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How Billing and Coding Automation Increases Laboratory Revenue
August 12, 2026
Like most businesses, molecular, clinical, and anatomic pathology laboratories depend on timely reimbursement for the services they provide. What sets them apart is the complexity of the payment process, as much of their revenue is generated through laboratory billing solutions that manage claims and reimbursement from Medicare, Medicaid, and private insurance payers.
Unfortunately, to the dismay of lab managers, insurance companies (commonly known as payers in the industry) employ a host of tactics to delay and deny payments.
Research indicates that healthcare claim denials increased at the onset of the pandemic, with medical laboratories experiencing particularly significant challenges. According to industry publication Medical Laboratory Observer (MLO), average denial rates for medical labs reached 15 percent for in-network claims and 30 percent for out-of-network claims.
Moreover, in addition to reduced reimbursement rates, ever-changing payer rules, and a growing population of uninsured and underinsured patients, today's laboratories face unprecedented staffing shortfalls, making it difficult for some labs to prosper.
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Laboratory Billing Denials are Costly
Although some laboratory billing and laboratory revenue cycle management (RCM) denials are simply part of the cost of doing business, labs can avoid most of them. According to LigoLab Billing Manager Farzad Abdi, most claim denials stem from simple human error.
"Improper coding and other mistakes play a major role in denials," he said. "But this is easy to fix with laboratory revenue cycle management automation. By simply automating lab billing and coding processes, we've helped some labs increase revenue by as much as 30 percent."
Discover More: Automation in Pathology Lab Management Using Advanced LIS System Software
Why Labs Can't Afford to Delay Laboratory Revenue Cycle Management Innovation Any Longer
Despite these challenges, many laboratory leaders remain hesitant to change established processes or invest in modernizing their laboratory billing solutions, even as reimbursement pressures intensify and the financial stakes continue to rise.
"Expenses are going up, and reimbursements are going down, so leaving hard-earned money on the table isn't acceptable," continued Abdi. "Labs that want to grow and sustain their businesses have no choice but to innovate, and an advanced RCM process that offers automatic billing and coding is a step in the right direction."
How Lab Billing Denials are Triggered
Successful payments depend on accurate coding and sufficient understanding of payer policies and the laboratory billing process. This can be a significant challenge for smaller labs, which may not have a laboratory billing specialist on staff. Therefore, lab managers may need to train the staff or undergo training themselves.
"If a lab insists on manual billing and coding, they're still going to have to spend money on training and staff," said Abdi. "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."
Timing and Late Claim Submissions
Another aspect of the RCM cycle that can be problematic is timing. Often, labs cannot contest denials that result from late claim submissions, and the consequences can be severe.
"There is a shelf life for when staff can submit claims," added Abdi. "Because of this, lab personnel typically rush to get claims out, even if incorrectly coded. Unfortunately, this approach can result in tens of thousands of dollars lost and hundreds of wasted hours spent on appeals."
The Growing Complexity of Volume Discounts and Payer Contracts
Another factor complicating the laboratory revenue cycle management landscape is the growing expectation from some payers and high-volume clients to include volume discounts and other credits directly in their contracts (often calculated daily, weekly, or monthly on a rolling basis). This practice became more widespread during the COVID-19 testing surge.
"Imagine how difficult it is for labs to calculate and operationalize a tiered structure utilizing manual processes," said Abdi. "Some payers want labs to adjust for alternative payment methods. Now, not only does the lab have rolling totals and discounts to contend with, but it also has a variety of payment methods to manage, too."
Future-Ready Lab Billing Automation Gives Customers a Faster, More Accurate Path to Financial Performance
With so much to lose, labs of any size can benefit from advanced technologies and future-ready revenue cycle management tools that ease lab billing and coding woes. Platforms such as the all-in-one LigoLab Medical LIS & Lab Billing Informatics Platform help labs save time and increase collectibles by adding easy-to-deploy RCM tools backed by advanced automation.
"With all that's at stake when it comes to lab billing, it's important for organizations to implement advanced laboratory billing solutions that increase productivity and protect them from errors and losses," added LigoLab CEO Suren Avunjian. "That's why the LigoLab platform includes a rules engine and both laboratory information system and lab billing automation that customers can customize and easily update."
