Durable Medical Equipment (DME) billing is the core of revenue management for any service that prescribes medical equipment for patient care. However, the DME billing process is riddled with pitfalls. With complex coding requirements and documentation guidelines, to ever-changing regulatory standards, there are many ways to fall prey to billing errors and denials, and ultimately revenue loss.
Healthcare providers and DME companies need to know what usually goes wrong when billing DME. Some easy strategies to avoid common problems can ensure that companies bill accurately, have a smooth flow of revenue, and avoid costly errors. Let’s dive into what usually goes wrong with DME billing and how to address these problems effectively.
- Incorrect coding and billing errors
One of the core problems of DME billing is coding for medical devices, which fall into very specific codes under the HCPCS Level II. Each code represents a different type of equipment or service. Therefore, accuracy greatly depends on the correctness of codes in billing.
However, the problem of incorrect coding is quite common. In the event of an incorrect code, insurance may deny or delay payment. In certain instances, wrong codes can result in an audit or legal issues.
Fix: The billing staff should be continuously trained on the changes within the HCPCS, modifiers, changes in payer requirements, and all current industry updates. Additionally, human error can be minimized by having accurate software for billing that will automatically recommend the most appropriate codes.
- Lack of Proper Documentation
Documentation is the key to DME billing. Lack of documentation or incorrect documentation is a reason for most claim denials. Documentation should establish that the prescribed equipment is a medical necessity. Most insurance companies, including Medicare, will use this as a reason for denial if it’s not established in your documentation.
Some reasons for a claim denial due to lack of proper documentation are missing a signature or doctor’s notes from the physician, or a required certificate was missing, such as the Certificate of Medical Necessity.
Fix: Maintain a checklist for documentation requirements and make your DME billing teams aware of proper documentation requirements. Regular internal audits will also pick up any missing paperwork before the claims are submitted.
- Failure in Coping with Regulatory Changes
DME billing regulations, particularly regarding Medicare and Medicaid, change frequently. Not staying abreast of these regulatory updates can have serious consequences; for example, some DME items could be deleted from coverage or require new documentation, and failure to do so causes denials or even penalties.
Fix: Designate a member of the team to track regulatory changes and implement their changes. Industry newsletters, Medicare bulletins, and periodic retraining definitely help as well.
- Miscommunication Between Providers and Billing Staff
Some errors could be a result of a lack of communication between the medical provider and the billing team. Physicians may prescribe DME items and fail to clearly understand the payer’s needs, thereby leading to some gaps in the documentation. This may take time to be fixed by the provider, causing delays in reimbursement due to the need for clarification.
Fix: Encourage open lines of communication between clinical staff and billing departments. Having periodic sessions where billing staff explain payer requirements to providers can also help improve coordination.
- No Preauthorization or Verification
Many DME items need pre-authorization, especially for a high-cost item. In case claims on items that are not authorized are submitted by the billing team, the payer is likely to deny them. Another common error is not confirming the patient’s insurance coverage where claims are denied because they do not apply under the patient’s plan. Failing to verify coverage or misunderstandings about payer policies, results in unpaid claims.
Fix: Maintain a pre-authorization and verification checklist for DME items. The checklist should be part of the patient intake process to ensure that authorization takes place before dispensing the equipment
- Insufficient Follow-Up on Denied Claims
Denied claims are a common phenomenon in DME billing; if not addressed, such claims can pile up, and revenue flow will also be affected. Providers often neglect denied claims just because they do not have the time or resources. This means lost revenue. Since there is often no dedicated team to review and resolve these denials, they easily slip through the cracks.
Fix: Organize a denial management team that investigates, corrects, and forwards denied claims in time. Using a tracking system for denied claims can make it easier to traverse the process with ease, and periodic reports can show the issues that occur too often and need attention.
- Billing for Non-Covered Insurance Items
Each insurance company, including Medicare, has its criteria for covered DME items. For example, home oxygen and CPAP machines are considered covered, while convenience or non-essential accessories might not be. Some items, therefore, result in denied claims.
Fix: Familiarize yourself with all of the coverage policies each payer requires for DME. Becoming educated regarding payer-specific policies and maintaining a readily available database of covered items can avoid claiming equipment that falls outside of coverage parameters.
- Duplicate Claim Submission
Duplicate claims occur when a practice submits multiple claims for the same healthcare service they provide to a patient on a specific date of service. More than one identical medical claim diminishes your practice’s administrative efficiency and wastes time, resulting in denied claims.
Fix: In scenarios like this, verify that the services rendered were actually performed and billed just once. Also, ensure that you have submitted the claim with the appropriate modifier and other requirements.
- Undervaluing Patient Information Verification
Commonly, providing incorrect patient information is the simplest, yet most common error in DME billing. Incorrect demographic data about patients, their ID numbers, or other common details leads to rejection of claims and delay in payments.
Fix: Emphasis needs to be given on proper intake of patients so that details are validated at the time of admittance. Auditing of patient data also helps identify common points of error and mitigate them.
- Underestimating the Value of an Effective DME Billing Partner
For smaller DME suppliers or medical practices, DME billing can become too cumbersome. In many cases, without an in-house team, it leads to leakage of revenue. This is why most providers are now outsourcing their billing services to specialized DME billing companies.
Fix: Use a reputable DME billing service provider who is efficient in revenue cycle management, compliance, and submissions. Hiring an expert could be helpful to facilitate billing, cutting down error rates, and providing expertise to handle regulations.
- Failure to Regularly Conduct Audits
Audits should be made regularly to identify issues, streamline billing workflows, and ensure compliance. Through audits, providers can identify problems related to coding, documentation, and claims submission and apply their findings to make improvements.
Fix: Schedule regular audits, preferably at least quarterly, to review the effectiveness of your billing processes. Audits covering all areas of the billing cycle, from intake and coding to claim submission and denials, should be performed during billing audits.
DME billing is a very regulated and complex area of revenue management in the healthcare industry. Unless proper strategies are in place to avoid common pitfalls, mistakes pile up easily and can lead to delayed payment, denials, and cash flow reduction. From accurate coding and documentation to external DME billing companies, there are a variety of best practices to steer clear of these kinds of problems.
