Leveraging LIS System & Lab RCM Integration to Improve the Laboratory Billing Process

Analysis

Most clinical laboratories and pathology groups rely on legacy and standalone laboratory information systems (medical LIS software) for operations and testing, and lab revenue cycle management (lab RCM) systems for reimbursement. However, high denial rates and sizable write-offs have long been part of this siloed laboratory billing process. Today, market pressure and tightening margins are compelling medical laboratories to reevaluate how their LIS systems and laboratory billing solutions operate to remain resilient through increasingly challenging conditions.

What You Will Learn

In this white paper, we examine how most medical laboratories continue to manage laboratory billing today, and the inherent risks and limitations of this traditional approach. We also present an alternative perspective and a modern collection model that unifies the LIS system and laboratory billing workflows to help laboratories protect their operations against mounting external pressures.

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A New Laboratory Billing Perspective

Historically, medical laboratories have initiated the laboratory billing process only after the final lab report was completed. This post-analytical approach made sense at a time when margins were healthier, budgets were more forgiving, and laboratories could operate profitably without rethinking standalone billing workflows.

That environment no longer exists. Today, lab directors and managers are under intense pressure from staffing shortages, reimbursement cuts, payer-specific requirements, rapidly evolving rules, increased regulatory oversight, and a growing share of patient financial responsibility. As a result, laboratory leaders are increasingly open to change and actively seeking more effective, integrated approaches to managing the lab RCM cycle.

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We will highlight the advantages of starting laboratory billing with powerful revenue cycle management tools as the order is created. We will also discuss how leveraging automation and an end-to-end medical laboratory information system & lab RCM informatics platform enables laboratories to gain maximum efficiency, real-time patient and insurance data verification, clean claim validation, and laboratory insights, all while increasing net collections and improving patient, client, and payer satisfaction.

There is a much-needed paradigm shift taking place within the industry as the accepted, old, and disconnected laboratory billing process is being replaced with a new way of thinking and new powerful laboratory billing solutions that will help organizations meet their present and future challenges, become more profitable, gain an edge over the competition, and steadily grow their technical and financial operations.

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A Fully Integrated LIS System & Laboratory Billing Platform

Across the United States, an estimated 35 percent of claim denials and rejections are tied to inaccurate or incomplete data. Fragmented laboratory billing system software and standalone lab RCM solutions play a significant role in driving this number higher. When laboratory software operates in silos, the lack of transparency and synchronization creates data inconsistencies that lead to increased denials, delayed payments, and lost revenue.

Laboratories operating under this model have historically had two costly options: devote additional resources to rework and resubmit claims, or absorb the loss by writing them off as bad debt.

A better laboratory revenue cycle management approach is gaining momentum. Lab leaders nationwide are moving away from outdated laboratory billing solutions and adopting flexible, all-in-one LIS lab platforms with embedded billing functionality that use integration and automation to improve net collections, reduce dependence on manual labor, and support scalable growth.

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‍Avero Diagnostics Laboratory Billing Case Study

Tina Quevedo serves as Senior Director of the Business Office at Avero Diagnostics, a high-volume, full-service laboratory supporting both pathology and clinical testing across multiple locations nationwide.

Avero has partnered with LigoLab for its laboratory information system since March 2015 and completed its transition to a fully integrated platform in January 2019 by replacing its legacy laboratory billing vendor with LigoLab’s all-in-one diagnostic lab software that fully supports pathology and clinical laboratory management.

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From Fragmented Lab Billing to a Fully Integrated Lab Workflow

Within four months of deploying LigoLab’s fully integrated laboratory billing module, Avero began seeing measurable improvements in efficiency, accuracy, and net collections. With new revenue cycle management tools and full transparency, Quevedo and her team gained real-time access to accurate demographic and lab billing data at the front end of the RCM cycle, capabilities the organization previously lacked.

Before full integration, LigoLab’s LIS system software interfaced with Avero’s standalone laboratory billing system from a well-known RCM vendor. According to Quevedo, the arrangement proved cumbersome, particularly for handling technical and professional component (TC/PC) splits. The legacy lab billing system lacked critical functionality and visibility. While coding was performed in LigoLab’s LIS software platform, billing rules were maintained separately within the legacy laboratory billing software, often preventing staff from submitting claims even when the data was accurate.

The legacy laboratory billing system also lacked real-time claim scrubbing, limiting the billing team’s ability to validate information before submission. In addition, it generated double balances and false refunds, creating accounting discrepancies and requiring frequent manual intervention.

As a result, Quevedo said her team was forced to manually review every payment application on the backend to ensure accuracy, an inflexible and time-consuming process. She also expressed frustration with the limited support and responsiveness provided by the outsourced vendor when issues arose.