"Labs and their payers can also view, in real time, everything being processed and make any necessary adjustments with the simple push of a button. Because of this, a laboratory billing process that once took weeks only takes minutes, and most importantly, it's error-free," he continued.
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A Comprehensive Laboratory Information System with Advanced Laboratory Billing Solutions
LigoLab's billing and coding automation is powered by a proprietary rules engine built into its comprehensive LIS system platform, a modern clinical and pathology lab management solution shaped by decades of medical LIS/lab billing expertise and extensive data analysis.
Although sophisticated, the platform's technology is easy for labs to deploy and doesn't require specialized LIS software and RCM cycle knowledge. It can run automatically and be monitored and customized as needed. Its functions are straightforward and intuitive.
"LigoLab's automation can accurately assign ICD-10 and CPT codes based on NCD, LCD, or payer-specific coverage policy," said Abdi. "It also learns from past denials and alerts users if a claim has the potential for denial, before being submitted."
The LigoLab platform also utilizes NCCI edits to alert users when code conflicts or issues with units and modifiers arise.
"One of the mistakes labs make is overusing the same modifier for all cases," said Abdi. "This will eventually lead to bulk denials and, in some cases, an effort by payers to recoup past claims paid. LigoLab protects labs from this by alerting them about potential denials."
How LigoLab's Rules Engine Learns and Adapts
LigoLab's rules engine is powered by intelligent management patterning. Because roughly 95 percent of a laboratory's billing activity follows predictable, repetitive workflows, the platform quickly learns these patterns with precision, eliminating errors and removing the need for manual oversight.
For the remaining five percent of unique scenarios, a lab billing administrator selects "create billing pattern," and the LIS system stores that logic for all future encounters, continually expanding the lab's automated capabilities.
"In essence, LigoLab completely automates everything that a laboratory billing specialist would do repetitively," said Abdi. "The only thing required is some monitoring and minor adjustments now and again."
Add to the mix the fact that the laboratory billing module never gets tired, never asks for days off, never requires training, and never leaves for another job.
"The rules and automation supported within the LigoLab platform maximize net collections for the laboratory and mitigate compliance risk," explained Avunjian.
Discover More: The LigoLab Difference - Demonstrating the Power of Lab RCM Automation in the Clinical Laboratory
Laboratory Billing Automation: The Key to Quality and Scalability
While a skilled coder can handle about 250 claims a day with a low error rate, growing RCM cycle volumes quickly surpass what manual workflows can support, making automation indispensable.
"There is a growing reliance on diagnostic testing within the medical community," said Avunjian. "Thanks to wider adoption of evidence-based medicine and advances in molecular testing, lab services are now in high demand, and will be for the foreseeable future."
Scaling Through the COVID-19 Testing Surge
When COVID-19 first hit, LigoLab partner labs experienced a massive surge in cases. Some labs went from processing a few thousand monthly tests to nearly 500,000 weekly claims. Without advanced laboratory revenue cycle management and coding automation, the billing teams at these organizations would not have been able to keep up with the demand.
Relying on manual processes would have made this nearly impossible. Fortunately, with LigoLab's future-ready laboratory billing solutions, the labs scaled efficiently while maintaining a cumulative clean claim rate of over 98 percent.
Real Results: From Weeks to Hours
Another LigoLab customer utilized manual processes for their client billing operations for several years before deploying LigoLab's RCM tools and features, including its rules engine and automated lab RCM and coding capabilities.
Soon after implementing the laboratory revenue cycle management module, the customer began realizing a significant return on its investment. A laboratory billing process that once took several weeks and was frequently delayed by clerical errors was reduced to just a few hours.
The new workflow also eliminated time-consuming administrative tasks, enabling RCM staff to focus on maximizing reimbursement and capturing every dollar owed to the laboratory.
"Within weeks of deploying our lab revenue cycle management solution, the customer 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. "The lab has sustained that level of added revenue ever since."
