Features
What You Gotta Know Now
American POWs being forced to play Russian roulette in “The Deer Hunter” is the most disturbing scene of all movies for me.
The thought of home care providers submitting competitive bids for Medicare business with the level of information commonly held by these companies is equally disturbing. To avoid the Russian roulette-like risk, providers must have certain facts about their own business before concluding their bids for Medicare business are safe. Following are six questions that get to the necessary facts.
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Is it necessary to be a competition area supplier? The law has already answered that question with a “no” for providers serving beneficiaries in smaller metropolitan statistical areas. Neither will all providers serving the top MSAs find it necessary to be a competition supplier.
In earlier demonstration projects, a large number of providers decided not to participate. The most common reason was that the revenue gained from Medicare was an insignificant part of their business (less than 5-10 percent). If the answer to the first question is “no,” then answers to the following questions will still be helpful. For all others, accurate answers to the next questions are essential.
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What is the revenue per HCPCS code from Medicare? This answer is essential because (a) bids will (in my opinion) be for product lines and their underlying HCPCS codes, and (b) the significance of the revenue and associated expenses and profits cannot be measured without it. The answer lies in your billing system. If the system does not accept the query to provide this answer, export data to an electronic spreadsheet and use its sorting capability to find the answer.
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What is the total cost associated with each HCPCS code? The answer to this question reveals how profitable — or unprofitable — it is to provide a Medicare beneficiary with the products and services reimbursed under a certain HCPCS code. The costs fall into two categories. The first is the cost of goods, which should easily be extracted from your purchasing system.
Second is the cost of activities, such as completing an intake form, collecting a CMN, completing a reorder ticket, delivery or set-up of equipment, etc. Because activity costs are not reported on financial statements, they require the process we know as activity-based costing.
