Clinical laboratories can ease their billing burdens, submit fewer denied claims, increase revenues, and manage profitability through the use of billing software.
 |
Money doesn’t grow on trees, nor does it grow in a Petri dish. If clinical laboratories want to receive the payments due them, they must submit their claims to payors. According to Xifin Inc, San Diego, the Centers for Medicare and Medicaid Services (CMS) have found that 40% of all claims cannot be processed due to errors and that, of these, half are never resubmitted.
Jim Kasoff, president of Antek HealthWare LLC, Reisterstown, Md, summarizes the challenges in the CMS process: “[The … automated … process] requires specified claim information—ie, patient name, last name, insurance, CPT, modifiers—be placed in a set file format. If any of the fields are missing, formatted incorrectly, or inaccurate, the claim simply gets denied. Claims that do pass are sent through a second round of checks that may deny payment for failing to meet criteria on items such as medical necessity failure, failure to meet the filing deadline, or a mismatch between the provider specialty and the charged procedure.”
 |
| Antek’s DAQBilling runs rules on claims before submitting them to the insurance carrier to reduce denials. |
To complicate matters further, payors frequently alter the specifications or formats, meaning what worked last month may not be valid this month. Even though the errors may be as simple as missing information or incorrect formatting, the time required to fix them may be seen as not worth the reimbursement. “Deciphering the reason codes and figuring out how to correct the claim for resubmission is like learning a foreign language,” Kasoff says.
Burned Money
Independent and reference laboratories may have staff more willing to devote this time. In hospital settings, however, smaller-dollar-amount lab claims are often competing against larger-ticket items, such as imaging studies, for billing staff time. “Oftentimes, the same amount of data is required for a $25 CBC as a $1,500 MRI study. Someone in billing will put their primary effort on cleaning up the higher-dollar item, and over time, the laboratory ends up with a significant number of claims that are not reimbursed,” says Jeff Watson, MBA, MT (ASCP), a laboratory product specialist with McKesson, San Francisco.
Laboratories that use billing services may not want to pay for the resubmission service, and those that take on billing themselves must find the resources. Deb Larson, executive vice president of Telcor, Lincoln, Neb, notes that laboratories that do handle their own billing are more likely to resubmit claims. “This can have a significant impact on the bottom line. If the hospital writes off every denied claim under $100, then you are losing all that revenue. If the lab is in control, it may make the write-off amount $5 because that $45 on a $50 reimbursement is significant,” Larson says.
Easy Money
Billing control also can impact competitiveness through physician connectivity and pricing. A billing program outside of the hospital enables the laboratory to create its forms, eliminating demographics that do not apply and therefore maximizing workflow efficiency. If connected to the physician electronically, laboratories can ensure clean, legible, compliant information up front using rules-based systems that automatically transfer data to the laboratory information system.
“Creating a clean claim on the front end is key when trying to get your lab charges under control,” Kasoff says. Laboratory billing systems can check for complete and accurate patient and insurance data (ie, a missing last name or an eight-digit social security number), correct diagnostic codes, medical-necessity checking, authorization to run the test, and complete modifiers.
If properly utilized, electronic systems eliminate the amount of manual entry and double check the data that has been entered. As a result of these capabilities, more claims will meet the payor requirements on the first pass and will not require resubmission efforts.
An independent system also can provide the lab flexibility in pricing and invoicing. “It’s hard to measure this, but how many customers are you losing because you can’t offer the same services as LabCorp [Laboratory Corp of America, Burlington. NC] or Quest [Quest Diagnostics Inc, Madison, NJ]?” Larson asks.
Billing software can help to eliminate these problems, reducing the number of rejected claims while improving processes that boost the bottom line. “A lot of labs doing outreach don’t have a good way to track information. They know they performed x thousand of billable tests in a year, and they know the charges associated with those tests, but they can’t track the expected reimbursement or their profitability,” Watson says. The right system can help to meet whatever a laboratory’s needs are in regard to billing and accounting.
Smart Money
-
- To stay up to speed on billing issues, search our online archives.
Many systems are capable of interfacing with a laboratory’s existing software, so integration is not a huge challenge, but some laboratories may decide to forego any potential problems or additional costs by choosing a sister system. Features should meet the needs of the laboratory. Larson suggests workflow should be the first criteria considered. Does the system permit the user to develop different fee schedules and customized invoices? Does the system submit claims electronically? Does it offer electronic remittance? If the system meets all requirements, does the vendor? Are they reputable? Do they offer state-of-the-art programs? “You want to look at it as a partnership and select a company with experience in the billing arena,” Watson says. In other words, can the vendor and its program show you the money?
RENEE DIIULIO IS A CONTRIBUTING WRITER FOR CLP.
Get Your Money’s Worth
Clinical laboratories have options when they want to consider a billing system. Many programs offer similar features, particularly in regard to rules-based billing and claims procedures, but some also offer functionality in front-end processing and profitability analysis. CLP spoke with some of the vendors about their programs and the benefits they offer to give laboratories an idea of how to get the most for their dollars.
Antek HealthWare
DAQBilling by Antek HealthWare LLC, Reisterstown, Md, can help to reduce time spent on billing by 30%, according to the company’s Web site. The system can establish a bidirectional connection to Antek’s LabDAQ LIS and send patient demographics and insurance information in either direction to create a complete claim, reducing the need for manual entry.
