July 29, 2019
Just a few short years ago, the clinical toxicology laboratory space was filled with startup laboratories often managed by folks with little to no experience in the field. Such labs often did not have the years of experience and highly efficient processes of larger, more sophisticated laboratories. And their billing and payment collections processes were lacking as well.
Their selection of a laboratory medical billing and Revenue Cycle Management (RCM) vendor was often decided based upon short internet searches of local medical billing companies. The issue, however, was that most of these companies were physician billing companies with little to no background or experience when it comes to laboratory billing (or specifically, toxicology laboratory billing), and had limited technical expertise (required for creating optimized electronic work flows) or prior history in scaling a billing company to handle the high volumes of very specialized claims produced by such laboratories. As these companies started to grow along with the industry, they were able to secure the business of some of the larger laboratories.
The performance of virtually all of these companies was sub-par by professional laboratory billing standards. So why would labs keep them?
- Many did not provide 100% clarity and insight into billing and fiscal performance. In essence, labs were left in the dark and had very limited information required to differentiate samples from good
- Back in the day, revenues per encounter were high. In essence, life was as good as the dollars in the bank account. If the money was there, no one really concentrated on the details. So many labs never employed the best, most efficient billing processes. And quite honestly, they simply didn’t know any better.
- Lab owners thought the high reimbursement rates would continue…so why change? Of course, anyone who has been in healthcare for long has seen Medicare standardize and reduce rates, with almost virtually other payors following shortly thereafter. These lower rates necessitated that labs become hyper-efficient in terms of operations, and hyper-focused on proper billing practices. Failure to do so often resulted in laboratory failure.
Times have changed rather drastically. While the demand for toxicology testing has increased, reimbursements for such tests have decreased drastically. Claims have come under increased insurance payor scrutiny as well as subject to a myriad of complex claims adjudication rules and limits. Combine these factors with the new EKRA compensation laws, and declining insurance payment allowed amounts, and it is no wonder why so many laboratories have simply gone out of business (as have many of the billing companies which were adequate at making hay only while the sun was shining). Even highly experienced, reputable and professional laboratories can find themselves struggling.
It is therefore clear that for a toxicology lab to flourish during these challenging times, it must employ best practices when it comes to billing and revenue cycle management. However, some still hold on to sub-par processes or RCM (medical billing) companies.
As the CEO of a billing and RCM company with a large, industry-leading toxicology laboratory billing division, I have seen some of even the most reputable labs coming to us after relying on antiquated vendors who have not been able to stay ahead of the curve. The difference in performance can often mean a significant overall revenue increase – and for some labs it can even mean the difference between prosperity and closing their doors.
So, what should labs look at when evaluating their current or prospective billing partners? Below are ten important considerations. If your current billing paradigm doesn’t check the box of all of them, chances are you are leaving money on the table.
- Is the billing company (or internal billing group) highly specialized in the toxicology laboratory environment? Why is this important? As you will see from some of the examples below, achieving maximized revenues for clinical laboratories is not like billing for a medical practice. At our company we have a division which serves medical clinics. I have been serving medical clinics for over 26 years and I can tell you it is a different beast with different rules than toxicology billing. If your company is not highly experienced in toxicology laboratory billing, your lab will pay the price.
- Does the company have direct interfaces with your laboratory information system (LIS)? Patient information and most importantly, results, must flow electronically from the LIS to the billing software system. Can’t someone just key that information into the billing system manually? Absolutely – but then there is less time to follow-up with insurance payors who are bent on not paying you. In other words, do you want people typing info into a system, or would you rather have those resources spent aggressively pursuing money? The net effect to your revenue should be obvious.
- Speaking of interfaces and imports… no LIS system provides the information in an easily billable format. For example, does the billing company know all the in’s and out’s of which insurance companies require which diagnosis codes, and in what specific order to increase the likelihood of first pass payments and maximum reimbursements? Does their interface software system automatically take this information and load it for billing appropriately? You probably figured by now that a “no” will result in lower revenues. You should know the rules, and processes must be built around such rules or preferences to make certain information is being collected properly and then billed properly.
- While on the subject of insurance specifics, do they know exactly which payors want which code set for toxicology billing? (There are multiple code sets, and not every payor accepts the same codes – and some have specific requirements for such codes. And there is no one to one correlation between these codes). If they don’t know that, then you know who is going to pay the price.
- Speaking of codes, does the billing company know what codes are dictated by what analytes and tests? And then for which code set? (Hint: It’s not just about drug classes.) They should readily be able to show you a detailed matrix of what codes to bill for which analytes, classes, etc., by payor with corresponding rules. We obviously know them, and it comes after many years of hard work in the field. In fact, we embed that in our import processes to automate things. (Please do not ask our company to send this to your company to train them on their job… it is proprietary. Actually it is not proprietary – they can go out and learn from years of experience and hundreds of hours of research exactly who to bill what, how and when.) Failure to do so correctly results in less than optimal revenues.
