Computer Software Update

• By Steve Surfaro, Cara C. Bachenheimer
• Oct 01, 2005

Maintaining overall profitability in the DME/HME industry has become much more difficult over the years due to decreased reimbursements and increased demands for paperwork. Analyzing operations to find new ways to increase the bottom line is more important than ever before. At the same time, more technology is available today than ever before. Technology has always been one crucial tool for savvy owners and managers to cut costs while increasing the bottom line.

Your Most Valuable Asset

Payroll is one of the most significant costs in any business, but it also provides the most valuable asset — employees. Effectively utilizing employee time can change a company's billing department from a cost center to a center of profit. In other words, with time well-spent, the billing and collection department will bring in more money than the cost of its salaries combined. One of the ways to accomplish this goal is to implement procedures and technology to ensure that employees spend minimal time on tasks that can be automated by a computer. This enables employees to focus on tasks that actually require human intervention. Once this is accomplished, employees can resolve more claims and collect money.

Most DME providers currently use a billing software package to bill and manage their accounts receivable. The billing software can create and transmit claims electronically to many carriers. All the billing packages will, at the very least, track accounts receivables. Payments and denials are posted to maintain an up-to-date and accurate account of open balances. Posting payments requires entering transactions and reconciling those numbers to the actual amounts deposited daily. In order to maintain accurate accounts receivable balances, payments should be posted as received.

Automatic Transaction Posting

Payments are received with a copy of an Explanation of Medical Benefits or (EOMB). Medicare, many Medicaid programs and some commercial payors have elected to receive these EOMBs electronically. Electronic versions of the paper EOMBs are called Electronic Remittance Notices or (ERNs). ERNs are available for download from a bulletin board system, like the one used to transmit claims to Medicare, or from the insurance company's Web site. ERNs in HIPAA format are often referred to as 835 files, which is a health care industry standard format.

All billing software packages have the ability to post payments and denials from the ERNs. Although not all of the software packages will apply all of the payments and denials, most of the transaction will be posted automatically. This means that even if a company is downloading and posting payments, some manual entry and reconciliation may be necessary. Downloading the file and automatically posting, however, saves a lot of time.

Despite the advantages of downloading and auto-posting ERNs, many people are still resistant to the change. If ERNs are posted automatically and yet some payments and denials must still be manually entered, a vendor can review those transactions to further automate the process.

If you are not yet downloading and posting your ERNs from all available sources, you should be. A company can stay more competitive if it is more efficient. The leaner a company is, the better prepared it will be to handle the next reimbursement cut.

Paperless Office

Statistically, 10 percent of all claims are denied. Managing those denials requires some investigative skills, such as analyzing the denial, getting together the paperwork required to appeal the denial, and ultimately keeping a record of all those denials and appeals.

Tests have shown that it takes approximately four minutes to retrieve a document from a file. This number increases if the document is not in the file or the file is not where it belongs. Considering that 33 percent of documents are misfiled, there is a one-in-three probability that the document will not be where it belongs. The minutes continue to increase when the sought-after document is an EOMB, which requires the time to find the appropriate page and then black out other patients' information to comply with HIPAA.

While the four-minute minimum may not sound like a lot of time, consider that if a biller is working on six claims in an hour and needs to pull a document for each case, 24 minutes out of that hour were spent on retrieving the document alone. That is the cost of 40 percent of a biller's time, cutting productivity almost in half.

Document imaging and paperless office technology cuts the minutes needed to retrieve or document to mere seconds.

EOMBs to ERNs

Many insurance companies do not have ERNs available for download and are still sending paper EOMBs — making it necessary to go through the time-consuming process of manually posting every transaction.

Advances in technology have created an opportunity to merge the document imaging/paperless office technology and ERN capabilities to create the newest and most exciting cost-saving technology yet. This technology allows providers to scan all of their paper EOMBs, and create an ERN file. The computer automatically reads the form combining optical character recognition (OCR) technology (in which the computer reads and translates the images to word), intelligent data recognition and other forms of cutting-edge technology to capture the financial data off the EOMB. This software creates an ERN/835 file. Any billing software that posts ERNs from Medicare should have the capability to easily post these ERN files.

Imagine reducing time and money spent on posting transactions because a computer will automatically post them. Imagine staff having the time to follow up on more claims, which translates into collecting more money, increasing cash flow and lowering DSO.

ERN conversion tools round out this technology by allowing employees to view, print and analyze the ERN data. Capabilities include running reports to analyze how to better manage employees' time and extracting detailed information, such as the amounts paid for a specific claim, the number of denials from a given month, the denial most common for an organization and how that data compares to the most common denials Medicare publishes on a quarterly basis. This useful analysis will identify trends to help prevent denials.

Technology and Your Company

Document imaging and paperless office technology have proved to be the largest new cost-saving tools in office management. Automatic transaction posting and EOMB-to-ERN technology are the newest cost-saving techniques. Paper management is a time-consuming and costly part of managing billing, collections and the cash flow of any health care company. Just a few years ago, a paperless office was only a dream. Now, imaging solutions are the first step to managing the mountains of paperwork associated with running a DME company.

Technology will allow employees to work smarter not harder.

This article originally appeared in the October 2005 issue of HME Business.