On-Demand Webinar: Unifying Technical and Financial Operations to Minimize Denials and Prevent Revenue Leakage

Integrated LIS–RCM Workflows Shift Focus From Data Cleanup to Revenue Recovery

Quevedo noted that her team can now focus on higher-value activities such as appeals management and payment collection, rather than spending time tracking down missing or inaccurate patient demographic and insurance information.

As soon as a lab order is created, Avero’s system automatically performs demographic lookup, address validation, prior authorization checks, live eligibility verification, and insurance discovery. Because both LIS system processes and laboratory RCM workflows operate on a single, shared platform, all interdependent data is instantly available across both modules. Manually synchronizing clients, tests, or payers is no longer required.

The platform also automatically detects duplicate demographics and patient history, and new provider information can be added quickly and accurately through real-time interfaces with the Centers for Medicare & Medicaid Services and the NPI Registry.

At the core of this modern solution is an “Encounter” data structure that consolidates patient demographics, orders, and claim data into a single, real-time view. Supporting documents, including requisitions, reports, and test results, are immediately accessible within the same screen, streamlining laboratory workflow management and enabling a seamless transition from testing and reporting to laboratory billing and payment processing.

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A Closer Look

Avero experienced unprecedented revenue growth, with net collections increasing 31 percent year over year between January 2019 and January 2020, achieved without adding operating costs.

Powered by automation, flexible statement scheduling, fully customizable statement templates, and improved patient engagement, patient net collections alone rose by 30 percent.

With efficient RCM tools built into the unified LIS lab platform, Avero was able to issue patient statements an average of three weeks sooner than before. This earlier outreach significantly accelerated cash flow.

The all-in-one informatics platform also enabled a more patient-centric payment experience. Through an online payment portal with automated posting, patients could pay quickly and conveniently, supported by email and SMS reminders. As a result, 36 percent of patients chose to pay through the online portal, further improving collection performance and operational efficiency.

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Automation and Integration Drive Significant Gains in Client and Payer Collections

Avero’s client net collections increased by 45 percent, driven by the automation, integration, customization, and streamlined payment management built into the platform. These capabilities significantly reduced reliance on manual processes and helped minimize clerical errors.

Another key contributor was automated client notifications, which enabled Avero’s clients to review charges daily rather than waiting for a comprehensive end-of-month statement. This early visibility allowed clients to raise questions, flag discrepancies, or dispute charges in advance, resulting in fewer issues after invoicing and faster payment cycles.

Payer net collections also rose by 27 percent. Real-time access to patient demographics, insurance discovery, and eligibility verification enabled optimized claims and a substantially higher first-pass resolution rate compared to the previous year and well above the national average. Automated CPT and ICD-10 coding, along with real-time rejection and denial queues, further contributed to these gains.

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Beyond strong gains in net collections, Avero saw meaningful improvements across key performance indicators that could be directly attributed to full integration between its medical LIS and laboratory billing workflows.

Avero’s annual net collections per employee increased by 31 percent, as full-time staffing levels remained flat year over year despite significant growth in overall collections, demonstrating true revenue growth without added operating expense.

In addition, improvements enabled by LigoLab’s all-in-one clinical and pathology lab management platform drove a substantial increase in productivity, with Avero submitting 22 percent more claims (adjusted for growth) compared to the prior year.

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Conclusion

The reality is that independent pathology, clinical, and reference laboratories are facing mounting industry pressures, and the time to act is now. Laboratories that move decisively can unlock their full potential, positioning themselves not just to withstand today’s challenges, but to grow and thrive with a future-ready, all-in-one laboratory information system and lab revenue cycle management solution.

The platform laboratories choose to align with must be fully integrated, accessible through open architecture, comprehensive, transparent, and secure. It should deliver real-time data at the very start of the laboratory billing process, enabled by deep integration and automation. This level of alignment enables laboratories to achieve exceptionally high first-pass clean claim rates, well above the national average, while dramatically reducing the need for costly, manual claim rework.

An effective lab RCM solution should also include automated coding, secure online payment processing, and the ability to manage and monetize large volumes of data. As the platform continuously learns and adapts, it becomes increasingly efficient over time.

A modern, integrated LIS system and laboratory RCM platform, such as the solution offered by LigoLab, positions laboratories to scale through improved net collections and operational efficiency, meeting the complex and evolving needs of laboratories of all sizes.

