Learning to Do the Right Thing

What does “doing things the right way” mean in the home medical equipment industry? For me, it has multiple meanings. First, it means following the rules, not looking for loopholes in the Medicare system. I was taught that by my in-laws and mentors, Paul and Phyllis Kraemer, pioneers in the HME industry.

An activist, my father-in-law testified in front of the U.S. Senate about providers who were sending referral sources on lavish vacations just to receive a referral in return. At the time, kickbacks were prevalent, and he felt strongly that every provider should have an even playing field. He took that stand even though it was unpopular with his colleagues and referral sources.

Unfortunately, it took many, many years for CMS to face this problem and implement an anti-kickback statute.

In addition, my in-laws taught me that “doing the right thing” also means running a profitable business with the help of software and management reports.

Trained as a CPA, Paul created some innovative management reports that taught HME suppliers how to run their businesses. After all, he and his wife owned two HME businesses of their own, so they had a vested interest in ensuring the financial data was correct and available. Because of this expertise, their billing service was used by some 500 client companies.

My orientation and focus on what software can do for an HME company is a testimony to the Kraemers. They taught me to think critically about ways to improve operations, maximize the use of software and how to use management reports to gauge progress. They also taught me that integrity is virtuous, and that training providers on how to operate honest and scrupulous companies is a must. In fact, I still use much of their wisdom today when I speak at industry events.

Paul passed away this year, and I will truly miss him for all he did for me and for the HME industry as a whole. I will do my best to perpetuate his teachings, and dedicate mine to him.

Clean Up Order Intake

Just as profitability through a well-run and honest business was of paramount importance to Paul Kraemer many years ago, it continues to be a challenge today. Through proper order intake, abundant documentation, Medicare compliance, electronic billing and management reports, you should be able to maximize profitability. How so?

Now, more than ever, it is incumbent upon customer service staff to gather all of the information required prior to dispensing equipment or supplies. Unlike before, it is not enough for the doctor to write a prescription from which you deliver equipment. Today you must gather patient demographics, next of kin (with a phone number), doctor information (this is the treating physician), insurance information (primary and secondary) and numbers, the specific equipment/supplies prescribed, test results, height and weight, medical necessity justification, make financial arrangements and more.

In many cases, you also need to ask for the doctor’s chart/progress notes. For example, if the patient does not have a sleep study and needs a CPAP, you may decide not to dispense the device until the sleep study results are available.

If you do not have enough information, you simply need to render the patient non-assigned and obtain an Advance Beneficiary Notice. The order intake staff needs to be fluent in the proper use of ABNs to protect your financial interests while keeping the patient informed.

Additionally, when a patient needs a refill of supplies, it is the responsibility of the intake staff to determine whether that patient is eligible for the refill. When is the last time the patient received it, and is there a medical need for it? Staff also should verify that there is medical necessity documentation before dispensing the supply.

Get the Documentation You Need

As far as documentation is concerned, the order intake process determines the patient’s medical need for the item prescribed/ordered. This means that if the patient doesn’t qualify for a product, the intake department notifies the patient. Unless you have decided to accept a charity case, why release equipment to a patient when you are not sure if you will be paid?

While it is required that you obtain a dispensing/verbal order prior to delivering products (except for those items requiring a Written Order Prior to Delivery), it is not necessary to have the actual written order/CMN until you are ready to file the claim. If you are not going to obtain the medical necessity form at the time of intake, it becomes the documentation department’s responsibility. Otherwise, the billing department is forced to backtrack just to obtain the form.

One of the most significant changes ever in HME claims documentation is occurring right now. Medicare is eliminating many CMNs, making them obsolete effective Oct. 1 (with a grace period through Dec. 31).

You might be thinking, “Great … one less Medicare form to worry about.” On the contrary, by not requiring a specific form, Medicare has left its requirements more open, thereby subjecting you to a more arbitrary audit. If you are asked to prove medical need but CMS hasn’t told you how, it will be difficult.

While we all understand that the CMNs needed revamping, not having a form to guide you leaves you wide open in a post-payment situation. Therefore, it is recommended that you obtain as much documentation as possible not just from the doctor but also from other health care professionals such as therapists, when applicable.

The more documentation, the better. Follow the local coverage determinations and policy articles to determine medical need and justification for any item. Always scrutinize the written order thoroughly before releasing the claim. If you are able to obtain additional documentation, make sure it corroborates the written order. Finally, make sure that you can build a case in the event of an audit.

