Blog
Boosting Laboratory Revenue with Billing & Coding Automation
July 28, 2025
In today’s challenging environment for medical laboratories—including independent molecular, clinical, and anatomic pathology labs—preventing revenue leakage is more critical than ever. With increased scrutiny from insurance companies and a sharp rise in laboratory billing denials since the pandemic, the pressure to protect every dollar has never been greater.
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.
Let's explore how powerful laboratory billing solutions can turn obstacles into opportunities, enhancing your lab's efficiency and profitability.
Discover More: Clinical Laboratory Management Solutions for Lab Revenue Cycle Management (Lab RCM)
The Rising Cost of Laboratory Billing Denials
Medical laboratories are grappling with the growing financial impact of billing denials. According to an article in Medical Laboratory Observer (MLO), the average denial rate stands at 15% for in-network claims—and an alarming 30% for out-of-network claims.
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
Case Study: 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’s RCM Billing Manager, emphasized that issues like these can be easily rectified with lab RCM automation.
“Claim denials are often driven by improper coding and other avoidable errors,” Abdi said. “Fortunately, this is easily addressed with automated laboratory billing solutions. By automating lab billing and coding workflows, we’ve helped some labs boost their revenue by up to 30%.”
Despite the clear benefits of automation, many lab billing directors are hesitant to change their RCM process. The reluctance often stems from the perceived cost of improving their laboratory billing system.
However, Abdi warned 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,” he said. 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."
On-Demand Webinar: Outsourced vs. In-House Laboratory Billing - How to Make the Right Choice for Your Lab
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 stated that labs must innovate to sustain their business.
“If a lab chooses to rely on manual billing and coding, it must invest heavily in staff and ongoing training,” he explained. “Payer requirements and coverage policies are constantly changing, and each insurer has its own rules. Even certified coders often struggle to keep up with the complexity.”
Embracing Laboratory Billing Solutions: A Step in the Right Direction
Laboratory billing solutions that offer automatic billing and coding, such as the all-in-one LigoLab Medical LIS & Lab Billing Informatics Platform, are a step in the right direction. These laboratory billing solutions not only boost productivity but also safeguard labs against common errors that can result in significant revenue loss.
"With all that’s at stake, labs need to implement a laboratory billing system that increases productivity and protects against errors and losses," said Suren Avunjian, LigoLab’s CEO.
The Power of Automation in Lab RCM
Automation in lab revenue cycle management can lead to significant improvements and create a more controlled and transparent operation.
For instance, LigoLab’s laboratory billing system features a powerful rule engine that allows users to create custom rules based on any data points or combinations. These rules can then be connected using the platform’s automation engine to form seamless, automated sequences. Together, these engines enable labs to customize and automate nearly every aspect of their workflow.
Discover More: Maximizing Your Lab’s Profitability - The Case for In-House Lab Billing
The Impact of Lab RCM Automation on Operations
The impact of lab RCM automation on operations can be substantial.
For instance, Cole Diagnostics experienced a significant improvement in its client lab billing processes after implementing LigoLab’s lab RCM module. Soon after the upgrade, Cole’s laboratory billing process improved from several weeks to only a few hours.
"Within weeks of deploying our laboratory billing system and advanced lab RCM automation, the enterprise 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,” said Abdi.
Case Study: How Cole Diagnostics Streamlined Client Billing with LigoLab’s Medical LIS & Lab RCM Platform
The Return on Investment in Lab Revenue Cycle Management Strategies
Investing in lab revenue cycle management automation 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.
"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,” Abdi said.
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 claims out, even if they are incorrectly coded,” said Abdi. “Unfortunately, this approach can result in tens of thousands of dollars lost and hundreds of hours spent on claims appeals."
The Intricacies of Lab Billing Discounts & Credits
The lab RCM process is further complicated by some payers and high-volume clients requiring volume discounts and other credits on a rolling basis. This was common with COVID-19 testing during the pandemic.
“Imagine the challenge labs face trying to implement a tiered pricing structure using manual lab billing processes,” added Abdi. “Some payers also require adjustments for alternative payment methods. This means labs must juggle rolling totals, discounts, and a mix of payment types—all of which add layers of complexity without automation.”
With these challenges in mind, labs of any size can benefit from advanced technologies that ease lab billing and coding woes. Laboratory billing solutions such as the LigoLab platform help labs save time and increase collections by adding easy-to-deploy automation.
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The Power of Laboratory Billing Automation: Enhancing Quality & Scalability
As diagnostic testing becomes increasingly essential to modern healthcare, labs are experiencing a significant surge in laboratory billing demands. This rising workload is straining manual billing processes, making automation not just a convenience—but a critical necessity.
LigoLab's laboratory revenue cycle management 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," Avunjian said.
Harnessing the Power of Laboratory Revenue Cycle Management Automation
LigoLab is a premier provider of advanced pathology lab software, supporting nearly 300 medical laboratories. Its laboratory information system (LIS software) and integrated lab billing module unify all core operations within a single, seamless platform—eliminating silos and driving greater efficiency and profitability throughout the workflow.
Discover More: What You Need to Know Before Contracting with a Laboratory Information System (LIS) Company
The LigoLab platform empowers laboratories to save time and boost collections through a robust medical LIS system with lab billing automation capabilities. At the core of this automation is a powerful, proprietary rule engine—refined through decades of lab revenue cycle management expertise and extensive data analysis—that triggers a wide range of actions. This reduces the risk of clerical errors and enables labs to scale their test volume without having to overhaul their billing operations.
"LigoLab’s lab billing 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," said Abdi.
Key Features of LigoLab's Lab Revenue Cycle Management 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
Discover 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 requirement is occasional monitoring and minor adjustments. The laboratory billing system never gets tired, never asks for days off, never requires training, and never leaves for another job," concluded Abdi.
Ready to Streamline Your Lab Operations and Maximize Revenue?
Discover how the LigoLab Informatics Platform can transform your laboratory with powerful automation, seamless integration, and end-to-end support.
Request a demo today and take the first step toward a more efficient, profitable future.
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