• Always consider coding – Coding challenges are another significant issue for labs, often resulting in rejected claims or undercharges from third party payors. Many traditional billing systems have some flexibility in setting up individual testing codes and the associated fees from CMS. Most of these systems have limitations, such as the lack of intelligent automation, so they correlate the codes to a billing amount that meets generalized rather than specific payor rules. This may lead to rejected claims or undercharges, leaving reimbursement dollars behind. The alternative to this is to manually set each testing code reimbursement rate for each of the hundreds of payors, which introduces a high likelihood for error.

• Address workflow inefficiency – This leads into another big challenge for labs that can further squeeze their margins – errors and excess costs caused by manual workflow inefficiencies. Managing account receivables is about accuracy and timeliness, which are dependent on workflow. With labs representing two percent of healthcare spending but 30 percent of all claims filed, they see some of the smallest margins in healthcare, meaning manual processes and inefficient labor usage can further erode an already thin margin. Since up to 40 percent of lab claims are known to have missing or inaccurate information, tracking claims that are problematic and correcting them in real time introduces further potential for error. CMS statistics indicate that only about half of denied claims are ever returned for processing. It is precisely these exception claims, as well as inaccurate net versus gross revenue recognition, that cause labs to lose up to half of their profits.


Improving lab revenue through RCM
Many of these challenges are a result of outdated information technology infrastructure (IT) and tools. Incorporating a comprehensive RCM system that includes financial integrity, flexibility, connectivity, automated workflows and business intelligence can play a significant role in impacting a lab’s business and help better manage workflow. Intelligent automation is especially key for consistent and standardized claims exception handling, relieving the lab from relying on the manual decisions of billing clerks in a very complex regulatory environment.

Labs need complete RCM systems that are built on a solid financial foundation with referential integrity and the financial sophistication to provide general ledger-ready, compliant financial reporting. This requires greater drilldown detail, monitoring capabilities and adaptability to ever-changing requirements. Cloud-based RCM systems can help make these goals possible by allowing labs to remain flexible and agile, freeing them from traditional software and its hidden costs and risks.

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