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.
To purchase the complete Reimbursement study, visit research.homecaremag.com
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.
If they want to survive the reimbursement changes that now seem imminent, providers must reverse these trends, Lieber says. “Next year at this time, we might see a freeze implemented,” she explains, pointing to the Medicare reform debate taking place on Capitol Hill. The Senate reform package calls for a seven-year CPI freeze on Medicare reimbursement for durable medical equipment, and the House of Representatives package calls for national competitive bidding for DME. Consequently, providers need to know where they drive the most revenue and make sure to collect on what they bill.
“Even with a freeze, if you run efficiently you should be able to run a profitable business,” Lieber continues. “The freeze could cause attrition, but that leaves more room for those who want to run efficiently and prosper. This survey provides an eye-opening look at your peer group — some of whom won't be here long if they don't shape up.” You can find more of Lieber's comments on specific data throughout the survey.
The following pages offer a wealth of information about reimbursement, but HomeCare's full research report provides even more. For example, responses in the final report are tabulated by business mix and revenue, revealing the ways small and large companies differ in their approach to reimbursement. For information on purchasing the full report, visit HomeCare's Web site, www.homecaremag.com, and click on the button titled “Purchase Exclusive HomeCare Research.”
For the Record: Survey methodology conforms to all accepted research methods and practices, and the guidelines set forth by American Business Media. Percentages are based on responses from 353 providers unless specified. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses.
RESPONDENT PROFILE
| Full-service HME provider | 37.7% |
| HME with rehabilitation focus | 7.6% |
| HME with respiratory therapy | 24.9% |
| HME with infusion therapy | 2.3% |
| HME with pharmacy | 3.4% |
| DME only | 22.4% |
| Other/No answer | 1.7% |
| Less than $500,000 | 20.1% |
| $500,000 to $999,999 | 20.4% |
| $1.0 to $1.49 million | 17.8% |
| $1.5 to $2.99 million | 15.6% |
| $3.0 to $4.99 million | 7.9% |
| $5.0 million or more | 15.9% |
| No answer | 2.3% |
HIPAA
| Computer hardware | 25.8% |
| Computer software | 50.1% |
| Consulting services | 17.6% |
| Employees | 28.3% |
| Office/showroom renovations | 31.4% |
| Telecommunications | 14.4% |
| Training | 83.0% |
| Not adding anything new | 6.2% |
“Why don't companies who bill with software use it to track accounts receivable? This is inconsistent and inefficient unless software is sub-par,” says Miriam Lieber, Lieber Consulting.
REIMBURSEMENT-RELATED TASKS
| Patient name, address, phone | 97.2% |
| Physician name | 95.8% |
| Patient insurance | 94.9% |
| Diagnosis | 92.1% |
| Whether patient has prescription | 87.3% |
| Additional contact person | 79.6% |
| Whether patient already has same or similar equipment | 76.8% |
| Length of need | 67.1% |
| Interest in other products | 35.7% |
“The [percentage of revenue] generated from Medicare has been consistent for quite a few years with the exception of niche-oriented businesses,” Leiber says.
THIRD-PARTY PAYERS
| Medicare | 45.3% |
| Medicaid | 17.5% |
| Managed care | 12.7% |
| Private pay insurer | 11.5% |
| Cash sales | 11.1% |
| No answer | 1.9% |
| Base: 339 | |
| Payer Type | Mean rating |
|---|---|
| Managed care | 2.6 |
| Medicaid | 2.6 |
| Medicare | 2.7 |
| Private pay insurer | 2.5 |
| *Reflects data only from respondents who bill to these payers. | |
DENIALS AND APPEALS
| None | 1.4% |
| 1% to 2% | 13.3% |
| 3% to 5% | 19.5% |
| 6% to 10% | 23.5% |
| 11% to 19% | 10.5% |
| 20% to 29% | 12.5% |
| 30% or more | 9.9% |
| No answer | 9.3% |
| Mean: 14% of claims are reviewed or denied | |
| Question about medical necessity | 62.9% |
| Inaccurate/missing information | 60.6% |
| Question about claim code | 43.3% |
| Product or service not covered | 36.3% |
| Third-party payer error | 30.6% |
| Other | 7.9% |
| Appeal all denials (100%) | 44.8% |
| 90% to 99% | 19.0% |
| 50% to 89% | 7.6% |
| 10% to 49% | 6.5% |
| 1% to 9% | 9.3% |
| None are appealed | 2.3% |
| No answer | 10.5% |
| Mean: 77% of denials are appealed | |
| Product/service | Mean rating |
|---|---|
| Aids to daily living | 2.2 |
| Beds and support surfaces | 2.4 |
| Diabetes supplies | 2.3 |
| Incontinence products | 2.1 |
| Infusion therapy | 2.4 |
| Mobility/seating and positioning | 2.7 |
| Prosthetics/orthotics | 2.3 |
| Rehabilitation products/services | 2.6 |
| Respiratory products | 2.5 |
| Respiratory therapy | 2.3 |
| Women's health | 1.9 |
| *Reflects data only from respondents who offer these products/services. | |
To purchase HomeCare's full 2003 Reimbursement Survey, go to www.homecaremag.com and click on “Purchase Exclusive HomeCare Research.”
| All appeals are successful (100%) | 7.6% |
| 90% to 99% | 28.9% |
| 75% to 89% | 20.4% |
| 50% to 74% | 15.6% |
| 10% to 49% | 4.8% |
| 1% to 9% | 7.9% |
| None are successful | 2.8% |
| No answer | 11.9% |
| Mean: 69% of appeals are successful | |
DAYS SALES OUTSTANDING (DSO)
| Less than 30 days | 7.6% |
| 30-60 days | 39.4% |
| 61-90 days | 27.8% |
| 91-120 days | 11.3% |
| More than 120 days | 4.2% |
| Unsure | 5.9% |
| No answer | 3.7% |
| Mean: 63 days | |
“It looks like [providers] are not doing a great job at getting those claims in and getting them paid,” Lieber says. One possible explanation? As smaller companies grow, and owners hire new employees to process claims, “that's when they lose control. As they get bigger, they have enough resources to gain back that control.”
DURABLE MEDICAL EQUIPMENT REGIONAL CARRIERS (DMERCs)]
| DMERC Region A | DMERC Region C | ||||
|---|---|---|---|---|---|
| Category | No. Responding | Mean Rating | Category | No. Responding | Mean Rating |
| Accurate payment | 78 | 3.4 | Accurate payment | 160 | 3.5 |
| Complete information | 75 | 3.3 | Complete information | 159 | 3.4 |
| Easy electronic billing | 73 | 3.4 | Easy electronic billing | 153 | 3.6 |
| Timely information | 76 | 3.1 | Timely information | 159 | 3.3 |
| Timely payment | 76 | 3.2 | Timely payment | 159 | 3.4 |
| Timely reviews | 76 | 2.8 | Timely reviews | 157 | 2.9 |
| DMERC Region B | DMERC Region D | ||||
| Category | No. Responding | Mean Rating | Category | No. Responding | Mean Rating |
| Accurate payment | 86 | 3.3 | Accurate payment | 88 | 3.3 |
| Complete information | 85 | 3.2 | Complete information | 87 | 3.0 |
| Easy electronic billing | 76 | 3.3 | Easy electronic billing | 80 | 3.4 |
| Timely information | 85 | 2.9 | Timely information | 87 | 2.9 |
| Timely payment | 86 | 3 | Timely payment | 88 | 3.1 |
| Timely reviews | 83 | 2.7 | Timely reviews | 83 | 2.6 |
