How to Own a Durable Medical Equipment Business

Durable medical equipment (DME) covers a lot of ground, ranging from canes to oxygen used by patients with chronic obstructive pulmonary disease. DME companies work with home health agencies, drug stores and many other entities to conduct daily business. There are key steps to running a DME business.

Instructions

Running a DME Business

• 1

  Understand Medicare and commercial payer regulations and procedures. The Office of Inspector General investigates companies that receive funds from the federal government. The DME industry is under a lot of scrutiny due to a few unscrupulous owners. As a result, it is important to understand DME policies, such as competitive bidding. It is also crucial to understand the potential financial responsibility of patients in order to avoid the appearance of inappropriate benefits for goods and services.

• 2

  Develop a marketing plan. DME owners have a couple of options regarding the distribution of their products to customers. Owners work with home health agencies after a physical assessment is performed and it is determined that the patient needs an assistive device, such as a quad cane or wheelchair. Some equipment is sold in local drug stores, while other equipment is provided to hospitals. DME owners must assess the needs in their specific service area and create a marketing plan that focuses on deficits where they operate. If home health agencies in the area currently struggle to find DME, for example, the marketing plan should focus on finding home health agencies and contacting them directly.

• 3

  Create best practices for inventory control. DME owners will need a seamless inventory plan to run their business. The plan is contingent upon how much inventory is kept on hand. A DME owner develops their own thresholds for inventory on hand based on daily sales and frequently requested items. An inventory plan is most likely kept with bar codes that are scanned by item with a bar code reader. DME owners must follow Occupational Safety and Health Administration (OSHA) guidelines for storing and transporting oxygen.

• 4

  Follow up on certificates of medical necessity (CMN). In order to bill Medicare for DME, the owner must submit and track CMNs. The CMN must be completed and signed by a physician. In order to run a DME business correctly, internal and external audits must reveal a CMN tracking system that quickly produces outstanding and completed CMNs by patient. Without this tracking system, the DME provider may be accused of committing fraud.

• 5

  Keep accurate employee records. DME companies often hire respiratory therapists to monitor oxygen and commercial van drivers to transport large loads of DME. This means that continuing education and licensure must be tracked for therapists. All drivers must have commercial drivers licenses.

• 6

  Maintain accounts receivable (A/R) and accounts payable (A/P). Running a DME business means tracking outstanding A/R from customers, including home health agencies, drug stores and actual patients. The A/R aging also includes billing on hold from outstanding CMNs. The A/P record allows DME owners to know which vendors still need payment as well as situations with any violation of payment terms.