5 Key DME billing metrics to keep track of

5 Key DME billing metrics to keep track of

Durable medical equipment (DME) billing is a tedious process that takes up a lot of your team’s time and energy. It requires them to coordinate with different parties as well as an in-depth understanding of the codes required when submitting claims to Medicare and private insurance providers. On top of that, they must input and keep track of a large volume of data ranging from insurance information to medical prescriptions.

While the DME billing process is certainly laborious and time-consuming, it is essential to successful operations, and so must be monitored closely. Doing so will bring in a steady flow of revenue, which will enable you to invest in activities and resources to grow your business.

To ensure an efficient and effective DME billing process, keep an eye on the following metrics.

While the DME billing process is certainly laborious and time-consuming, it is essential to successful operations, and so must be monitored closely.

Days sales outstanding (DSO)

DSO is the number of days between the date a purchase was made or a service was rendered and the date of payment. In other words, it is the average time it takes to collect payments or reimbursements.

A high DSO means your DME business takes a long time to collect accounts receivables (AR), or the money owed to your business from a sale on credit. It also means your collection of monies owed to your business is inefficient, which can seriously impact your ability to invest in your company’s growth. At the very least, you’ll want to keep your DSO under 45 to ensure you have enough cash resources to service debts and fuel growth.

To calculate DSO, divide the total AR by the total net credit sales multiplied by the number of days within a given period.

DSO = (Total AR / Total net credit sales) x Number of days within given period

90+ AR percentage (90+ AR)

This DME billing metric refers to the percentage of AR that are 90 days past the due date. For DME businesses, a 90+ AR between 15 and 20 percent is acceptable; anything higher indicates inefficiencies in your billing and collection processes that you must address to improve your financial health.

To get your 90+ AR, add all aging buckets (time periods used to review and report on unpaid AR) over 90 days old, and divide the sum by your total AR balance. Multiply the answer by 100 to get the percentage value.

90+ AR = (Total sum of aging buckets over 90 days old / Total AR balance) x 100

Clean claims ratio (CCR)

This refers to the percentage of clean claims, or reimbursement claims paid at first submission without being rejected. A high CCR means you get the money your business is owed quickly, thus improving your cash flow.

CCR is calculated by dividing the number of clean claims by the total number of claims submitted within a given period, and then multiplying the answer by 100.

CCR = (Total number of clean claims / Total number of claims submitted within given period)
x 100

Denial rate

Denial rate measures the percentage of claims or invoices denied by payors. Common reasons for claims denials include incomplete or invalid information, incorrect or missing codes, and lack of proof of medical necessity.

Denial rate is computed by dividing the total number of denied claims by the total number of submitted claims within a specific period, and multiplying the answer by 100. Another way to calculate denial rate is to divide the amount denied by the amount billed and then multiply by 100.

DR = (Total number of denied claims / Total number of submitted claims within given period)
x 100

or

DR = (Total amount denied / Total amount billed) x 100

Net collections rate (NCR)

NCR refers to the ratio of the total amount collected to the agreed-upon amount with payors. NCR is a measure of how effective a DME provider is at collecting reimbursable dollars from patients and/or insurers.

Net collections are lower than net charges (i.e., the total amount a DME provider agrees to accept from a patient or an insurer) and gross charges (i.e., the charges reflected on an invoice before adjustments, such as the patient’s insurance allowable, are deducted).

To calculate NCR, divide net payments by net charges after adjustments for the period being monitored (e.g., 30 days, 60 days). Multiply the quotient by 100.

NCR = (Net payments / Net charges after adjustments within given period) x 100

Need help with DME billing? Turn to Revsuppliance. We provide Oklahoma DME businesses with premier account management and billing services to ensure quick, hassle-free claims processing and maximum reimbursement. Schedule a demonstration today — call 405-467-1791.

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