Blog
How Billing and Coding Automation Increases Laboratory Revenue
March 29, 2024
Like most business enterprises, molecular, clinical, and anatomic pathology laboratories sustain themselves by getting paid for the services they provide. What makes medical labs unique is that most of their laboratory billing solutions have to pass muster with Medicare, Medicaid, and insurance companies. Unfortunately, much to the disdain of lab managers and directors, insurance companies (commonly known as payers within the industry) in particular use a host of reasons to delay and deny payment.
Medical denials in healthcare rose during the onset of the pandemic, and according to industry publication Medical Laboratory Observer (MLO), medical labs were hit particularly hard, with average denial rates of 15 percent for in-network claims and 30 percent for out-of-network.
On top of reduced reimbursement rates, ever-changing payer rules, and a growing population of uninsured and underinsured patients, today’s laboratories are also facing unprecedented staffing shortfalls. All of which is making it difficult for some labs to prosper.
Laboratory Billing Denials are Costly
Although some laboratory billing denials are simply the cost of doing business, many can easily be avoided. According to LigoLab RCM Billing Manager (RCM = revenue cycle management meaning) Farzad Abdi, a majority of denials are the result of 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 their lab billing and coding processes, we’ve helped some labs increase revenue by as much as 30 percent.”
Yet despite this, lab managers and directors are hesitant to change the way they operate. Many just aren’t willing to spend resources on improving their lab revenue cycle management (lab RCM). However, the stakes keep getting higher for those unwilling to invest in new solutions.
“Expenses are going up and reimbursements are going down, so leaving hard-earned money on the table isn’t acceptable,” said Abdi. “Labs that want to grow and sustain their business have no choice but to innovate, and an RCM process that offers automatic billing and coding is a step in the right direction.”
How Lab RCM Denials are Triggered
Clean claims are dependent on accurate coding and adequate knowledge 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 will need to train the staff they have 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.”
Another aspect of the RCM cycle that can be problematic is timing. Often, denials that result from late claim submissions cannot be contested, and the consequences for submitting claims late can be severe.
“There is a shelf life on when claims can be submitted,” added Abdi. “Because of this, lab personnel are often in a rush to get claims out, even if they are incorrectly coded. Unfortunately, this type of approach can result in tens of thousands of dollars lost and hundreds of wasted hours spent on appeals.”
Another trend that is making the laboratory billing process even harder for labs is the fact that some payers and high-volume clients now require things like volume discounts and other credits on a daily, weekly, or monthly rolling basis embedded within their contracts. COVID-19 testing made this scenario more commonplace.
“Imagine how difficult it is for labs to calculate and operationalize a tiered structure utilizing manual processes,” said Abdi. “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 as well.”
With all there is to lose, labs of any size can benefit from technologies designed to 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 RCM tools backed by advanced automation.
“With all that’s at stake when it comes to lab billing, it’s important for labs to implement laboratory billing solutions that not only increase productivity but also protect them from errors and losses,” said LigoLab CEO Suren Avunjian. “That’s why LigoLab’s lab RCM solution includes a rule engine and automation that can be customized and easily updated. Labs and their payers can also view, in real time, everything that is being processed, and any necessary adjustments can be made with the simple push of a button. Because of this, a process that once took weeks now only takes minutes, and most importantly, it’s error-free.”
A Laboratory Information System and Laboratory Billing System Built on Rules and Automation
LigoLab’s billing and coding automation is driven by a powerful, proprietary rule engine that’s housed within its all-in-one laboratory information system software platform, and that has evolved from terabits of data analysis and decades of hands-on lab billing experience. Although sophisticated, the technology is easy for labs to deploy and doesn’t require specialized software knowledge to use. It can be set to run automatically and can 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.”
The secret to how LigoLab’s automation works involves lab revenue cycle management patterns. From lab to lab, 95 percent of the RCM cycle work they do is redundant, so the platform can quickly pick up on a lab’s billing patterns and follow them without error or second-guessing. For the other five percent of cases, all that a lab billing administrator has to do is click “create billing pattern,” and that pattern will be added to the platform for future use.
