Case Study

Reduce Denials and Increase Your Lab's Revenue and Net Collections

Reduce Denials and Increase Your Lab's Revenue and Net Collections
Reduce Denials and Increase Your Lab's Revenue and Net Collections
November 3, 2021

As we all know, following up on missing billing information can be a challenge. In fact, a recent study noted that perhaps as many as 50% of hospital and independent labs may have follow-up processes that are inadequate or non-existent.

This represents 20 - 30% of the revenue that might not ever be collected!

Staggering trends include:

From 2016 through 2Q 2020, the average denials rate was up 20%.

In 2020 alone, 10.8% of all claims were denied upon initial submission.

What’s more, the national denials rate topped 11% of claims denied upon initial submission in Q3 2020, bringing the total increase to 23% since 2016.

The good news is there’s a way to reverse these trends, and it starts with powerful and highly integrated automation embedded in a sophisticated and intuitive RCM software platform.

To learn how revenue cycle management (RCM) can reduce claim denials and increase your lab’s revenue, review the following short presentation.

Revenue, Risk & Compliance Management - Mitigating Compliance Risk & Bad Debt: Increasing Revenue & Profit

​Introduction

  • We are living in evolving and turbulent times.
  • Typically, with change comes caution.
  • Caution instigates resistance and payer push back.
  • In our industry, this resistance translates into payer denials.
  • Increased denials negatively affect a lab’s bottom line.
  • Now more than ever we need to better understand this impact and proactively counter it.

Denials Steadily Rising

  • National medical claims denial rates are on an upward trajectory.
  • While most providers have taken steps to reduce the risk of denials, they are putting significant revenue at risk each year.
  • The average denial rate is up 20% since 2016, hitting 10.8% of claims denied upon initial submission.


  • The average cost to rework a claim, per HFMA, is $25.
  • Up to 65% of claim denials are never even reworked, resulting in a substantial net revenue loss.

Estimated Cost of a Denial

  • The average cost to file a claim: $6.50
  • Cost to resubmit a denied claim: $25.00
  • Total cost to submit, correct & resubmit a claim: $31.50

And note, this is in addition to the entire revenue loss on the 65% not resubmitted.

Why Are Denials Rising?

  • Lack of Denial Processing Resources
  • Staff Attrition & Training
  • Growing Denials Backlog
  • Legacy Technology

Improved Automation Increases Workflow Productivity 

Ongoing regulatory changes and the constant need for updating of Revenue Cycle Management (RCM) systems mean:

Workflows need to be automated and able to attach necessary clinical documents or manage high balance denials.

Investment is needed for modern analytics and artificial intelligence that can flag denials pre-submission relative to payers and provide remedial actions.

Measuring Denials: Performance & Outcome-Based KPIs

  • Accurate demographics capture 
  • Financial clearance/eligibility 
  • Coding  
  • Procedure pricing monitoring

Denial Causes – Most (90%) are Preventable 

  • Accurate demographics capture & payer validation: 26.6%
  • Missing or invalid claim data: 17.2%
  • Payer authorization/rendering facility accuracy: 11.6%
  • Service coverage: 10.6%
  • Medical documentation requested: 9.2%
  • Rules & regulation compliance: 6.6%
  • Medical coding: 4.8%

Additional Denial Causes… Ever-Shifting Payer Policies, Such As: 

  • Latest rules and regulations for Covid-19 testing and billing, including early returns on the use and payment of the U0005 Medicare add-on code for two-day turnaround times.
  1. The early issues that have arisen surrounding the use of this code.
  2. The documentation you should be maintaining when billing for U0005.
  3. G2020 – must be provided & billed at least 1 day before any other service. If not, it is denied.  
  • Other recent coding and billing changes were introduced in 2020/2021.
  1. Antibody testing for the novel coronavirus.
  2. Screening for cancer cells and inherited ataxias.
  3. Vaccine (2 and 1 dose CPT codes).

Steps to Reduce Denials

  • Determine where denials are originating and their root causes.
  • Prioritize remediation based on where and what actions will have the greatest impact.
  • Prioritize denials based on revenue impact.
  • Consolidate revenue cycle (RCM) technology with a single “end to end” vendor.

Ways to Achieve the Benefit from Advanced Analytics and AI

  • Choose the right partner.
  • Work with that partner to determine and analyze action-oriented KPIs.


About LigoLab

LigoLab is a leading provider of innovative end-to-end healthcare software for pathology laboratories, servicing 100+ facilities nationwide. As a comprehensive enterprise-grade solution, the LigoLab LIS & RCM Laboratory Operating Platform™ includes modules for anatomic pathology, clinical pathology, molecular diagnostics, revenue cycle management, and direct-to-consumer, all 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, become more compliant, and more profitable.

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