Blog
Boosting Laboratory Revenue with Billing & Coding Automation
July 26, 2024
In the complex landscape of medical laboratories (including molecular, clinical, and anatomic pathology labs) where every dollar counts, stopping revenue leakage has to be a top priority. The scrutiny of insurance companies on laboratory billing and the surge in denials since the pandemic has only added to the pressure.
But there's a beacon of hope in this challenging scenario - advanced laboratory revenue cycle management (lab RCM) and coding automation.
The RCM cycle isn't just a technical term to describe the laboratory billing process; it describes transformative laboratory billing solutions that can help labs navigate lab revenue cycle management challenges and significantly increase their revenue intake.
So, let's explore how powerful laboratory billing solutions can turn obstacles into opportunities, enhancing your lab's efficiency and profitability.
Learn More: Reduce Denials and Stop Revenue Leakage With Integrated Laboratory Billing Management
The Rising Cost of Laboratory Billing Denials
Medical labs face an uphill battle with the rising cost of billing denials. According to Medical Laboratory Observer (MLO), the average denial rate is 15 percent for in-network claims and a staggering 30 percent for out-of-network.
These denials, combined with the following factors, are creating a challenging lab revenue cycle management environment for labs:
- Reduced reimbursement rates
- Ever-changing payer rules
- A growing population of uninsured and underinsured patients
- Large fluctuations in patient volume
- Unprecedented staffing shortfalls
Learn More: Leveraging LIS & RCM Integration to Improve the Laboratory Billing Process
The Human Error Factor in Lab Billing Denials
While some denials are an inevitable part of doing business, a significant portion of lab billing denials can be attributed to human error, particularly improper coding.
Farzad Abdi, LigoLab RCM Billing Manager, emphasizes that issues like these can be easily rectified with lab RCM automation.
"Improper coding and other mistakes play a major role in claim denials. But this is easy to fix with laboratory billing solutions that feature automation. By simply automating their lab billing and coding processes, we’ve helped some labs increase revenue by as much as 30 percent."
- Farzad Abdi, LigoLab RCM Billing Manager
Despite the clear benefits of automation, many lab billing directors and managers are hesitant to change their laboratory billing process. The reluctance often stems from the perceived cost of improving their lab revenue cycle management/laboratory billing system.
However, Abdi warns that the stakes are only getting higher for those unwilling to invest in advanced laboratory billing solutions.
"Expenses are going up and reimbursements are going down, so leaving hard-earned money on the table isn’t acceptable. Labs that want to grow and sustain their business have no choice but to innovate, and laboratory billing solutions that offer automatic billing and coding are a step in the right direction."
- Farzad Abdi, LigoLab RCM Billing Manager
The Need for Change in Laboratory Revenue Cycle Management
In the face of rising expenses and decreasing reimbursements, the need for change in laboratory revenue cycle management has never been more critical.
Abdi emphasizes that labs must innovate to sustain their business.
“If a lab insists on manual billing and coding, they’ll have to spend money on training and staff. Coverage policies are constantly evolving and each payer has its unique way of doing things. Even certified coders have a hard time navigating all that is involved.”
- Farzad Abdi, LigoLab RCM Billing Manager
Embracing Laboratory Billing Solutions: A Step in the Right Direction
Laboratory billing solutions that offer automatic billing and coding, such as LigoLab Informatics Platform, are a step in the right direction. These laboratory billing system solutions increase productivity and protect labs from common errors that lead to revenue losses.
"With all that’s at stake, labs need to implement a laboratory billing system that increases productivity and protects against errors and losses."
- Suren Avunjian, LigoLab CEO
The Power of Automation in Lab RCM
Automation in lab revenue cycle management can lead to significant improvements while giving the lab a more controlled and transparent operation.
For example, LigoLab's laboratory billing system solution includes a rule engine that can create custom rules based on any parameters or combinations with the lab data. Next, the platform’s automation engine can link these rules to create an automated sequence. When working together these two engines can customize and automate virtually any laboratory workflow.
The Impact of Automation on Lab Operations
The impact of automation on lab operations can be substantial.
For instance, Cole Diagnostics experienced a significant improvement in its client lab billing processes after implementing LigoLab’s RCM module features. Soon after the upgrade, Cole’s laboratory billing process improved from several weeks due to constant delays because of clerical errors to only a few hours.
"Within weeks of deploying our laboratory billing system solution, the lab was collecting 20 to 30 percent more every month thanks to a reduction in errors and costly overhead, and this was without an increase in test volume.”
