Monday, June 30, 2008

Q. How can providers use their billing software to craft a competitive bid for Medicare?

A. To prepare a smart bid that will allow providers to service their customers effectively while remaining profitable, they must have accurate data. If they are tracking this information, it is typically located in their billing/inventory software system. The two areas where data will be invaluable to craft a competitive bid are pricing and capacity. Let’s look at each.


First, providers should run reports from their business management software to gather the cost of the inventory products, the current billing price and the amount that is reimbursed on these products.

Next, this data should be used to calculate the average cost per product and average payment received.

Lastly, the provider should factor in any overhead costs and projected profit.


In order for a provider to estimate future capacity, he should pull current/actual data from business management software—such as number of patients serviced and number of those that are Medicare; and number of products in the category serviced and number of those products that are Medicare. Next, the provider should extrapolate this data to arrive at projected capacity. It is important to factor in any necessary personnel/workforce additions into these calculations. Finally, the provider should develop a path for handling growth if they are awarded a contract.

One of the biggest issues that Brightree hears from providers is that the accurate tracking of cost and inventory data is “challenging” and they do not have accurate Medicare price tables. The top reasons cited include: too hard to use the inventory module; the data long ago became inaccurate and providers don’t have the knowledge or training to fix the data; and the provider has not developed policies and workflow to update this information in their system as they sell items.

The bottom line today is that many providers are not effectively tracking their inventory, capacity or average costs. This will become problematic for them assuming competitive bidding continues to roll out.

Gary Long is COO of Brightree in Duluth, Ga. He can be reached at <a href="