Solving the DME Billing Puzzle

Billing Medicare for DME claims can be complex. How can special software solutions help?

• By Joseph Duffy
• Jun 01, 2016

When it comes to billing, many pharmacies don’t understand DME, which Rob Boeye, executive vice president for Home Medical Equipment at HME software company Brightree, calls “much more complex than what pharmacies are used to.”

“Pharmacies can end up rushing into something they aren’t prepared for,” he adds. “In addition, the fairly recent contract business model — that is, DMEs being required to have a contract with insurers in order to do business — has become a significant barrier to entry.”

So it’s important for pharmacies to understand that the billing practices of a pharmacy and a DME are very different and often, pharmacies are not prepared to handle the additional work required without significant preparation or a billing partner that can help you through the process.

“Pharmacies are used to receiving a prescription from a doctor, putting the patient’s info into their system, and immediately learning what they will make for dispensing the drug,” Boeye says. “If they don’t want to accept the prescription based on what they’ll be paid, they can reverse the prescription. For DMEs, billing is more complicated, and naturally a foreign concept for a pharmacy that has no DME experience.”

According to Boeye, DMEs must submit a claim for every patient they provide products to, and then it’s a waiting game, hoping their claim will be approved and they’ll receive payment. The claim could be denied and they’ve already given the product to the customer, losing out on that revenue. There is the option to appeal a denied claim, but this extends the time to payment and takes resources to accomplish.

“Pharmacies should have a clear understanding of the DME industry, particularly around billing and reimbursements,” he says. “It’s a much more complicated business, and if they don’t like the model, or feel it will be too difficult to keep up with, it’s not going to be a good business to get into.”

Justin Buckland, market analyst for HME software maker QS/1, says that when pharmacies decide to sell DME products, they need to do three things:

• Become familiar with the Medicare laws if they are going to accept Medicare. “The information is available on the DMEMAC websites,” he says. “The coverage policies, Local Coverage Determinations (LCDs) and the Supplier Manual have a wealth of information. There are online webinars and courses available at no charge.”
• Have software or a service that can handle HME billing and documentation.
• Appoint someone to manage the process. “A lot of this depends on product mix,” he adds. “It is easier to learn how to bill a couple of products rather than a full range of HME.”

Pharmacy-Specific DME billing Challenges

Many of the DME billing challenges encountered by pharmacies stem from a lack of knowledge of the DME business model. Boeye says there are several ways pharmacies are overcoming DME billing challenges:

• Billing services assist the pharmacy with the everyday claims submission and follow through, helping to increase the rate of reimbursement and the turnaround time of each claim.
• Many pharmacies retain consultants that provide on-site training and toolkits that help DME start-ups succeed, with a focus on understanding that controlling cash flow is critical to a new business’s success.
• Hiring in-house expertise can help the pharmacy ensure things run smoothly, and with the consolidation of the industry, there are DME professionals whose knowledge is untapped.
• Technology, such as a solution that follows the natural workflow of the DME, while also understanding the needs of the pharmacy, can help streamline billing practices and maintain compliance.

“The biggest hurdle that I have seen is the assumption that DME billing is the same as pharmacy billing,” Buckland says. “It can be a lot more complicated than fill and bill, especially with rentals. For example, orders for capped rentals are processed for 13 months. The 14th month, you must convert the rental to ownership and notify the customer. Requirements like this are why you must have the proper software or you just won’t be able to manage DME properly. That includes a good electronic claims solution that can bill not just Medicare but other payers. Some pharmacists think DME is just Medicare but there are other payors out there.”

When it comes to integrating new DME billing into a pharmacy’s existing billing system, Boeye says the challenge is finding a solution that will align the two separate billing structures.

“The efficiencies for the two businesses are different and it’s tough to mold them together,” he says. “Some billing services help connect the two billing systems, but it can be clumsy when it comes to rental equipment. There are cloud-based billing solutions that offer a single platform for clinical, billing and reporting needs.”

Software Solutions

Fortunately, there are options to help pharmacies undertake DME billing. For instance, QS/1 has a pharmacy management system that handles HME billing and documentation.

“We built that into our NRx pharmacy system a couple years ago and it has helped our pharmacy customers quite a bit,” Buckland says. “If a pharmacy has a large DME department, they usually opt for our SystemOne HME management system, which integrates with our pharmacy system, point-of-sale system and other products.”

The right solution depends on the product mix, Buckland says. If pharmacies are only billing for nebulizer medications, it is not very difficult. If they add incontinence products, bedside commodes or rentals, it gets far more complicated.

Also, Brightree offers a billing service and a billing solution that pharmacies with DMEs could benefit from. Brightree Revenue Cycle Management is a complete billing service that helps DMEs collect more, get paid faster and maintain compliance. A billing service can be a great option for a small operation that may not be able to hire talent inside the business.

“Brightree HME Pharmacy is a feature-rich, single platform, cloud-based solution that follows workflows and business rules for both the pharmacy and the DME,” Boeye says. “A solution like this can be better suited for a larger operation, and pharmacies that already carry DME supplies like infusion and specialty pharmacies. These pharmacies may have more knowledge or resources to handle billing internally.”

Top Tips for DME Billing

Ultimately, DME pharmacies need to make sure they have a solid understanding of Medicare billing in order to both generate and protect that revenue.

“Compliance is everything in the DME industry,” Boeye says. “Being compliant not only helps increase reimbursement rates, but it also helps the pharmacy reduce the risk of an audit. DMEs are constantly being audited, and pharmacies aren’t used to having to keep track of extensive documentation.”

He also says DMEs must maintain documentation for seven years from the date of service. That means that documentation must be kept on file for that entire time period; otherwise, pharmacies run the risk of having to pay the money back if audited.

“Use the resources available to you,” Boeye explains. “Technology and people can do powerful things to help a pharmacy’s new DME practice succeed. Don’t go after a complex and regulation-stringent industry alone.”

Finally, Buckland had these tips for pharmacies:

• Understand that the billing and documentation can be more complicated than pharmacy.
• Allocate staff to learn and stay current with regulations.
• Have follow-ups at each step of the process where a claim could fail, including transmission and denials on the EOB levels.
• Make sure you have the ability to post payments and track denials.
• Bill the secondary insurance or patient for co-insurance and deductible amounts. Best option here is to collect any patient responsibility amount at the time of purchase. It is a legal requirement to attempt to collect these amounts and it represents 20 percent of their possible revenue.
• Have a good electronic claims option for multiple payors.

This article originally appeared in the DME Pharmacy June 2016 issue of HME Business.