Hello, and welcome to this component, this module of the ATPPS DME course. We're going to be covering DME billing options, and we're going to be tag-teaming this today. Nick Hopper, Athletic Trainer, Director of Commercial Operations for Inovus Healthcare Solutions, and BJ Mack, also Athletic Trainer, Senior Director of Inovus Healthcare Solutions, so welcome. Today's learning objectives, first, identify three different billing models for durable medical equipment. Second, assessing strategies for why a model is chosen and maintained. Our third objective is examining best practices for maintaining or changing programs. And finally, we will look at evaluating ways to maintaining best patient care in dispensing product. Choosing the right financial model for your DME program is an integral part for profitability and to evaluate the long-term financial health for your practice regarding your DME program. One area to look at is, should your practice evaluate revenue generation, where you're billing your own DME, establishing the revenue, but also taking the risks of loss and things such as bad debt and denials. There also are different cost savings measures out there, depending on the vendor that you do choose, whether they supply the products on consignment at your practice and do the billing and a total cost savings type of model or stock and bill model, or possibly there's some type of rebate model where your practice is reimbursed for the product that that vendor does bill for. Why should you evaluate that? Just take a look at those different models. What is best for you? What is best pathway to profitability? Maybe it's a combination of both in what is often termed as a hybrid type of situation. Compliance and resources may be a consideration as well. Things such as having your DME post number credentialing, having your compliance pieces set from a billing standpoint, software development, as well as on the backend, all processes needed in order to support a true DME program. So as you get started into your Durable Medical Equipment Program, here are the questions that need to be asked when you're thinking about how the billing will work. So first, who is billing for the revenue? Secondly, who owns the product? Third, who captures the revenue? Fourth, and what personnel will run a DME program? And lastly, how would your DME program be managed? So a couple of points to drive home on this slide. Going back to the first one, who's billing, knowing who is capturing the revenue, who's doing the billing and who's also getting the revenue, who's keeping that as a profit. The second part of that, who's buying the product? Who's responsible for buying it and who is paying the bills when it comes to the purchasing of the brace product? Also want to make sure that, skipping down to the personnel piece, our best recommendation for who should run a DME program is always going to be around one person who's not wearing several other hats. In other words, this doesn't need to be somebody who's managing six other roles. This is a very complex world and it's best done if one person is in charge of it and that person is compensated accordingly to the growth of the program so that they have some incentive and skin in the game. There are three main types of billing models for DME, depending on the goals or objectives for your program. One would be direct, where your practice is billing for the DME, establishing all the profitability for those items that are billed, but also taking on the risk of things such as bad debt as well as denials. This would be a 100% revenue generation type of model for your practice to obtain profitability for those items that are dispensed upon prescription by your providers. Cost avoidance is another area to evaluate where there is a total cost avoidance of the products that are ordered, dispensed, and stocked at your practice. Typically through a stock and bill model through a vendor where they will supply the inventory on the shelf, replenish the inventory as it is used, as well as will bill the patient's insurance for those items that are dispensed. Another area to evaluate is a hybrid type model and what this would be is a combination of both the direct billing revenue generation model and the cost avoidance model. Maybe this is based off of the payers, if there is a payer gap at your practice in trying to evaluate cost avoidance for that payer or maybe for certain products evaluating things such as prior off or low profitable types of items. In this type of model, that vendor would bill for certain products in a cost avoidance model or a stock and bill model and your practice would then bill the rest, so to speak, underneath the direct or revenue generation type of model. So let's cover the first option, direct billing. So here are the main bullet points of this. The clinic or practice would purchase the bracing and orthotic soft goods, durable medical equipment. They would be the entity buying the product, receiving the inventory, stocking the shelves, storage in the inventory, but they are the ones responsible for the bill of the equipment. Then the second thing that would happen in this model is that once the brace or product is prescribed by the provider to the patient, the DME coordinator would then dispense the brace to the patient. Once the patient does their standard written order, capturing, they get the signature done, all the things that are needed to properly set up a claim to be billed, what we would refer to as a clean claim. Once it is done, then the clinic then would submit that billing information over to the payer and await payment. The clinic is also responsible for maintaining denials, for checking to see if something was missing. An example might be a modifier that needs to be added or the correct diagnosis code. But in this model, in the direct deal, this person is, the clinic is responsible for all of the denial maintenance. Then the revenue is captured and put into the bank for profitability. So direct billing model, pretty straightforward, clinic buys it, they hand it to the patient, they handle the inventory, they handle the bill, submit to the payer or capture the cash revenue from the patient, and then they keep the revenue. There are pros and cons of the direct revenue generation model. Some of the pros are you do capture all of the revenue for your practice in this model. So what you stock, what is prescribed, and what is dispensed is all revenue opportunity for your practice. 100% full control of your DME program, managing the products there on the shelf, purchasing of those products along with vendor negotiations on pricing of those items, full billing, and then working on processes such as denials, outstanding balances to patients, those different processes in order to establish that revenue. Another benefit we often see is it does enhance patient care, most notably because what is prescribed is what that patient is going to get per the protocols of the physician. There isn't a so-called middleman within a vendor, both on the products, what is dispensed, and what is billed component for your practice. Some cons, you are responsible for all payers regardless of the contract. There may be some out-of-network products or maybe some products not covered by insurance where a cash pay program will need to be established. The cost of the products are all at the liability of the practice. So what's on the shelf, your practice would be paying for. Maybe there's certain consignment models through a vendor. At least in that model, you would be susceptible to the cost of the items as they are dispensed to the patient. It does require personnel to run the DME program. Typically for larger practices, DME program personnel, along with, at times, depending on the workflows, personnel, and volume, interaction with your clinical staff, whether it's clinical assistance, medical assistance, and helping to manage, distribute products from your DME program. Keep in