In last week’s blog post, we laid the groundwork for success in your HME business. Tracking the right KPIs, or combination of metrics, allows you to see what is relevant to your goals and apply them to company decisions.
But, that’s not all.
DSO, 90+ A/R, payment rate, and write-off rate are only half of the equation. The KPIs below are also important, and when tracked consistently, can move your company in the right direction.
Key Performance Indicators Continued
Adjustment rate is split into allowable adjustments and billing error adjustments. Allowable adjustments occur as part of the cash posting process when the allowable reported on the explanation of benefits (EOB) is not the same as the allowable reported in your billing system.
Billing error adjustments are the result of A/R that should not have been billed and was never expected to be paid. Common examples include adjusting rental A/R that billed past the maximum allowed rental months, or adjusting A/R that will be re-billed.
Denial rate is the number of denials received divided by the number of claim lines billed for the month. For example, a 10% denial rate indicates that the payer rejects 1-in-10 claim lines billed. To prevent future denials, providers should proactively monitor and address trends by payer, product, and reason.
Open Order Days
Open order days is the number of days’ worth of orders that are tied up in your open, or nonconfirmed, orders. You may struggle with front office process management if this KPI is high. Possible reasons include order confirmation backlogs and “stuck orders” piled high on people’s desks and in the warehouse.
Hold days is the number of days of allowable billing tied up in your on-hold A/R. Many providers
struggle with hold management. Your holds include issues such as certificates of medical necessity (CMNs), prescriptions, and authorizations. Make sure you are properly staffed in this area. Poor hold management is the number one cause of past timely filing write-offs.
HME Industry Benchmarks
You now have the KPIs your company needs to better understand, achieve, and refine its goals.
It’s time to track your data for 6-12 months. Then, you can conduct a benchmark analysis, or comparison of your business’ current period and trending results against common industry standards. If you see outlier values, negative trends, or other red flags, don’t panic! Learning about these data points allows you to course-correct.
These industry-specific benchmarks are available by downloading our free white paper, Are You Tracking the Right Metrics? They are general in nature and apply most readily to traditional HME providers with wide ranges of payers and products and a respiratory focus.
Prochant helps HME providers become more profitable by combining superior billing and process outsourcing with highly-skilled specialists. We audit existing front and back-office processes, rapidly implement changes, and conduct proactive analytics to enable providers to consistently exceed industry benchmarks. Headquartered in Charlotte, North Carolina, our clients include leading medical equipment providers and health systems.