- Does their billing integration system automatically take the results of the test, compare it to the patient’s insurance, identify the correct code set, calculate the correct codes based on your instructions, the code set and analytes, determine ICD preferences per code/insurance, and then import that information in a matter of milli- seconds? No? Well, then the money you are paying them goes more toward calculating this manually (assuming they even have the experience and unique knowledge base to calculate it properly) and then entering it manually – rather than spending that same time going after money that is owed to you. And importantly, they won’t be able to do it accurately. The result? You guessed it – money left behind.
- How about experience in toxicology insurance-specific limits on things like usage, max benefits, and max code levels? Do they have the experience and automated systems to take these things into account
- Do they have accession-driven billing software platforms? Billing for labs is tracked by accessions, not standard visits or DOS like clinic billing. If you don’t do it right, you will pay for it. There are reasons for this that we learned the hard way a long time ago.
- We spend a lot of time discussing what to bill, but how about what not to bill? Certain payors and code sets allow you to bill for items that others do not.. If billers are not experienced here, two things can happen… First, they can omit billing for items in certain circumstances for which you should rightfully and properly be paid. Second, and most importantly, many billing companies bill for things they shouldn’t in the toxicology lab space. I have seen it first hand, I have actually had laboratories fire us because we refused to do it. Here’s the thing, you may get paid on it. Sounds good, right? Wrong… it will usually trigger an audit down the line and then best that you can hope for is a massive take back. The worst thing, a knock on your door by the Office of the Inspector General. It’s called fraud. The bottom line is that compliance is paramount to the long term viability of any laboratory. Make sure your billing partner has these things coded into their interface software. Most do not.
- Can the billing company provide laboratory-specific reporting and analytics based upon accession and then break it by payor, code, denial reasons, referring providers…etc. The reasons for doing so should be obvious. We want to make sure we are getting paid, have the knowledge of what doesn’t pay, and then drill down to determine the source of the issue. This allows you to focus on payable samples rather than non-payable business. If you don’t have those reports, custom extracts, and analytics – you are flying blind. The way most billing companies want it.
These are just the top ten items that come to mind. There are many others, especially as they relate to billing and follow-up protocols…etc. But (at least in this article) I won’t bore you on topics like insurance-specific rules-driven claims follow-up engines in this article. The fact is that reputable RCM companies have many additional processes and resources aimed at collecting increased revenues for the hard work that medical laboratories and providers perform.
All of the things I listed are items that highly experienced companies with exceptional technical resources, automate, process engineer, and implement for every laboratory they serve. But it is just the tip of the ice burg. Each item is important – and the omittance of even one can have a negative financial impact on your laboratory.
It goes without saying that if your laboratory does not have these state of the art RCM processes in place, it is time to implement them. Truly many labs of all shapes and sizes still don’t know if they are optimizing their revenue collections.
My suggestion: It may be wise to get an outside opinion, as many reputable RCM companies offer a free analysis of billing performance and processes.
A few final thoughts…
Hit by EKRA, increased scrutiny, reductions in payor rates, and stiff competition, labs should also consider making sure they cover the following:
- Make certain they are maximizing revenue for the services performed (the focus of this article.)
- Continue growth with not just any samples, but reimbursable samples
- Review in-network contracts and make every effort to gain in-network status with the appropriate insurance payors where possible and appropriate. (Credentialing).
- Review internal processes and technologies to make sure the lab is operating optimally. Ie. Some labs are able to process samples much more efficiently than others, driving down their per-sample processing costs.
- Differentiate themselves from the competition with additional clinically valuable tests such as new synthetic urine validity testing. (many of our labs have started this with great success and benefit).
Many labs which have implemented the above items commendably and compliantly, have not only survived, but thrived. Will yours?
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Note: Please feel free to contact PractiSource if you would like more information on any of the above topics. They will be happy to point you to the proper resources.
About the writer:
Markus Muhlhauser is the CEO of PractiSource, LLC and has over 26 years of experience in the billing and revenue cycle management field. PractiSource is a national full service billing and RCM firm dedicated to maximizing reimbursement with the highest levels of customer service and support. Based in Connecticut and Massachusetts, PractiSource’s laboratory division serves a wide variety of clinical laboratories in the fields of pathology, chemistry, molecular and toxicology services.
Prior to founding PractiSource, Markus served as CEO of PhyLogic Healthcare from 2001 through 2011 guiding the company through 10 years of positive annual growth without exception. The company was acquired by ADP™ in 2011 and became a fundamental building block of the ADP AdvancedMD™ organization. Markus then served on the AdvancedMD Executive Team as Vice President of Business Development until 2014.
Markus founded PractiSource in 2014 with Frank Perrotta, a CTO and longtime industry veteran. They brought together some of the very best and highly experienced RCM professionals with whom they worked over the past 20 plus years to form an RCM dream team. Today, PractiSource serves both laboratories and physician clinics from coast to coast.
You can contact Markus through PractiSource’s Contact Page or by calling 860-840-2244.
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