The right RCM partner can help increase revenue, reduce bad debt
Laboratory outreach provides a crucial healthcare service to the local community by enabling healthcare organizations and physicians to offer vital laboratory services and precision medicine on an outpatient basis.
However, numerous economic and regulatory pressures can impact revenue cycle performance, reimbursement and financial viability for these operations. Below are some of the top revenue cycle management challenges facing outreach laboratories.
Lack of Patient Visibility
The typical patient interactions that are common at hospitals, health systems or physicians’ offices are largely absent at most lab and diagnostics providers. Physician offices and hospitals communicate with patients in person prior to service when it is most timely to run eligibility checks and field prior authorization requests. Doing so at the point of care allows the administrative staff to verify whether the patient has adequate health insurance and to gather any missing patient information.
In contrast, lab and diagnostic providers rarely interact directly with patients, especially prior to a visit. Instead, they commonly receive specimens from a referring hospital or physician along with a paper or electronic order containing patient demographics, procedure codes and diagnosis codes—some of which may be inaccurate or incomplete. This can create a “garbage in, garbage out” scenario. Diagnostics labs are reliant on the referring provider to furnish complete and correct data; if the data is flawed from the start, the lab is likely to have the corresponding claim be denied when it submits it to the payer. When this happens it sets off a cascading series of time-wasting events for the lab, payer and patient.
Since diagnostics providers also have limited visibility into a patient’s insurance coverage, they don’t always have a good sense for what tests he or she is eligible. Nor do they understand the patient’s financial responsibility for the accession. As a result, when a patient receives a bill from the lab, they may be frustrated to learn that the procedure isn’t covered by their health plan. Since the charge is an unwelcome surprise, the patient may be reluctant to pay the bill. That reluctance may turn into full-scale resistance that leads the lab to write off the charge.
Volume of Claim Denials
For lab and diagnostic providers, the complexity and scope of claim denials is one of the biggest issues in denials management. The sheer volume of health plans—which can number in the thousands for national labs—and the corresponding price schedules, make it very difficult for billing teams to keep everything straight. The problem compounds further because each payer has its own rules for denied claims, including the reasons behind a denial and how it is communicated to the provider. It’s difficult to develop a consistently successful claims denial strategy based on so many variables.
Whereas hospital billing generally deals with a lower volume of high dollar claims, diagnostics labs must cope with a significantly higher volume of low dollar accessions. As a result, the revenue cycle team at these labs are not able to work all the denials. It simply doesn’t make sense to scale up a billing staff to pursue low dollar collections, so revenue cycle personnel are thrust into triage mode to follow up on claims with more meaningful dollar amounts and write off claims with more negligible sums. This make-do strategy leads some labs to write off as much as 15-20% of their revenue due to denied claims.
Lack of automation also hinders a lab or diagnostic provider’s ability to check claims for errors or missing information before they are submitted for reimbursement. The reimbursement process as currently designed, and regardless of outcome, costs lab providers an unacceptable amount of time, money, and resources to manage. This uncontrolled drain on cash and resources inevitably leads to greater inefficiencies, administrative burdens and lower collection recoveries.
To complicate things further, because of the limited time between when an order is placed and when testing must begin, there is often little opportunity to conduct an electronic eligibility check or to assess whether a prior authorization is needed. Oftentimes, the revenue cycle team is required to “fly blind” and submit a claim that hasn’t been fully vetted and therefore has a higher than average likelihood of being denied by the payer.
Complex prior authorizations
A lot of things have to go right for a prior authorization request to be resolved quickly and accurately. The rendering diagnostics lab, referring provider, payer and patient are all involved in the intricate choreography that makes up the prior auth dance; the number of participants and steps increases the potential for errors, delays, and redundant work. Often, the referring hospital or physician isn’t even aware that pre-authorization is required. Request-and-review requirements vary by health plan and provider too, which only magnifies the complexity.
If there is a single misstep in the prior authorization process — a denial triggered by incomplete patient data, for instance — then the diagnostics lab is put in the untenable position of having to work through the referring provider as an intermediary and rely on them to resolve the issue with the payer. Because rendering providers depend on referrals from the originating providers, they know that they can only push the referring hospitals and physicians offices so hard or risk losing future business.
Cost is the primary driver that dictates the level of review rigor that labs can apply to prior authorization requests.
Prior authorizations are increasingly common for molecular diagnostics and genetic testing, given their high average unit cost and growing usage. For specialized lab panels that require prior authorization, if just one of the CPT-based services in the panel is considered inappropriate, it is common for the entire panel to get denied.
The incremental processes, people and systems that support prior authorization appeals and claims adjustments also add a degree of uncertainty to final claims disposition for the lab service under question.
Increasing Bad Debt
As a result of the growing popularity of high-deductible health plans, patients are now collectively the largest nongovernmental payer in the nation. However, as more of the monetary burden is transferred to patients, many of whom struggle to meet their financial obligations or fully comprehend the invoices they receive, providers have found themselves crushed under billions in bad debt. Few providers, whether hospitals or lab providers, have had the tools to make billing more transparent.
Many lab and diagnostic providers remain in the dark about a patient’s financial situation, propensity to pay and insurance benefit coverage. Patients themselves often don’t understand their financial responsibility with regard to the lab services performed, nor are they aware of the payment options available to them that could affect their out-of-pocket liability.