The system also will submit claims to carriers electronically and can integrate with other hospital software systems, such as the EMR. Access is achieved through the Internet, eliminating the need to network computers together.
DAQBilling will run rules on claims before submitting them to the insurance carrier. “For example, the system checks for an invalid date of birth, valid CPT entry, valid formatting of NPI, and insurance group number, and forces required fields to be populated,” says Jim Kasoff, Antek’s president. Advanced features include electronic remittance advice (ERA) and insurance eligibility verification (IEV).
Reports in DAQBilling PMS are designed to permit the user to gauge performance metrics on the financial health of the laboratory. DAQBilling’s financial reports provide feedback on claim submission, claim failure, accounts receivable, profitability, and reimbursement rates. Laboratories can use the information to improve cash flow, determine profitability of specific tests, decide which tests should be in-house, and negotiate better contracts. However, Kasoff cautions, “A system is only as good as the data you can mine and analyze from it.”
Computer Service and Support
The AR-2000 billing system from Computer Service and Support Inc (CSS), Linwood, NJ, also offers a full range of billing reports. “Because it lets you know what your receivables are, the system gives you an important piece of the puzzle,” says Krissy Zocco, owner of Biomedical Laboratories in Hubbard, Ohio.
Her laboratory looks at receivables reports in a variety of formats to perform financial analysis. Daily reports provide information on how many specimens are received and how many claims were produced for top carriers. “We look at our top 10 carriers every day and track those numbers, both claim-wise and revenue-wise,” Zocco says.
Monthly reports look at all clients. Zocco estimates that 50% of tests are received from physician’s offices and 50% from long-term care facilities, such as nursing homes. Census reports help the lab to determine if the facility or CMS should be billed, increasing the efficiency of the billing staff.
Since Biomedical Laboratories integrated billing with its LIS, it has been able to reduce FTEs in that department by one-and-a-half. “Now when we add new clients, I don’t have to think about hiring new billing staff,” Zocco says.
McKesson
McKesson’s Horizon Lab Financials provides a tool to more easily manage claims that require more data before submission: claims with missing data can be grouped by physician and sent to that office in batches for completion before submission to the payor. “There will be a certain number of claims with missing information in the best of programs, so this provides a tool to manage those within a large volume of testing,” says Jeff Watson, MBA, MT (ASCP), laboratory product specialist with McKesson, San Francisco.
The program’s error work cues help to manage mistakes presubmission as well as postsubmission; if a claim has been accepted, a remittance work cue permits electronic management of the accounting. Coding and formatting updates for state, federal, and commercial payors also are completed electronically. The result is faster and more efficient processing.
One McKesson Horizon Lab Financials customer laboratory has seen a 90% reduction in paper and is collecting payments 70% to 80% faster since using the system. Prior to implementation, the same laboratory had a 40% rebill rate with 50% of its staff dedicated to working denials. Afterward, that fell to a 7% rebill rate and 10% of staff working denials. This shift in workflow enabled the laboratory to increase volumes by 30% without adding any staff. With its prior system, there was a 1:1 ratio of volume to staffing increases.
A pricing module permits laboratories to create different fee schedules for different clients, increasing negotiation capabilities and competitiveness. “For example, if a client exceeds a certain volume, they may get a discount or they may negotiate special pricing on a market basket of tests. The pricing module makes those adjustments and ensures that what was contracted is what they see on their statements,” Watson says.
The profitability and compliance module can be used to help determine if those contracts add to the laboratory’s bottom line. Oftentimes, laboratory administrators don’t have a good grasp of whether the lab is profitable. “They’ll say, ‘I have a feeling we are profitable,’ or ‘I know our gross revenue,’ but they can’t really measure profitability,” Watson says.
Horizon Lab Financials addresses this issue, permitting the laboratory to look at financial reports by specific contract, regions, and accounts. Issues such as late payments or incomplete patient data can be identified and then addressed with offending clients to prevent them from impacting revenue.
Telcor
Telcor’s Outreach Information System (OIS) also will help laboratories to strategize while providing control of business at the front and back ends. The solution offers both order entry and results reporting alongside billing management. “By having both sets, we have integration and data flow that improves efficiency,” says Deb Larson, executive vice president of Telcor, Lincoln, Neb. Larson recalls one client who increased revenues from $20 million to $40 million while maintaining the same number of people in the billing department.
The order entry and results reporting segment uses the Internet as well as workstation applets to transport data in a quick and easy fashion. “The adoption rate of the program is 90 percent compared to pure Web solutions, which have an adoption rate of 20 percent,” Larson says. This helps to ensure that data is completed correctly at the front end.
Real-time rules processing will send automatic notices via fax to the physician to request missing information; reports can identify the worst offenders, who can then be educated about what information is needed. Billing staff then deals only with exceptions. “You make it tighter so the number of claims they deal with is smaller,” Larson says.
Laboratories can then devote resources to managing the business more effectively. The system can provide information on errors, utilization, and revenues by categories such as department, sales rep, client, or territory. “How do you know if you should bring a test in-house or send it out? How do you know if you should install an automation system or add a courier route? How do you know if a client is profitable or should be ‘fired’? Who are your best and worst clients?” Larson asks.
—RD
