Understanding HME Commercial Reimbursement
How contract reviews and defined procedures can alter relationships with your problematic payers
by Sarah Hanna

The landscape of the HME industry has changed drastically with the full rollout of competitive bidding. Whereas, years ago, Medicare held the largest percentage of provider’s accounts receivable pie, that distinguished title now goes to commercial payers. These may come in the form of commercial primary payers, Medicare Advantage plans or Medicaid managed care contractors. Even though the slice of the Medicare pie may increase for some providers in 2019 due to the announcement of the end-stage renal disease (ESRD) and durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) final rule, commercial payers and their practices won’t go away and accounts receivable (AR) will remain large and looming.

Navigating the waters of commercial reimbursement is not an easy task. There is no manual with information on the reimbursement policies/practices of each payer and there are challenges around every bend. These challenges come in different forms that can include any combination of underpayments, short timely filing limits, denials and/or recoupments. The good news is that not all payers are problematic; but the percentage of payers that are result in soaring AR and reduce your company’s return on investment (ROI) by being a contracted provider. So, how do you handle a commercial payer’s frustrating practices?


Review the Contract

First, you need to review your contract with the payer. Gaining a commercial payer contract can be both cause for celebration and cause for extreme caution. Many providers are so happy to be on a provider panel that they do not read their contracts and therefore make mistakes in billing. The costs of doing business under the contract may be higher than the reimbursement.

Start by reviewing the fee schedule guidelines. Is it a percentage of the Medicare fee schedule? If so, which year of the Medicare fee schedule does it pertain to? Also, is the payer using the rural or nonrural Medicare fee schedule? Knowing your fee schedules will help you assess where you are making and losing money. Many providers signed contracts years before reimbursements took a nose dive and now the percentages originally agreed upon are untenable. This may be a sticking point where company leadership needs to either renegotiate or terminate the contract.

The contract also provides valuable information when determining if you can or cannot bill patients. Many providers erroneously believe they can bill the patient when the commercial payer denies the claim. This can turn into a breach of contract if the agreement has specific provisions that prohibit providers from invoicing beneficiaries.


Identify Problem Areas

Following the same lines of reviewing your contract and its fee schedules, having procedures in place to identify underpayments is an important part of the revenue cycle process. Updating price tables, insurance records and item records for your payers and their corresponding item codes is important. Most companies don’t complete this task because the manual process takes an exorbitant amount of time to update and maintain. Just having it done for your top 10 payers outside of Medicare and the top revenue codes is a tremendous help when identifying the payer(s) that are not paying in accordance with the agreement.



Underpayments can be a simple system processing error on the payer side, or it can be an indicator of something more that needs addressed. Your company needs to have processes and procedures to prevent incorrect adjustments from occurring. Provide your team with access to contract pricing information so they have a frame of reference for your payers. Give parameters of a percentage of billed posting staff are allowed to adjust based on contract fees, rather than a percentage—use a fixed amount as a baseline. Your team needs to understand what to look for when applying payments and to not adjust off differences due to contractual adjustments. Monitor the dollars associated with contractual adjustments and trends month to month.


Timely Filing Limits

Timely filing limits (TFL) for commercial payers have become tighter in the last few years. These limitations have caused timely filing denials to increase for providers. These limits can be 60, 90 or 120 days, based on date of service for claims filing, and then they may only give you a TFL of 90 to 120 days from date of denial to appeal or resubmit a corrected claim. How do you combat the dreaded TFL denial? First and foremost, know your contracts and the timely filing requirements for your payers. The revenue cycle team should have this data at the forefront of their minds when working claims.

Claims can reach filing time limits while sitting in your holding revenue, waiting on medical documentation, prior authorization, compliance data, etc. Monitor holding revenue based on payer and timely filing requirements. Remember, you also have to allow enough time for electronic processing. For example, after being on hold, if a claim is billed the day before the timely filing limit is reached, this does not mean that the payer will receive it in their processing system. A clearinghouse could have delay times of 2 to 3 days before the payer picks it up and starts processing it. If you are dangerously close, try entering the claim into a payer portal for immediate acceptance.

If you receive a TFL denial, verify that the claim(s) that were sent were actually processed within the timely filing limits. If you have submitted a clean claim and they are not following their claim processing timeline according to your contract, remind the payer of their obligation. Delay tactics are a common way to avoid payment. By monitoring timely filing limits on denied claims, you can make these a priority in your collector’s work queue to improve turnaround time and thereby reduce the risk of a TFL denial.

Another area to watch is rejected claims for payers with short timely filing limits. A rejected claim may mean the payer never entered it into their processing system. If the claim rejects and sits in the system without being worked, that could cause a TFL denial. Make those rejections a priority.

Reverify your payers’ timely filing limits on a regular basis. Most payers do not email or mail updates to providers, but simply house them on their websites. If the timely filing limit has changed, knowing as soon as possible will prevent unnecessary denials and write-offs.



Recoupments have been on the rise and are another subject to evaluate. Many contractors that are hired to administer Medicare Advantage plans or are Medicaid Managed Care Organizations don’t follow Medicare or Medicaid guidelines and develop their own requirements when they should be following those set by the government entity for which they are conducting operations. Recoupments are usually put on the back burner along with refunds when claims are ranked in importance. This means that suppliers are losing hard-earned dollars because the money is being taken back on electronic remit notices (ERNs) and explanation of benefits (EOB) on claims that are approved for payment and no one is contesting these takebacks.

Recoupments require a lot of research to show the payer they are recapturing money when they shouldn’t. In these instances, it is up to the supplier to show the payer they are in the wrong and why. You need to prove your case with data that cannot be disputed by the payer. These recoupments can be seen on small and large dollar items. Analyzing the takebacks, the payers and the code is essential in having any possibility of gaining traction in getting your money and reducing future recoupments.

At the end of the day, using analytics to assist in trending and monitoring data will improve your opportunities for success when billing and collecting from commercial payers. Diligence and perseverance are required because the payer is banking on you giving up as they stand firm. It takes time to forge the rushing river, but once you do, the reward is worth it.