Industry Insights: Best Laboratory Billing Software Solutions: A Complete Comparison for Clinical, Pathology, and Outreach Labs
The Industry-Wide Impact of Laboratory Billing Automation
Industry research indicates that this type of RCM cycle result isn't an isolated case. A report from the Council for Affordable Quality Healthcare (CAQH) found that healthcare companies saved $122 billion in administrative expenses through modern RCM process software in 2020 alone.
The same report highlighted an additional $16 billion in potential savings by automating nine routine steps in the laboratory billing workflow. This represents a substantial return on investment that organizations should consider when evaluating whether to modernize their lab revenue cycle management strategies.
"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," concluded Abdi.
Read the Report: 2020 CAQH Index
Why a Fully Integrated, Automation-Driven Medical LIS & Lab Billing Platform is the Smartest Investment for Growing Labs
Choosing a comprehensive and automated solution such as the LigoLab platform makes perfect business sense.
The platform's full integration with advanced LIS system functionality and its rules-based capabilities enable labs to automate the laboratory billing process, from order creation to invoice, giving them a considerable advantage that reduces denials and audit risk while increasing net collections and profitability.
Moreover, thanks to LigoLab's automation capabilities, customers never have to worry about losing knowledge and skills because of employee turnover.
In addition to automated ICD-10 and CPT coding and client billing, LigoLab's other innovative laboratory revenue cycle management features include:
- Upfront demographic review and insurance verification
- Insurance discovery services
- Whitepages address lookup
- Automated claim validation and error correction
- Real-time data processing workflow queues for heightened visibility
- Detailed statistical reports to help labs monitor trends and KPIs
Together, these capabilities form a modern laboratory informatics platform that consistently surpasses legacy medical LIS and lab billing systems. They enable customers to scale efficiently, leveraging automation to reduce errors, accelerate claims processing, and drive sustainable revenue growth.
Industry Insights: Choosing LIS Vendors - Guidance for Your LIS Software Upgrade
LigoLab's All-in-One LIS System and Lab Billing Platform
LigoLab is an award-winning provider of innovative end-to-end laboratory information system software for medical laboratories, servicing hundreds of facilities across the U.S.
As a comprehensive enterprise-grade LIS software with advanced laboratory billing solutions, the LigoLab platform includes all lab workflow management modules required for an enterprise operation, including modules for anatomic pathology, clinical laboratory, molecular diagnostics, lab revenue cycle management, and direct-to-consumer lab testing (TestDirectly).
All are housed in a single, powerful, and integrated lab database software platform that supports every role, department, and case.
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Frequently Asked Questions About Laboratory Billing and Coding Automation
How much can billing automation increase laboratory revenue?
Labs that automate their billing and coding processes have seen revenue increases of up to 30 percent. One LigoLab customer began collecting 20 to 30 percent more every month within weeks of implementation, without any increase in test volume.
What causes most laboratory billing denials?
Many claim denials result from preventable issues, including coding errors and late submissions. Increasingly complex payer-specific requirements, volume-based discounts, and contract terms add further challenges to the reimbursement process.
How does LigoLab's rules engine automate lab billing?
LigoLab's rules engine can accurately assign ICD-10 and CPT codes based on payer-specific coverage, learn from past denials to flag potential issues before submission, and use NCCI edits to catch code conflicts. It recognizes that roughly 95 percent of billing activity follows predictable patterns and automates accordingly, while allowing lab administrators to create custom billing patterns for unique scenarios.
Can lab billing automation handle high testing volumes, such as during the COVID-19 pandemic?
Yes. During the COVID-19 testing surge, some LigoLab partner labs scaled from a few thousand monthly tests to nearly 500,000 weekly claims while maintaining a cumulative clean claim rate of over 98 percent.
What other features does LigoLab's lab billing module include?
Beyond automated coding, the platform offers upfront demographic review and insurance verification, insurance discovery services, address lookup, automated claim validation and error correction, real-time workflow queues, and detailed statistical reporting for tracking trends and KPIs.
What is the broader industry impact of lab revenue cycle management automation?
An industry report found that healthcare companies saved $122 billion in administrative expenses through modern RCM software in 2020 alone, with an additional $16 billion in potential savings identified through further automation of routine billing steps.
