Laboratory Billing Software
November 20, 2023
Diagnostic laboratories, such as anatomic pathology and clinical pathology labs, experience a constant stream of patient samples. Increasingly, they’re accompanied by associated data that requires automation and laboratory software systems to keep the lab running smoothly. One such clinical laboratory management solution that maximizes a lab’s efficiency is a laboratory billing software program. Lab billing software provides a solution for the laboratory billing process, enabling the tracking and submission of bills for services rendered and the collection of payments.
Pathology labs can choose to have a third-party entity handle their laboratory billing, or they can integrate a lab RCM or lab billing software into their existing laboratory information systems (LIS). A laboratory information system and a laboratory revenue cycle management (RCM) system can interface to track patient reports, as well as the status for claims and payments. Based on the scale of a lab’s operations, lab billing software will process numerous patient claims and build lab revenue cycle management capacity for collecting payments. In the case of pass-through billing for labs, where services were performed by a person or entity other than the billing provider, the laboratory billing process will still be interfaced into the lab’s LIS software.
The Outsourced Approach: Laboratory Billing Services
The RCM cycle and RCM process for a medical lab includes several complex stages that can last for months and entail multiple interactions between different departments, such as the physician’s office, lab personnel, and the insurance company. A significant portion of lab billing and revenue can come from following up on every claim due to the lab. But such a thorough process demands an advanced and automated laboratory billing solution or a large investment of time and labor from the lab personnel.
Billing administrators for pathology labs can choose to lighten the load by employing independent laboratory billing services to handle this key aspect of clinical lab financial management. Like a billing department using lab billing software, these third-party entities offer support for a wide range of lab RCM services, that include:
- Monitoring patient encounters with the hospital system to ensure that every case is covered for reimbursement;
- Verifying patient eligibility based on their insurance coverage plan;
- Discovering insurance options for patients who are missing insurance information;
- Ensuring the correct medical code is assigned to a procedure through Correct Coding Initiative (CCI) edits. The billing service ensures that each lab test is billed according to the Current Procedural Terminology (CPT) codes;
- Managing and tracking appeals made when a diagnostic test performed by a pathology lab is denied for reimbursement;
- Tracking claims in real-time;
- Automating the process of prior authorization when necessary, where an insurance company requires reports and documentation from prior tests before they provide coverage for a medical procedure or diagnostic lab test;
- Providing patients with guidance on pricing;
- Generating denial alerts, as well as editing and re-submitting denied claims;
- Providing a payment portal option;
- Following up with a balance due statement to ensure that patients are guided to the right payment portal;
- Integrating with other patient record and management systems, such as an Electronic Health Record (EHR), a Laboratory Information System (LIS), or a Laboratory Information Management System (LIMS);
- Ensuring laboratory billing compliance with the relevant regulations.
Lab billing services help reduce a lab’s overhead costs and ensure a steady flow of resources but there are drawbacks to be aware of related to the necessary expertise to handle the most complex cases and having access to timely customer support when needed. By definition, when outsourcing lab RCM, the lab loses full transparency of the of the RCM cycle and because of this, may not be aware of potential revenue leakage.
The In-House Alternative: Laboratory Billing Software for Labs
A pathology lab RCM cycle begins with assigning the right CPT code for a test or procedure and linking this data to the patient’s demographics and insurance information. Once a claim is submitted, either directly or via a clearing house, the insurance provider assesses various factors that can influence reimbursement. They can include evaluating the necessity of a medical procedure or treatment.
Successful claims will reimburse a lab with an agreed-upon percentage of costs incurred from the medical test or treatment. Denied claims are sent back to the lab – they can be claimed again once the lab edits the required information. These negotiations can take months to settle and require tracking at every stage.
Thus, the clinical or anatomic pathology lab RCM cycle is a complex process that can involve a lot of back-and-forth between the lab and the payer. The deployment of automation within a lab can radically improve performance and efficiency. Lab billing software is a huge improvement over a paper-based laboratory billing system, since digitization allows meticulous record-keeping and swift report generation. In a manual lab revenue cycle management system, these processes are often lengthy, confusing, and prone to errors.
The lab billing software available today is designed with a number of features to simplify the laboratory billing process of keeping track of claims; for example, displaying a dashboard with the status of each claim in the lab RCM system. Other features include denied claim management processes, improved collections, providing guidance on pricing, and interfacing with other laboratory software systems to integrate patient data with a payment schedule. In addition, they help with securing payment by directing a patient to a secure payment portal, as well as generating accurate financial reports for each patient.
The Bottom Line on Laboratory Billing Solutions and the RCM Process
Medical labs handle large sets of patient data and increasingly rely on either outsourced clients or automated internal laboratory information system software for a smooth clinical laboratory management experience. Laboratory billing software includes automated lab RCM processes that provide end-to-end solutions for maintaining a lab’s billing needs in-house. This is different from lab billing services, which involve outsourcing the lab RCM process to an external provider.
In addition to tracking claims, lab billing software and lab billing services follow up on denied claims and ensure reimbursement of every invoice/bill generated within a hospital and clinical laboratory system, while complying with regulatory guidelines. Factors to consider before choosing either a lab billing software or lab billing service are the scale and scope of a lab, whether a lab has multiple locations, the infrastructure investments (cloud storage) that a clinical lab has access to, and the ability to integrate laboratory billing solutions into the existing laboratory information management system (LIS system or LIMS system).
Whether it’s a lab billing service or lab billing software for labs, the lab RCM solution needs to be patient-focused, and able to verify the eligibility of a patient for insurance coverage, follow-up in real-time on patient claim status, allow immediate edits of errors in either coding or claim submissions, follow up on denied claims and, finally, provide frequent reports on a lab’s financial performance so that areas for improvement can be identified and improved.
The Advantages that Come with One United Laboratory Information Management System
As the above analysis shows, laboratory decision-makers can either choose to go with an in-house laboratory billing software or an external lab billing service. The size of the lab and its growth goals should be factored in when making this decision, as should factors like the benefits of having automated RCM processes, end-to-end data integrity, and control and transparency of the entire organization’s operations and finances.
Those last two points (control and transparency) are very important considerations. Ask yourself, who would be motivated more to go after every dollar and work every claim, including the hardest and most complex ones? An in-house lab billing team or an outsourced lab billing service?
At LigoLab, we believe in-house laboratory billing software represents the best option for labs to drastically improve the RCM cycle and net collections. That’s why we developed a laboratory billing software solution for our lab partners.
Going further, there are substantial advantages that come with fully integrated LIS and RCM modules that share the same database like LigoLab Informatics Platform. To learn more, we invite you to read the following white paper and case study. Both highlight the benefits of this type of laboratory information system software arrangement.
Interested in a fully integrated LIS and RCM platform for your laboratory?
Contact us to schedule a software demonstration and see how our informatics platform can unite and transform your lab’s financial, administrative, and technical operations.