Face to Face with Reimbursement

Washington's face may not have launched a thousand ships, but it certainly prompted thousands of HME providers to brave the seas of reimbursement over the past year. For some, the voyage was short, yielding approvals at every turn. For others, the voyage never ended, as denied claims piled up, payments stalled and the HIPAA deadline grew closer. The following pages hold snapshots from those voyages, provided by a few hundred of your peers.

In May, HomeCare mailed reimbursement questionnaires to 1,500 randomly selected domestic subscribers, asking about denials, appeals, days sales outstanding, third-party payers and more. Many of the respondents were small, full-service HME providers. In fact, of the 353 participating businesses, 40.5 percent reported annual revenue of less than $1 million. Another 41.3 percent were in the mid-range with earnings between $1 million and $5 million, while 15.9 percent of respondents reported revenue greater than $5 million.

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Nearly 40 percent of respondents called themselves “full service providers,” much to the surprise of reimbursement expert Miriam Lieber, president of Lieber Consulting, Sherman Oaks, Calif. “I thought the one-stop-shop concept was no longer in vogue,” she says. “Although I understand the competitive advantage of being a full-service HME provider, I seriously query how you could maintain a level of expertise and efficiency in trying to be everything to everybody.”

The next most popular business mix was HME with respiratory therapy, a combination 24.9 percent of providers reported having. Another 22.4 percent of respondents indicated they offer “DME only,” which Lieber says is a difficult mix in the current economic climate. “Without respiratory or another niche product area, how do they stay afloat?” she wonders.

Many providers seem not to have changed the way they track vital information about denials and DSO. Only 13.9 percent of respondents say they calculate DSO averages by third-party payer, and only 12.2 percent calculate DSO averages by product or service. At the same time, respondents' overall average DSO crept up this year, from 61 days reported in our 2002 survey to 63 days.