TOP 5 REASONS RETRIEVING MEDICAL RECORDS ARE KILLING DME CASHFLOWS
Updated: Sep 8, 2021
...And how you can fix it
Before you want to kill the messenger, let me first state that I too believe that CMS’s interpretation of the rules is similar to our schoolyard days when the kid who owned the ball would get up and go home, with his ball, if the game wasn’t turning out the way he wanted.
I honestly believe (as operators, leaders, and managers of DME supply companies) that we make documentation compliance significantly more difficult than we need to. OUCH!
Here are my TOP 5 reasons for my belief, in no particular order:
1. Forms are not compliant from the onset
We conveniently interpret LCD’s PIM’s, and payor guidelines to be what we need them to be, in order, for our financials to work. We try to make black and white; gray. For example, we expect Medicare to do the math for us. We create forms that are non-compliant from the onset and want Medicare to do the math in regards to daily frequency or rate of change… even though the LCD is very clear (Local Coverage Article: Standard Documentation Requirements for All Claims Submitted to DME MACs (A55426). Specifically, it states as a supply for a DME item, the written order must include:
Description of the item(s)
Quantity to dispense
Specific Frequency of Use
Number of refills
Date of the order
So even though the LCD is clear as to what elements are REQUIRED, we still expect CMS to state that 90 units over a 30-day supply equates into 3x per day. Seems logical. Seems like a fair expectation… BUT CMS MAC’s will NOT do the math, so you are left with a choice. Either stand my ground, continuing to lose appeals and audits, or change your forms
2. Not Asking for Medical Records With DWO Intake
WE ALL WANT INSTANT GRATIFICATION.
Ship, ship, ship. We get pressure from outside sales reps, patients, referral sources, our leadership team…seems like everyone is only focused on SHIPPING ORDERS.
IN REALITY, WE GET PAID ON BILLED INVOICES, not shipped orders. I completely understand that the happy flow would have all orders converting into billable invoices that in turn converts into collectible revenue.
IN REALITY, when in an audit, whether it is a TPE, CERT, UPIC, RAC, ZPIC, or other post payment audit, shipped orders without medical records only convert into one of two things:
A. Unbilled Revenue; or
B. Bad Debt
And, if unbilled continues to rise, because you cannot obtain the medical records, then it is almost impossible to come off the audit successfully.
Bad debt during an audit only converts into one result if it is not effectively managed, with proper risk management… audit fail and more problems.
It is imperative that everyone understand that if you cannot not effectively obtain medical records and verify medical necessity, then you cannot be profitable in this business. Either you become excellent at this or you partner with someone who is excellent at this and begin building an audit proof business. Audits are not going away, but your profits and EBITDA will if you do not correct the problem.
3. Internal Documentation Teams are Properly Trained
Please allow me to be 100% clear with, in case you did not know…
DOCUMENTATION AND MEDICAL RECORDS ARE THE FOUNDATION OF ANY DME BUSINESS
And to further call out the importance of this TOP 5 Reason Why Medical Records are Killing DME Cashflows…
LABOR COSTS ARE THE LARGEST LINE ITEM EXPENSE WE HAVE, So why are we not putting all the required training and best talent into this department and these team members?
Inadequate medical documentation results in unbilled revenue, denials, write-offs, reduced margins, and audits.
Typically, we hire people off of the street with little or no documentation background, and little or no clinical background, and we expect them to become medical documentation experts… and how do we expect them to become experts; by having them sit and train with other people off the street who are in the process of becoming so-called documentation experts. THIS IS INSANE.
Would you allow someone to represent you in a legal matter who wanted to become a lawyer?
Would you allow someone to operate on you who wanted to become a doctor?
Of course not, but we will let people who want a job in medical documentation verification become our documentation experts. And we let them learn from people whose knowledge, at best, is dated and limited to their training and experience.
We do not put them through continuing education when LCD’s change or payor guidelines change. We do not provide them with any medical terminology training. We do not effectively train them on how to engage referral sources and how to educate the referral sources on what and why we need to verify medical necessity and continued use.
I completely understand that, due to network consolidation and reimbursement cuts, that we cannot afford to hire a team of nurses to handle our documentation needs, but we do need to be properly trained and we do need to be EXCELLENT in documentation verification.
4. Lack of Effective Processes
The impact of poor documentation processes are as follows:
1. Rising unbilled revenue that negatively impacts the financial performance of the company
2. Bad debt write-offs due to denials, recoups, and audit fails
3. Failing audits because you did not understand you were in an audit or you do not respond to the audit
4. Complete erosion of profit and the ability to grow
5. Ultimately referral source dissatisfaction and less referrals due to high documentation demands and patient complaints
6. Lack of business knowledge and tribal knowledge that is flat out wrong, not completely correct, or quite honestly make you more dangerous then effective… because you do not even know why you are wrong.
There are simple, yet effective tweaks that can be made to the process that can DRAMTICALLY improve the operational and financial performance of your business.
5. Lack of Executive Buy-In
We get involved in this business to make money and deliver excellent patient care. We never intended to get into the audit business; But yet, here we are.
Business owners/leaders all typically look to do the least amount of work to improve the documentation process. They simply do not understand that documentation is the cement to the foundation of the business. They focus on referrals, conversion rate, revenue per order, time in process, etc.… and FAIL to understand that the VALUE to the business is hidden in documentation.
In order to audit proof your business and be prepared to win when an audit letter surfaces, the executive team must understand the impact of poor documentation and the drivers to poor documentation.
In addition to all the reasons above, the only way you would ever be able to sell your business would be at a fire sale valuation. No one is going to pay a top multiple for a business that does not achieve operational excellence in their documentation. You simply cannot have strong margins, growing EBITDA, and provide value if you do not master documentation.
Well there you have it. The Top 5 reasons why documentation is killing your cashflows. I challenge each of you to review your documentation processes, knowledge, training, talent, and your audit appeals process… and then take action to improve them.
THE SUCCESS OF YOUR BUSINESS DEMANDS IT.
About the Author: Michael Breslin is a seasoned and proven healthcare executive who has led, improved, grown, bought and sold numerous DME businesses since 2009.
He is viewed as a performance improvement and change management expert with a deep understanding and success in medical records, documentation, and audit appeals. Michael is currently the Executive Vice-President at Boost Advisory Group.