- Farzad Abdi, LigoLab RCM Billing Manager
Learn More: How Cole Diagnostics Streamlined Client Billing with LigoLab’s LIS & RCM Platform
The Return on Investment in Lab Revenue Cycle Management Strategies
Investing in lab revenue cycle management strategies can yield a significant return on investment. A recent report from CAQH found that 33 percent of healthcare administrative spending can be saved annually through automation.
"When you consider the increase in productivity and profit, and the decrease in AR and cost with lab billing and coding automation, any investment in new technology is well worth it.”
- Farzad Abdi, LigoLab RCM Billing Manager
Overcoming Challenges in Laboratory Billing & Coding
Accurate coding and a thorough understanding of payer policies and the laboratory billing process are essential for clean claims. However, these can pose significant challenges, especially for smaller labs without a dedicated lab billing specialist.
Timing is also critical in lab billing, with severe consequences for late claim submissions.
"There is a shelf life on when claims can be submitted. Because of this, lab personnel often rush to get claims out, even if they are incorrectly coded. Unfortunately, this approach can result in tens of thousands of dollars lost and hundreds of hours spent on claims appeals."
- Farzad Abdi, LigoLab RCM Billing Manager
The Intricacies of Lab Billing Discounts & Credits
The laboratory billing process is further complicated by some payers and high-volume clients requiring volume discounts and other credits on a rolling basis. This was commonplace with COVID-19 testing during the pandemic.
"Imagine how difficult it is for labs to calculate and operationalize a tiered structure utilizing manual lab billing processes. In addition, some payers want labs to adjust for alternate payment methods. Now, not only does the lab have rolling totals and discounts to contend with, but they also have a variety of payment methods to manage."
- Farzad Abdi, LigoLab RCM Billing Manager
With these challenges in mind, labs of any size can benefit from advanced technologies that ease lab billing and coding woes. Platforms like the LigoLab LIS & RCM Laboratory Informatics Platform help labs save time and increase collectibles by adding easy-to-deploy automation.
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The Power of Lab RCM Automation: Enhancing Quality & Scalability
As the reliance on diagnostic testing within the medical community grows, labs face an increasing lab RCM workload. This growth is pushing the limits of manual lab billing processes and making automation a necessity rather than a nice-to-have.
LigoLab's laboratory billing system solution demonstrated its value during the COVID-19 pandemic, enabling labs to scale while maintaining a clean claim rate of over 98 percent.
"There is a growing reliance on diagnostic testing within the medical community. Thanks to wider adoption of evidence-based medicine, lab services are in high demand, and will be for the foreseeable future."
- Suren Avunjian, LigoLab CEO
Harnessing the Power of Lab Revenue Cycle Management Automation
LigoLab is a leading provider of innovative pathology software, servicing nearly 300 pathology laboratories nationwide with its all-in-one laboratory information system (LIS system) and lab revenue cycle management (lab RCM) software. The comprehensive solution integrates all essential lab services into one silo-free and robust platform, enhancing efficiency and profitability at every stage.
Learn More: What You Need to Know Before Contracting with a Laboratory Information System (LIS) Company
The LigoLab platform offers labs a way to save time and increase collectibles through the LIS system and lab billing automation capabilities present in the platform.
This automation is powered by a sophisticated, proprietary rule engine that has evolved from terabits of data analysis and decades of hands-on lab billing experience to trigger a wide array of actions that remove the potential for clerical errors and support scaling test volume without drastically reshaping the lab billing department.
"LigoLab’s automation can accurately assign ICD-10 and CPT codes based on NCD, LCD, or payer-specific coverage policy. It also learns from past denials and alerts if a claim has the potential for denial, before being submitted."
- Farzad Abdi, LigoLab RCM Billing Manager
Key Features of LigoLab's Lab RCM Module
- Automated ICD-10 and CPT coding and client billing
- Upfront demographic and insurance verification
- Insurance discovery services
- Whitepages address lookup
- Automated claim validation and error correction
- Real-time data processing lab workflow queues
- Detailed statistical reports for trend monitoring and RCM KPIs
Learn More: Understanding the Importance of Real-Time Analytics in the Modern Clinical Laboratory
With LigoLab, labs can automate processes, eliminate human error, support regulatory compliance, drive business growth, improve turnaround time, increase net collections and profit, and reduce labor costs.
"LigoLab completely automates everything that a lab billing specialist would do repetitively. The only thing required is some monitoring and some minor adjustments now and again. The laboratory billing system never gets tired, never asks for days off, never requires training, and never leaves for another job."
- Farzad Abdi, LigoLab RCM Billing Manager
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