mind with any type of direct model, there are a lot of billing considerations to keep in mind for this ancillary revenue source. Billing management, pre-auths, look at things such as denial management as well, a lot of different components to ensure that billing does occur, revenue is established, and keeps your collections right up. Now we will discuss another model called the cost avoidance model. Sometimes people call this stock and bill. Like the direct model we just discussed, the clinic does dispense the product that is prescribed by the provider. However, here are the key differences. The clinic does not own the inventory or manage the inventory. Another third-party company would ship the product in, manage the shelf product somehow, and then all of the billing and collection information, all the denial management that we discussed in the direct model, would be handled by the third-party. So they are owning the inventory on the consignment, and they are managing the inventory so that the shelves stay stocked. Pros and cons of the cost avoidance model, where we have a vendor supplying the products, billing for the products, and replenishing the inventory. A couple of pros, fewer headaches. All the different processes regarding billing, following up, outstanding balances for braces, communication to patients regarding their outstanding balances, a lot of fewer headaches for your practice. This would include a full cost avoidance, no overhead expense to your practice, other than at times, depending on your contract with that vendor that is supplying the products, possibly there could be a chargeback for shrink, any inventory that does walk off your shelf, or claims that are not billable because not enough information was given at the time of service. No real overhead expense, typically, other than possibly the staff dispensing the items and filling out the paperwork, whether manual or through an automated solution, there really is little to no overhead expense with this type of model. The cons, the big one is no revenue generation. Those products are dispensed. The practice is not going to share or establish any revenue from those products. Another one is the DME program is really controlled by that third party or vendor that is billing the items. Granted, they'll supply the products typically approved by the providers. There may be some variations to that, depending on your practice's arrangement with that third party or vendor, but just keep that in mind as well from a cons standpoint of things. Lastly, the DME bill does come from a third party. At times, that includes some questions from the customer. They were seen at your practice. Now they get a bill from another third party, but overall, at times, can be counteracted with communication upon the dispensation of brace and then receiving a copy of their proof of delivery. The last model that we will cover in this module will be what we call the hybrid model. This one is a very interesting one. It is called hybrid because it is a combination of the direct model that we covered earlier and then also the cost avoidance model that we covered. It is a merging of these two programs, hence the word hybrid. What can be utilized here is either a product or a payer is what is routed to the appropriate billing entity. So for instance, if a clinic is not contracted with a certain payer, they have let a DME license lapse for some reason, or if they just do not want to mess with a certain payer, a third party would step in and handle the billing and the revenue capture where the clinic does all the other billing. This is advantageous for any payer gaps, like I mentioned, or non-profitable items that they just do not want to mess with. Some people describe it as the clinic would bill the best, the third party would bill the rest. Pros and cons of the hybrid model, where your practice is doing the billing for certain products or maybe certain payers, and a third party is billing the gaps where your practice is not doing the billing. One pro is it is the most profitable model. If you really look from a hybrid situation, the third party vendor or entity that you are utilizing typically will run a good pro forma to evaluate the profitability of items across HCPCS codes, across payers, and your practice will make the decision on what products or payers you want to bill for that are most profitable for your practice or does not allude to a lot of overhead expense, whether it's pre-auth or the fitting of the devices, those different components that go along with it, while that third party will bill the rest. So out of the three major ones, revenue generation, true cost avoidance, and hybrid, this tends to be the most profitable model per item. Cons, you do have the operations of who is doing the billing per product or payer, whether it's automated or through a paper process, what processes are completed when your practice is doing the billing versus when that third party is doing the billing at the time of service and typically requires some training for your staff. Another con is it's two different methods of inventory replenishment, meaning for the products that your practice is completing revenue generation on, you'll order and replenish the products, but also for those products that the third party is billing for payers, they're going to be replenishing the inventory. So requires a little bit of record keeping, two kind of channels for replenishment of inventory that at times just needs to be evaluated for your practice. A couple of other additional components to keep in mind about these billing options. First on the left side, compliance and audit. It's a good idea to review with your compliance team to make sure everyone is aligned with the processes. In addition to your compliance team, you want your complete RCM team to be aligned with exactly who's doing what, when, and where. Remove any silos that you might have in the office before proceeding and making sure that the right hand definitely knows what the left hand is doing. A best practice from an audit perspective would be to involve reviewing the claims. So let's say that you start with a hybrid program and after a couple of months, you're pulling different patient agreements and charts and claims to see what's working and what isn't. Are we getting paid by this payer like we had hoped? Are we seeing a profitability increase by moving things off? The key here is to be very proactive with your claims. Don't wait for a small problem to become large. And now on the right side, another component to consider is your practice management system, your EMR practice management system, and then also your DME software. You want to make sure that your DME software partner, that whatever model you choose is compatible. Can you do a hybrid program? Does the integration actually work on both sides, both inbound and outbound? So that would be a component to consider. Practice the workflow. Make sure that you draw it out, that you're actually thinking through all the different scenarios of who's getting what, when, and where. And then back to that integration piece that I just mentioned, how is the information getting from your DME software platform into your billing software or your practice management system? Is it integrated or is there a manual entry process? These things will help streamline the process and reduce headaches. Like to finish with a summary slide here. We went over how the three different management models work for DME programs. We looked at the pros and the cons of each solution. We went over compliance and audit preparation and went over billing software and platforms and how these work with these different billing models. We hope that this met your expectations and we look forward to seeing you on our next module.

Durable Medical Equipment

billing models

direct model

cost avoidance

hybrid model

inventory management

DME billing models

direct billing

practice management

profitability