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Laboratory Billing Wish List

With a future-ready LIS system & laboratory billing informatics platform, labs can enhance their RCM cycle in the following ways:

• Gain full operational and financial control through complete transparency across laboratory workflows and billing processes.
• Capture accurate lab billing data at the front end of the RCM cycle, including address validation, demographic verification, insurance discovery, eligibility checks, prior authorization, and dynamic send-out logistics, powered by real-time integration and automation.
• Enable bidirectional integration with key third parties, including mailing vendors, multiple clearinghouses, the NPI Registry, and payment processors, to ensure a synchronized and reliable data exchange.
• Reduce manual effort and clerical errors by using automation, operational and financial insights, and advanced data tracking to streamline and simplify the LIS system and laboratory billing workflows.
• Automate CPT coding at multiple stages of the RCM cycle, ensuring compliance with PTP, MUE, NCCI, custom payer rules, and all applicable regulations.
• Apply automated ICD-10 diagnosis assignment using configurable policies and statistical analysis to improve accuracy and consistency.
• Accelerate claims and appeals processing while lowering labor costs through automated provider and facility assignment, including TC/PC splitting.
• Address financial requirements at the point of care by generating Advance Beneficiary Notices (ABNs) and securely collecting prepayments when needed.
• Maintain quality assurance and compliance across the entire RCM cycle with a comprehensive audit trail and built-in QA/QC controls.
• Leverage machine learning to analyze RCM cycle data, continuously refine workflows, and drive ongoing process improvement.
• Improve operational visibility with real-time laboratory workflow management queues (tailored to each laboratory role).
• Monitor performance with advanced analytics, including detailed reports on trends, KPIs, and benchmarks, all within a single, unified informatics platform.

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More Lab Billing Insight To Consider

Once an organization recognizes the need to modernize its laboratory revenue cycle management to remain viable and profitable, the next step is to look inward and establish clearly defined goals, priorities, and success metrics.

LigoLab equips forward-thinking clinical laboratories and pathology groups with the RCM tools they need to navigate today’s pressures while clearly differentiating itself from traditional LIS systems and laboratory billing solutions in several key ways:

• Flexible, Configurable LIS Software - The LigoLab Informatics Platform is highly adaptable and can be configured to meet the unique operational, clinical, and financial needs of virtually any pathology or clinical laboratory.
• True Modular Growth Without Added Infrastructure - Customers can activate additional LIS, RCM, and supporting engine functionality at any time, without new servers, hardware, middleware, or interfaces, enabling seamless expansion as needs evolve.
• Enterprise-Scale Capability - The full suite of medical LIS and lab billing applications is available immediately, enabling laboratories to scale, add tests, and expand services without migrating to another system as they grow.
• Proven Implementation Support - LigoLab partners closely with laboratories throughout implementation, from domain analysis and validation to go-live and ongoing optimization, while actively mitigating risk. In two decades of operation, no LigoLab partner lab has rolled back after go-live or migrated away following implementation.
• Continuous Innovation - The platform is constantly evolving, with new features and enhancements deployed regularly to support partner laboratories and respond to real-world operational needs.
• Aligned, Tiered Pricing Model - Unlike legacy LIS vendors that rely on large upfront licensing fees, LigoLab invests in long-term partnerships through aligned, tiered pricing. This shared-risk, shared-reward LIS model enables LigoLab and its customers to grow together.
• Deep Industry Focus and Expertise - Headquartered in Los Angeles, LigoLab specializes exclusively in developing advanced LIS software for pathology, clinical, and reference laboratories.
• Expert-Driven Design and Support - By partnering with LigoLab, customers gain access to best practices and domain expertise from a platform built by pathologists and laboratorians, supported by friendly, responsive, and unlimited customer service available 24/7.

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‍Last Thought

Medical laboratories relying on outdated RCM tools and legacy laboratory billing systems are increasingly falling behind. Without a unified foundation, traditional laboratory billing processes lack the integration, visibility, and automation needed to keep pace with today’s operational and financial demands.

Labs that adopt a modern, all-in-one LIS software platform with embedded lab billing functionality, such as the LigoLab Informatics Platform, gain the flexibility and transparency required to operate more efficiently and competitively. The result is measurable business impact, including:

• Accelerated cash flow
• Increased revenue and stronger margins
• A sustainable competitive advantage

Since 2006, LigoLab has delivered flexible, enterprise-grade laboratory information system software that now powers hundreds of laboratories nationwide, driving performance, efficiency, and scalable growth.

Ready to see what a fully integrated LIS and lab RCM platform can do for your laboratory?

Schedule a personalized LigoLab demonstration and discover how a unified informatics platform can transform your lab’s financial, administrative, and technical operations.

Act Now: Speak with a LigoLab Product Specialist!‍

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