More often than not, they are not even aware of what lab conducted their tests. Since invoices from the rendering lab provider may not be delivered for weeks or months after testing is performed, there can be confusion among patients in trying to identify what procedure the invoice correlates to, which only serves to make patients more reluctant to pay.
If the ordering provider doesn’t offer a specific lab service, it might have trouble referring to a cost-competitive alternative beyond one that it is financially tethered or with which it is already familiar. Less-advanced healthcare organizations or lab service organizations may be unaware when payment for prior services are aging into bad-debt risk. Transparency into past-due bills, especially on non-emergent labs, would at least trigger further review to avoid another bill going unpaid.
Increased billing complexity
There are several hand-offs that happen between stakeholders, systems, processes and contracts that are ripe for errors that lead to payment leakage. For example, certain procedures need to be rolled up into a bundle or panel before a claim is sent to the payer. Additionally, payers have differing requirements related to billing processes which creates a lack of consistency in how to successfully submit claims from health plan to health plan.
Even when a payer makes a coverage determination on a new lab service, it may take weeks for claims adjudication systems to properly accommodate all the rules. Provider and lab service staff often keep “cheat sheets” that detail the particular rules for each of the large payers, but because these rules are continuously changing, these cheat sheets quickly become outdated.
Inconsistencies in how each payer reimburses for services creates complexity and chaos for the providers and labs that must track across these entities. Contracting that determines covered services and payment levels for members and providers, respectively adds to the complexity. The process grows even more complex if dealing with patients who are covered by multiple insurance plans.
Managing technology and people
The constant stream of claims that must be managed, the increasing frequency of prior authorization requests that must be addressed, and the sheer complexity of the billing process combine to make revenue cycle management at diagnostics labs an order of magnitude more challenging than traditional hospital settings. Revenue cycle staff must be able to manage all the nuances relative to payer changes, reimbursement cuts and the move from fee-based billing to value-based billing. So, it is no surprise that it can take even a seasoned healthcare billing professional an extended period of time to ramp up and fully grasp the intricacies of RCM at diagnostics labs.
So, how do you solve these challenges?
By partnering with Quadax!
Quadax’s Prebilling, Billing, A/R management and Payer Reimbursement solutions ensure accurate accounting of financial transactions, and increase revenue and decrease bad debt. Our laboratory solutions manage the entire revenue cycle using a solid financial foundation by conducting a thorough and continuous analysis of front-end to back-end revenue processes to help deliver the best possible patient care and physician experience without compromising or sacrificing reimbursement goals.
Quadax Patient ID helps ensure highly accurate patient demographic data so you can…
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- Improve demographic accuracy and collection efforts by verifying and updating patient identity and demographic information in real time to streamline the billing process.
- Reduce data entry errors by confirming an address as a known location formatted to meet United Postal Service standards and correctly matched to a patient’s name.
- Protect against medical identity theft by enhancing compliance with Red Flag regulations and assure patients that their health records are in good hands.
Quadax Prior Authorization and Medical Necessity solutions help verify authorization requirements and meet medical necessity sooner to ensure services are approved and subject to reimbursement so you can…
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- Connect earlier with ordering physicians on payer needs to secure next steps in treatment and required approval and/or documentation.
- Help enhance the client and patient experience.
- Avoid denials and save time and operational resources by utilizing a streamlined process to obtain physician-initiated prior authorization or medical necessity.
- Avoid bad debt and write-offs, protect expected revenue, and increase the probability of collecting expected revenue.
Submit And Track All Physician-Initiated Prior Authorizations Electronically Through A Single Platform And Ease The Burden On Staff And Time Resources.
Quadax Prior Authorization solution helps you to submit and track all physician-initiated authorizations in real-time so you can…
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- Streamline your workflow, saving time and resources
- Get pre-claim requirement direction and release test results sooner
- Prevent denials and protect expected revenue
Confirm Medical Necessity Payer Policy Requirements To Further Verify What A Patient Will Owe For Covered and/or Non-Covered Tests.
Quadax Medical Necessity solution helps you verify what a patient will owe for both covered and non-covered services so you can…
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- Decrease claim denials and increase net revenue
- Ensure expected reimbursement is received
- Increase client and patient satisfaction through transparent pricing
- Improve workflow efficiency by automating compliance checks
Denial Management helps remove the complexity and scope of managing claim denials. Our claims professionals and sophisticated technology govern health plans and the corresponding price schedules, coding combinations and the associated fee schedules from CMS. Patient visibility is gained using tools to streamline verification of insurance coverage, prior authorization and propensity-to-pay at or before the time of service. Staff errors are reduced and productivity gained with automated workflow processes. These processes identify both full and partial payer denials in real-time, and trigger appropriate actions such as appeals, corrected claims or write-offs.
The icing on the cake…
While we offer an industry-leading purpose built RCM solution, Quadax’s greatest strength is our experience around implementation and ongoing support given our extensive history of meeting a variety of billing, reimbursement and industry challenges. The client service team is supplemented with various dedicated resources within Quadax to react quickly to client needs, not only during implementation but throughout the engagement.
Contact us today to start tackling these challenges to maximize your net collections and your bottom line.
