billers and all the personalities and water cooler talk and other stuff that ends up happening in that scenario.”
In the same way software revolutionized billing and claims management for HME businesses, those systems are adding RCM tools. The goals are to help management monitor and manage revenues in a much more proactive fashion.
“Really, in my opinion, software needs to have more visibility, as to why things are not getting paid,” Universal’s Golen says. “And of course present them in a way to the end users, that they’re not relying upon reports, or digging into, trying to find out what to do. You should be told by the system what to do.”
But what’s the right approach for software? A key problem that Bailey says many providers encounter comes down to process. While large healthcare organizations might have developed RCM procedures that have become refined to the point that they are commonplace, RCM is new in HME. Much needs to be down in terms of outlining process.
“The obstacles we see most are the lack of clear workflow processes,” he says. “Without systems in place, it’s hard to find the leaks and fix them.”
Bailey notes that this is another excellent opportunity for providers to put in software that can help them manage their RCM.
“It allows businesses to set structure in place for all of their employees and monitor results over time,” he says. “An ERP allows you to program workflow rules into the system. This means fewer choices for employees, and fewer choices lead to fewer mistakes. Our software walks employees through every step from intake through delivery and ensures they gather every piece of information and documentation they need before delivering an item. This means fewer trips back and forth to the warehouse, less time spent waiting for paperwork (everything on our system is electronic), fewer reimbursement resubmissions, fewer non-reimbursable expenses, and other situations that result in lost money for the HME provider due to employee mistakes.”
Focusing on the beginning of the process is critical, according to Golen, because it prevents so many of the sorts of clams problems that turn into extremely costly time sinks if left to fester. Moreover, it gives staff time to focus on the real problems.
“If you think about it, your goal is to have a fully qualified order and a clean claim, that basically a no-touch claim that gets paid at a high percentage on the first pass,” he says. “So, for most of your business, say 85, 90 percent of it, the front-end creates the proper order. The billing doesn’t even have to touch or see or look at; no billing edits. Once the system decides that it can go, it goes.
“So then you’re managing exceptions,” Golen continues. “The software finds things that it presents to you that it knows are problems. … Those are the things that your team needs to get to.”
Managing Those Tools
Putting healthcare IT into place is critical, but at the same time, providers need to make sure that they are staying on top of their technology. Once you invest in a system, it’s critical to make sure that it continues to pay off over time. Providers must have staffers who manage their software on a regular basis. The last thing they want to do is take a “one and done” approach.
“A lot of providers, they’ll set up their new EMR … They set it up once, they do kind of a so-so job of it, and then they never touch it again,” Graham says. “Nobody ever goes back and looks under the hood. ‘What were some of those settings that we set at the beginning? How is the system changing over time?’
“Any of these EMRs, about quarterly, they’re releasing new features,” he continues. “If you’re not staying on top of that and you don’t have somebody who’s responsible for reading those release notes and understanding the new capabilities that have been built into the system, you’re leaving so much on the table. These software providers have done an amazing job over the last few years of adding automation in and the ability to stop bad claims from going out the door, adding pre-qualifying criteria up front; tying utilization limits to your payer and product combination — so many things.”
Of course, another option is to outsource parts of the RCM process to third parties. There’s where companies such as Prochant and the Allegiance Group come into play. In many cases, these companies will specialize in particular elements of billing and claims processing. For instance, Allegiance specializes in patient pay and Prochant focuses on insurance. Moreover, they usually offer tiers of service to help providers offload as much or as little as they need.
“We have one that’s called full-service billing,” Graham says. “That’s the traditional outsourcing of your billing, where we get a percentage of collections in terms of how we bill.
“The other is called staff augmentation,” he continues. “That’s an interesting model. That’s low-cost labor, essentially. We can plug and play resources. You need help with cash posting; you need help with denial management; A/R management; even front-end processes, such as data entry, CPAP resupply processing, and consignment processing — even fax wrangling.”
Outsourcing offers other benefits besides increased staff muscle and offloading costly workflows; it harnesses institutional and industry knowledge. Because outsources are handling far more claims or collections than any single provider, they start to see trends develop that providers don’t, or develop best practices that would take a provider much longer to discover and implement.
“I think a lot of providers only know their business, they only know their niche, they only know their market,” Graham says. “They don’t have that worldview of what’s happening in the rest of the country, what’s happening with the other providers, what’s happening with their competition down the street, or some of the best in class providers in our industry.
“When you work with an outsourcer like us, we do have that experience. We do work with these amazing players,” he continues. “We see behind the curtain and how they’re running their operation. While we would never share secrets and trade secrets, we can help guide our clients down a path of best practices in what we know will ultimately to success.”
Ultimately, RCM will continue to see increased relevance in the HME and adoption by HME providers. Moreover, outsourcing and technology will continue to play critical roles.
“Professional HME providers that embrace the enterprise approach to business with an ERP will be able to thrive on the 12 to18 percent margins that are putting old-school HME providers out of business,” Bonafide’s Bailey says. “It’s not too late to upgrade your business and succeed in the new market, but it’s not going to be possible to compete without the right tools in place.”
This article originally appeared in the May 2018 issue of HME Business.