Laboratory 101: Improving the Laboratory Billing Process To Prevent Common Errors

Laboratory 101: Improving the Laboratory Billing Process To Prevent Common Errors

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Medical laboratories generate large volumes of tests annually, so it’s no surprise that these same laboratories also experience some of the highest denial rates in the healthcare sector. 

Years ago, armed with robust budgets and sizable margins, laboratories would often write off a significant number of these denials, believing the effort to resubmit wasn’t worth the time and resources required to work the claims. They weren’t concerned about leaving money on the table because they were profitable. 

Unfortunately, those days are gone and every dollar counts. Today’s laboratories face several market pressures and challenges that are forcing them to look inwardly and evaluate shortcomings while identifying areas where improvement needs to be a priority. 

Laboratory billing has traditionally been viewed throughout the industry as a backend process rather than one that begins on the front-end at order origination. But backend billing represents a missed opportunity for labs because the reality is that the billing process starts when the order comes into the laboratory, not when the report is final. Fortunately lab operators are beginning to realize this need to proactively improve RCM workflow to protect themselves against continuing trends like payer reimbursement cuts, custom payer requirements, fast-changing rules, increased regulations, and the continued growth of patient payment responsibility.

Missing patient demographics account for most laboratory denials. Laboratories that recognize this and take the time to implement a system that captures the patient’s name, address and phone number on the front-end of the billing cycle will experience immediate improvement. 

The laboratory assistant sends the results of the study for the presence of coronavirus antibodies

Actionable Steps To Improve Your Lab’s First-Pass Resolution Rate: 

  • Maintain Accurate Patient Files - Verify demographics and insurance information with each patient visit. Insurance carriers change often and so do coverage limits.
  • Insurance Discovery - Call the client or provider to obtain any missing, inaccurate, or incomplete patient data. This will help you find commercial and government insurance coverage that’s billable.
  • Check Eligibility - Visit the patient’s payer portal or call the payer to confirm that the insurance you’ve identified is active.
  • Whitepages Lookup - Log on to to check and verify the patient’s name and telephone number. 
  • USPS Address Validation - To check and verify the patient’s address, log on to
  • Don’t Be Late - Establish a process that ensures that the claim is filed on time and confirms that the payer received the claim.
  • Analyze Results - Take the time to find out why a claim was denied and learn from the result to identify patterns and trends. 
  • Stay Current- Rules and regulations are in constant flux. Take the time to educate and train staff members to stay current. 
  • Close The Gaps - Identifying patterns and trends does a laboratory no good if the findings aren’t communicated effectively to front desk staffers, billers, and physicians. Make sure everyone is on the same page and working from the same playbook. 

By taking the time to go through these steps on the front end, laboratories will enjoy more clean claims and a boost in net collections. This short-term fix will help stabilize struggling labs, allowing them the time to identify and implement a long-term solution that will increase their ability to collect on all claims with full visibility while minimizing labor costs. 

Once armed with the proper tools, laboratories can do more than just meet the challenges of today and the future, they can become more profitable, gain an edge over the competition, and steadily scale up their operations.

The key to long-term laboratory success is tied to automation, and a recent study from CAQH, a nonprofit group that works with providers to streamline the business of healthcare, reinforced the importance of automation as part of any RCM solution. 

CAQH identified eight common administrative tasks that are costing the healthcare industry $13.3 billion annually. The group then attached a cost per transaction value to each of the tasks, taking into account the volume of each of these transactions, plus the cost of time and manual labor spent on each activity. 

Average Cost Per Administrative Task When Performed Manually

1. Claim status inquiry: $10.13 

2. Prior authorization: $14.24

3. Eligibility and benefit verification: $8.77 

4. Attachments: $5.06

5. Claim submission: $4.22 

6. Remittance advice: $4.22

7. Claim payment: $3.18

8. Coordination of benefits: $1.05

(Source: 2019 CAQH Index. Conducting Electronic Business Transactions: Why Greater Harmonization Across The Industry Is Needed)

Average Cost Per Administrative Task When Performed Manually

Not surprisingly, the costs associated with administrative manual tasks add up quickly and serve as a drag on a laboratory’s bottom line. On the other hand, this is timely news for laboratory operators across the country motivated to cut costs and increase margins while improving RCM performance. 

Inquire here to see how LigoLab can automate all of these steps and help you avoid losing money and time. 

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