“In essence, LigoLab completely automates everything that a laboratory billing specialist would do repetitively,” said Abdi. “The only thing required is some monitoring and some minor adjustments now and again. What’s even better is the fact that the laboratory billing system never gets tired, never asks for days off, never requires training, and never leaves for another job.”
“The rules and automation that exist within the platform maximize net collections for the laboratory and mitigate compliance risk,” added Avunjian.
Laboratory Billing Automation is the Key to Quality and Scalability
The average coder can code around 250 claims daily with minimal errors. If a lab’s RCM cycle workload is growing beyond the point of manual processes, automation is a must.
“There is a growing reliance on diagnostic testing within the medical community,” said Avunjian. “Thanks to wider adoption of evidence-based medicine and the demands created by COVID-19 and advances in molecular testing, lab services are now in high demand, and will be for the foreseeable future.”
When COVID-19 first hit, LigoLab partner labs experienced a massive surge in cases. Some labs went from processing a few thousand tests per month to nearly 500,000 claims per week. Without lab billing and coding automation, the lab billing teams at these organizations would not have been able to keep up with the demand. Using manual processes would have been next to impossible. Thankfully, with LigoLab’s laboratory billing system, the labs were able to successfully scale while also achieving a clean claim rate of over 98 percent.
Another LigoLab customer used manual processes for their client billing operations for several years before taking advantage of LigoLab’s RCM tools and features, including its rule engine and automated lab RCM and coding capabilities. Soon after the implementation of the RCM module, that same lab received an immediate payoff for its investment, with laboratory billing processes that had taken several weeks, with constant delays because of clerical errors, now taking only a few hours. Better yet, the lab’s RCM staff was freed from time-consuming administrative tasks and was able to go after every dollar that was due.
“Within weeks of deploying our 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,” said Abdi. “The lab has sustained that level of added revenue ever since.”
Learn More: Leveraging LIS & RCM Integration to Improve the Billing Process
Industry research indicates that this type of RCM cycle result isn’t an isolated case. A recent report found that healthcare companies saved $122 billion in administrative expenses through RCM process software in 2020 alone. The same report identified a further $16 billion in savings achievable by automating just nine steps in the everyday administrative laboratory billing workflow. This is a significant return on investment that labs should consider as they weigh the pros and cons of upgrading their RCM process 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.
Choosing a solution like the LigoLab LIS & RCM Laboratory Informatics Platform makes perfect business sense. The platform’s full integration with advanced laboratory information system (LIS meaning medical, also known as a LIS system) functionality and its rule-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. In addition, because of LigoLab’s automation, labs never have to worry about knowledge or skills being lost because of employee turnover.
In addition to automated ICD-10 and CPT coding and client billing, LigoLab’s other innovative features include:
- Upfront demographic 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
All of these features combine to form a modern laboratory informatics platform that legacy LIS systems and laboratory billing systems cannot match. With it, labs scale easily and efficiently as automation helps increase revenue by reducing errors and the time spent on claims.
LigoLab’s Comprehensive Laboratory Information System and Laboratory Billing Solution
LigoLab is an award-winning provider of innovative end-to-end laboratory information system software for pathology laboratories, servicing nearly 300 facilities nationwide. As a comprehensive enterprise-grade LIS software and laboratory billing solution, the LigoLab platform includes all pathology lab management modules, including modules for anatomic pathology (LIS pathology), clinical laboratory (LIS medical), molecular diagnostics (molecular LIS), lab revenue cycle management (lab RCM), and direct-to-consumer lab testing (TestDirectly and TestDirectly.com), all housed on one powerful and integrated platform that supports every role, every department, and every case.
LigoLab empowers laboratories to better serve patients, differentiate themselves in the marketplace, scale their operations, and become more compliant and profitable.
To learn more, visit LigoLab.com or contact us for a brief consultation about our informatics platform and your business.
