Viewing a stack of unpaid claims and past due patient invoices can be deflating for most HME providers. This is especially true when the billing team tries everything to improve receivables, including sending letters to patients and changing the business model to collect payments before products are delivered, but nothing seems to work. This scenario is all too familiar for many HME businesses. Outstanding accounts receivable (AR) negatively affects the bottom line.
How can HMEs get reimbursed without damaging the patient relationship or cutting corners in other areas to offset costs and improve operations? Finding answers is a priority for providers as they struggle with declining reimbursements and profits.
Some providers turn to collection agencies. While this may result in payments, collection agencies can be aggressive and may not care about the customer experience. One bad experience can lead to the patient going to another provider, leaving a black eye with referral sources. Other providers prefer to hire more staff. This is costly and only provides temporary relief.
Providers need a complete business management solution. Whether using internal staff or external resources, an ideal solution automates all payment handling and processing, has verification capabilities, and uses analytics and advanced functionalities to track, report and determine revenues. This means HMEs can know every step of the way where their money is, where it’s going and where it should be at any time.
Find the Weak Spots in Your Business
Before making a decision, it’s important to evaluate your operation to see what’s working and what’s not in your receivables operation. Maybe you have inconsistent communications, irregular payment support or confusion over hard and soft costs. This helps identify the best solution for your needs.
Common Weak Spots
- Your staff does not have the time to follow up on bills or the skill-set to talk with patients.
- You manage your receivables manually or rely on an outdated software system.
- Your system does not provide alerts for bills that are past due.
- You may not have a clear view of your outstanding AR.
- Your system does not provide the right metrics and reporting tools to give you real-time visibility into your finances.
Not every weak spot is the same for each HME, but providers do share a common goal: Collect payments in a timely manner to maintain a healthy cash flow. Getting to that point means evaluating your technology and processes to better manage your greatest asset—your patient data.
Study Your Data and Metrics
Every day we receive a lot of data from our electronic devices, and we determine what is most important to run our lives. The same goes for using technology and optimized processes to manage your HME business. Whether a provider makes 20 deliveries daily, has a list of more than 10,000 patients, or has 40 accounts that just reached 30 days past due, the right solution provides insight into the data and metrics that you want when you want it. That means you can monitor receivables to collect outstanding AR, track revenues and costs while using this data to measure the efficiency of the operation and run projections.
From this data, providers get actionable information that is reliable, robust and repeatable. Reliable means you get accurate information, robust means it captures the full scope of information you need to make the right decision, and repeatable means that you consistently get the data that is important to you every time. This increases overall visibility into operations.
From tracking payments to evaluating overall workflow, you should be able to monitor and identify the metrics necessary for your operation. The question is, what is the right data to improve your AR and revenue?
Key Metrics
Providers need to connect to their data to oversee all areas of their operation—and that means using key performance indicators (KPI). These provide insight into an organization’s operational performance. Some of those key metrics include:
- Unconfirmed sales orders (days)—This is money that is not yet in AR and can’t be billed until documentation is complete.
- Held AR—How much of a company’s accounts receivables is comprised of invoices on hold?
- Denial rate—What percentage of claims or invoices have been denied for payment?
- AR aging over 90, 120 days—These are the unresolved or open claims that are aging.
If your current billing department can’t realize the right number of unconfirmed sales orders, you are not likely collecting all the money you are owed. If you have excessive held AR, you could have a front-end documentation process problem. Each of these metrics represents an important aspect of the HME business.
More specifically with key metrics, some of the collection opportunities that providers can see with each include:
Key Collection Opportunities
- Unconfirmed sales orders—Track orders being created and monitor backlog.
- Held AR—Track, measure and manage to prevent claims becoming untimely.
- Denial rate—Identify denials and monitor top denial reasons.
- AR aging—Generate a list of outstanding AR. If your business has proportionately higher aging invoices, this indicates there is room for improvement. From that list, you can determine which payers/patients to contact immediately.
Benchmarks
Metrics can also help create educated benchmarks and goals to drive collections for your business. Capture denial and adjustment data in a way that facilitates the causes of revenue adjustments and payment delays. You can also monitor trends over time to help identify areas that need process improvement. This means real-time visibility, which you can even discuss with your sales and operations team.
Beyond Technology
It’s common knowledge that an HME’s business is driven by data and monitoring metrics. With that said, there are areas outside of technology that affect outstanding AR. This includes working with referral partners to ensure the collection of data that is of value to those partners. Providers also need to communicate this information back to their referral partners so everyone involved in the patient’s care can maximize the benefit of the data.
From an internal staff perspective, it’s important to consider the timeline for change communication and staff education. This will help facilitate the efficiencies you gain with the technology and automation. Additionally, working with outside experts and letting their staff and software do the heavy lifting will allow your billing team to focus on other areas of the business.
