Diagnostic and medical laboratories in the United States have already made $57 billion in revenue this year. With numbers that high, it’s easy to see why laboratory billing is so complicated.
Managing revenue is difficult for any business. Then, add in the mess of dealing with proper patient information and insurance companies. Now you can see why the billing cycle can take months to complete.
Are you concerned about how laboratory billing is affecting your bottom line? Looking to get a better handle on the process? Look no further!
Here, we’ll cover the most important steps of the laboratory billing process. We’ll also discuss some common pitfalls that can affect processing time.
The Steps of the Laboratory Billing Process
The laboratory billing process can be confusing. Here, we’ve simplified it for you by breaking it down into three main steps.
1. Laboratory Coding
The first step in laboratory billing is the coding process. After a laboratory provides a service, they provide diagnostic and procedural codes associated with it. Insurance companies use these codes to determine whether they are willing to cover these services.
The first type of coding you should know about is the ICD (International Classification of Diseases). The ICD provides diagnostic codes that classify diseases. Thanks to the World Health Organization, these diagnostic codes are the same around the world.
The ICD is currently on its 11th version. And not only does it provide diagnoses, but it also includes values for signs, symptoms, and abnormal findings.
The other important type of coding is the CPT (Current Procedural Terminology). The CPT code represents various diagnostic and medical services so that these values are uniform across the country. The American Medical Association maintains these codes and makes this all possible.
2. Revenue Cycle Management
After assigning the codes, the collections phase of the cycle begins. First, the payer receives a bill. This usually takes place electronically using the Electronic Data Interchange.
Next, the claims are processed. This usually is the job of medical claims examiners or adjusters.
If it’s a particularly large sum, the insurance company may have medical directors review these claims. They’ll base this on eligibility and medical necessity.
3. Approval/Denial
Finally, claims are either approved or denied. If approved, they are reimbursed a percentage. This amount is determined by a negotiation between the provider and the insurance company.
If the claim is denied, the provider receives a notice, usually as an Electronic Remittance Advice or an Explanation of Benefits. Upon denial, the provider has to reconcile it with the original claim. They then make any necessary corrections and resubmit it.
This process of correcting the claim can take several iterations until the full claim is paid. Or the provider can give up and accept the lesser amount.
Common Laboratory Billing Pitfalls
There are several things that might delay the laboratory billing process. Check out these common pitfalls so you can make sure that you avoid them!
1. Mistyping Insurance Information
Typing in insurance information is of the utmost importance. Even one incorrect letter or number can vastly slow down the laboratory billing process. This can cause a delay of weeks while your laboratory tries to track down the patient or their physician.
To avoid this, take a copy of the insurance card. You might want to also copy the patient’s ID in case you mistype their name or address.
2. Accepting Inactive Insurance
Sometimes you’ll collect all the correct insurance information. But then you discover that the insurance card isn’t currently active. This, too, will slow down the billing process.
Usually, you will not be able to submit the bill until they have active coverage. And that will greatly impact your bottom line. Make sure to check for active coverage upon collection of the insurance information.
3. Not Checking In-Network Versus Out of Network
It’s also important that you check if you are in or out of the patient’s network. It’s common for policies to not cover out of network services. Keeping track of this information can help you track all denials that are due to out of network clients.
4. Failing to Separate Out Billing
While it might be tempting to try to reduce the number of personnel, it’s actually detrimental to your business in the long run. Dedicating resources to track billing allows you to track costs, profits, and losses.
This can often make issues affecting your bottom line much clearer. There might be thousands of encounters on a daily basis, and it’s harder than you think to separate out the things that are costing you money.
5. Failing to Manage Denials
Keeping track of denials is also important, as they’re preventing you from receiving your payment. Some denials can be as simple as collecting updated patient information. But if your denials aren’t managed on time, you’re adding on unnecessary time to the laboratory billing process.
Avoid these common pitfalls by using a laboratory billing service. Companies that specialize in laboratory billing make sure that the billing process runs as smoothly as possible! Find out more about these services here.
Laboratory Billing: Now You Know!
Now you know the basics of laboratory billing! It’s not easy, but it’s an extremely important part of the medical field. Follow the process above to avoid pitfalls, and you’ll have laboratory billing down in no time.
Don’t have the time to manage all this? Fret not! Hire a laboratory billing service to take over the process for you!
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