Remember that as Medicare makes its requirements more stringent, the cost of obtaining these forms will increase. Make sure that the product you are delivering is financially worth your while. This extra work is costly and digs right into your profit margin.

Working on all this documentation for a $20 item seems outlandish. Even if this $20 item may later lead to additional business, weigh the costs of providing the item against your profitability. Find the balance between going the extra mile for paperwork and the need to make money for survival.

Check Compliance and Billing

Remaining compliant in this day and age is a monumental and expensive task. This means that you should have a compliance plan and conduct internal (and/or external) compliance audits. Use corrective action policies to make necessary changes, and issue repayments as necessary.

Regardless, no matter how clean your operation may seem, remember that Medicare may conduct an audit and decide that the result is not satisfactory. This means you should focus your attention on all compliance issues, but don’t dwell on the small matters that may never arise.

Showing Medicare that you are proactive in your attempts to remain compliant will bode well in an otherwise unfavorable audit situation. It is truly your way of showing your version of “doing the right thing” in today’s HME environment — all while you attempt to remain profitable.

Once the documentation process is complete, the claim should be just about ready to submit for payment. In some companies, this step requires a confirmation process (that may also be done at the time you gather your documentation).

Once the claim is generated, print a billing edit report that shows you everything that is ready to be billed. This is the time for you to examine the claims (via the report) for obvious errors such as modifiers, unusual charge amounts, correct ICD-9 and HCPCS codes and more. Taking time for review in this final quality control process makes sense. Take the extra time now to avoid the denial later.

Manage Your A/R

If by chance you do receive a denial, work it immediately. Letting denials linger makes collecting them later an insurmountable and arduous task.

Create a step in the collection process that includes working denials as soon as the remittance/summary notice is received. If possible, segregate denials by type so that you can work like things together. Consider using a service or software to manage denials. This will provide you with management reports that will make it easier for your staff to work denials quickly.

Along the same lines, remember that your front-end rejection reports from Medicare are easy to fix. They show errors that occurred during transmission that prevented your electronic claim from processing. This includes HCPCS codes, ICD-9 codes, Medicare numbers and more. Fixing these immediately will ensure that you are submitting timely claims.

Other than front-end rejections and denials, you should still expect outstanding, residual accounts receivable that need to be worked. Your aged trial balance is where you will find these older outstanding dollars.

Divide the task by payer, dollar and age. As the statute of limitations runs out, consider things like timely filing limits for all payers. Also recognize that a patient invoice that remains outstanding for more than 90 days becomes a much harder receivable to collect than receivables within 30 days from the due date.

Moreover, no matter which payer’s receivables you are trying to collect, always work them in descending balance order. This will get you the biggest bang for your buck. I find that many A/R representatives are methodical workers who hate to work out of order, so they confront each open balance in an alphabetical way. This can be a waste, since some of these dollars are worth less than the employee is paid to work them. If possible, print the report in descending balance order so they will not be tempted.

As you work these older outstanding balances, segregate them on their own A/R report so you can easily tell whether you are collecting the older monies or if they have to be written off. When you have a month where your collections exceed your billings — in other words, you collect more than 100 percent of the amount you billed — you will know that your efforts were fruitful.

In addition to working your accounts receivable, you will also be teaching staff to focus more on the bigger-picture items. In fact, it is prudent to work with your employees so they understand that getting bogged down in minutiae is costly and unproductive.

If employees find an error that occurs only once in a while, they should learn to let it go. Instead, they should spend time on more serious matters that will impact the company as a whole. The less time wasted on small matters, the more time there is to take proper orders, gather accurate and complete documentation, conduct compliance audits, submit clean claims and collect bigger outstanding dollars more quickly. The result will be enhanced operational efficiency for maximum profit.

It is not simple to perfect every operational function inside your HME business. However, it is your duty to do what you think is right, focusing on material matters that will be marked by improvement in your operational conduct.

You may actually be more like my father-in-law Paul than you imagined. An earnest company that works for integrity and profit is a place I would personally want to work.

Miriam Lieber is president of Lieber Consulting, Sherman Oaks, Calif., specializing in operations management and reimbursement for the HME industry. She can be reached at 818/789-0670 or by e-mail at [email protected].