Medsphere Team

Laboratory Billing Solutions: What should you be looking for in a partner?

February 22, 2021

Laboratory Billing 8 Minute Read

Do complex and complicated mean the same thing?

Merriam-Webster says they do. But everyday usage matters, and people seem to frequently tack exasperation onto complicated in describing impenetrable things like legislation and relationships.

Complex, on the other hand, is reserved for discernable challenges requiring Mensa-quality cognitive skills and graduate-level education, and for Rubik’s cubes and string theory.

To that list we can add running a clinical laboratory, as “Lab Manager” magazine Editor-in-Chief Pamela Ahlberg spells out in an editor’s note.

“Today’s lab manager has a lot on his or her plate,” Ahlberg writes. “First and foremost is the science … but now your responsibilities have expanded to include evaluating and purchasing equipment, complying with regulations, managing human resources, controlling costs, developing laboratory safety programs, and so on. Add to that the speed with which technology advances and the need for managers to stay abreast, and it’s a pretty tall order.”

Indeed, if one were to identify a single phenomenon that has made life more complex it is the velocity of information enabled by computers.

“It goes without saying that the computer has revolutionized the clinical laboratory,” writes James Seidler in Clinical Lab Products. “Still, while the clinical laboratory has been made more efficient in the digital age, the rapid pace of technological advancement has also made its management more challenging.”

The upside of this scenario is that technology both creates the velocity and enables the solution. The digital age is multiplying the niche players in most industries that can shoulder the burden of particular tasks many specialized companies are just better off not having to do.

Take laboratory billing, for example. At the highest level, lab billing is a complex endeavor, and it is absolutely essential to the long-term success of all laboratories, but it’s not something that the labs must do themselves. In fact, many labs would be better served by outsourcing their billing function to a third-party with proven expertise and the right tools.


1. A Company That Understands Complexity

From a testing perspective, labs can be bucketed as waived (physician office labs), moderately complex, and highly complex. As a lab manager, you’ll obviously want to select a billing organization that meets your testing needs but also has expertise at all billing levels to understand the nuance of lab testing and clearly distinguish between the different levels of complexity.

Beyond an understanding of testing itself, the most competent billing organizations can also see clear of the intricate processes required to effectively conduct lab revenue cycle management (RCM). These operations efficiently navigate billing and cash reimbursement, provide a responsive and agreeable customer service organization, and offer frequent and detailed billing reports, as well as feedback.

Perhaps most importantly, the lab billing company who best meets your needs will understand their own processes well enough to give you simplified insight (transparency) into how they work. A company that treats their process like a black box only they can understand is one to steer clear of. When considering lab billing groups, also ask how they continuously improve on their processes—how they implement tweaks intended to manage overall costs while still maximizing potential revenue.

2. Proven Ability to Maximize Revenue

The unambiguous point of outsourcing lab billing in the first place is to generate as much revenue as possible for the tests a lab organization has done. Again, the most effective and efficient billing organizations will have baked revenue maximization into their overall process, so ask detailed questions about that process.

What, specifically, should you want to know?

  • What tests (level of complexity) are the billing organization familiar with and what types of tests have they done previously? The response you get should include a description of the captured data necessary to efficiently bill. Remember, a process that requires additional data generation will add hours and costs to the final tally, which a well-thought-out process avoids.
  • What most frequently gets in the way of full reimbursement? A prospective billing organization should have a ready answer for any questions about what most frequently sabotages rapid reimbursement.

3. Commitment to a Bidirectional Relationship
Even as your lab considers hiring a billing partner, remember that a reputable and professional billing organization will also be interviewing you to confirm that your organization has all precedents in place to facilitate an effective overall RCM process.

They should ask, for example, about the states you are licensed in and about your existing payer contracts. Credentialing of your lab and ordering providers will also be a concern and should give rise to questions. Also, what percentage of the tests you perform are covered through existing contracts, and what other payment requirements—ICD-10 coding, prior authorization, coverage policies, established documentation—are in place to enable appropriate and streamlined payment?

Why, you may ask, should you entertain questions like these from an organization you are thinking about hiring? Simply put, lab billing becomes a more complex and expensive prospect for labs that don’t have all their ducks in a row. You can use the feedback a prospective billing company provides as a means to better organization, or it can become a source of blame and friction throughout a troubled relationship.

Your response may also mean that the billing organization chooses not to enter into a relationship with you, but you should have more confidence in a company that asks about your processes than one that simply seems happy to have your business, no questions asked.

4. A Complete Resume

You’ve already asked about the level of complexity your prospective lab billing partner is familiar with, so now ask for the evidence. Tell them you want to see a list of clients. You don’t have to ask for specific names and locations unless they’re willing to provide them, but do ask for an anonymized roster of clients—the number of hospital labs, molecular diagnostics labs, physician group labs, anatomic pathology labs. Speaking to level of complexity is one thing but demonstrating that familiarity is something on which to establish a broader based of confidence.

In the digital age, you should also request a demo of the platform used to facilitate the billing process. Are the tools user friendly and understandable, even to you who does not have daily familiarity with them? If not, new users may struggle to quickly get up to speed, which could cost your organization. The platform should be regulatory compliant and have redundancy built in, and you may want to inquire about where it is located (SaaS versus onsite) and whether it is proprietary.

5. Proven, Documented Outcomes

In the end, your greatest concern is that an outsourced lab RCM provider effectively bills for every test. You can confirm that they are by regularly viewing detailed billing reports cross-referenced with the test data you send to the billers. Reports should be frequently available and automated, and they should include, at a minimum, submission date, recipient, current claim status, reimbursement date, and reimbursement total.

Assuming every test is accounted for, a related concern is how you are being charged for each test by the billing company. Of course, this will vary by test (complexity), but base pricing should be based on a percentage of collections and then be adjusted based on volumes, resource needs, additional services added, and required minimums. Again, any responsible billing organization should be able to explain their pricing structure in a straightforward and understandable way. If any aspect of pricing is vague or left open, that might give you pause.

Yes, the list of concerns you’ll want to embrace when considering an outsourced lab RCM services partner is extensive, but detailed understanding is one component of a successful business relationship. Ultimately, what you’re looking for in a more general sense is the openness and accessibility that are hallmarks of a genuine partnership. The most effective lab billing organizations will make your lab better as they show you how to alter workflows in ways that improve efficiencies, reimbursements, and even compliance. Spend the necessary hours to probe the nature of the relationship and you can ensure a lengthy and mutually beneficial collaboration.

To learn more about entrusting your RCM process to an experienced, professional support team, visit this page to read about Medsphere’s Laboratory RCM Solutions. You can also set up a demo and conversation using this form.

About Medsphere Laboratory RCM Services

Medsphere provides the highest quality comprehensive billing and revenue cycle management (RCM) services to laboratories in the industry. By being flexible with technology, optimizing business process and sweating the details, we help secure our clients’ financial success. Over the past 25 years, we have provided RCM / billing services to a wide range and types of laboratory facilities, including a strong focus on Molecular Diagnostic Labs, Hospital Lab Outreach Programs, and Pathology Labs/Practices.

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