Laboratory Billing

The laboratory billing process is the interaction between a clinical lab or pathology group and the insurance company (payer). The entirety of this laboratory billing interaction is known as the billing cycle, which can take anywhere from several days to several months to complete, and require several interactions before a resolution is reached. The entire process is the function of what is commonly known as the laboratory coding/billing/collections department.

Laboratory billing starts with laboratory coding. After a lab service is provided, diagnosis and procedure codes are assigned. These codes assist the insurance company in determining coverage and medical necessity of the services. The codes used for laboratory billing are the International Statistical Classification of Diseases and Related Health Problems, usually called by the short-form name International Classification of Diseases (ICD), and the Current Procedural Terminology (CPT) codes.

The ICD is the international “standard diagnostic tool for epidemiology, health management and clinical purposes.” The current version is ICD-9, with ICD 10 scheduled to become the new standard on Oct. 15, 2015. It is maintained by the World Health Organization, the directing and coordinating authority for health within the United Nations System.

The ICD is designed as a health care classification system, providing a system of diagnostic codes for classifying diseases, including nuanced classifications of a wide variety of signs, symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or disease.

The CPT code set is a medical code set maintained by the American Medical Association through the CPT Editorial Panel. The CPT (copyright protected by the AMA) describes medical, surgical, and diagnostic services and is designed to communicate uniform information about medical services and procedures among physicians, coders, patients, accreditation organizations, and payers for administrative, financial, and analytical purposes.

Once the procedure and diagnosis codes are determined, the lab bill enters the laboratory collections/revenue cycle management phase. The payer is usually billed electronically by formatting the claim as an ANSI 837 file and using Electronic Data Interchange to submit the claim file to the payer directly or via a clearinghouse. The payer processes the claims usually by medical claims examiners or medical claims adjusters. For higher dollar amount claims, the insurance company has medical directors review the claims and evaluate their validity for payment using rubrics (procedure) for patient eligibility, provider credentials, and medical necessity.

Approved claims are reimbursed for a certain percentage of the billed services. These rates are pre-negotiated between the health care provider and the insurance company. Failed claims are denied or rejected and notice is sent to provider. Most commonly, denied or rejected claims are returned to providers in the form of Explanation of Benefits (EOB) or Electronic Remittance Advice.

Upon receiving the denial message the provider must decipher the message, reconcile it with the original claim, make required corrections and resubmit the claim. This exchange of claims and denials may be repeated multiple times until a claim is paid in full, or the provider relents and accepts an incomplete reimbursement.

Genetic Tests Grow in Number, Complexity

CEO SUMMARY: Getting paid for genetic tests continues to be a challenge. This is true for both payers and the labs that perform the tests. Even physicians are dissatisfied with the status quo because they must deal with patients unhappy about the high cost of genetic tests. The prob…

Read More



NJ Lab Sues UnitedHealth Over Unpaid Test Claims

CEO SUMMARY: New case law in how health insurers should reimburse for COVID-19 lab test claims might be one outcome if a New Jersey lab company were to prevail in a federal lawsuit it filed against UnitedHealthcare alleging non-payment of COVID-19 test claims. An interesting fact me…

Read More



XIFIN to Open New Office in South Carolina for Lab Billing

SINCE FEBRUARY, THE TOTAL NUMBER OF PEOPLE VACCINATED grew steadily even as the number of tests for COVID-19 declined sharply in the United States. But overall test volume has remained steady at 130% of pre-pandemic levels, said Brian Kemp, Vice President of Revenue Cycle Operations for XIFIN,…

Read More



MedPAC Advises Congress on Lab-Data Reporting

CEO SUMMARY: For years, the clinical lab industry has sought unsuccessfully to get the federal Centers for Medicare and Medicaid Services to address the inequities in the payment formula CMS adopted after Congress passed the Protecting Access to Medicare Act (PAMA). In April, the la…

Read More



Federal Judge Rules Against ACLA in Its PAMA Lawsuit

CEO SUMMARY: Now that a federal judge has ruled that the American Clinical Laboratory Association’s lawsuit is moot and dismissed the case, it is unclear what next steps are open to ACLA and the clinical laboratory industry in their challenge to how the federal Centers for Medicar…

Read More



OIG Says Medicare Spending On Testing Increased in 2019

CEO SUMMARY: Newly-released data indicates that Medicare officials are falling far short of their goal to decrease the total amount of money spent annually on Part B clinical laboratory tests. That is one finding by the federal Office of the Inspector General in its report of Medica…

Read More



Congress Passes Bill to Ban Surprise Medical Bills

Starting Jan. 1, 2022, out-of-network clinical laboratories may no longer be allowed to bill patients for lab tests performed in certain settings under a law both houses of Congress passed on Dec. 21.  The COVID relief bill includes a ban on unexpected m…

Read More



UnitedHealthcare Delays Its New Test Registry Protocol Until April 1

CLINICAL LABORATORIES AND ANATOMIC PATHOLOGY GROUPS working to register their tests with UnitedHealthcare’s (UHC) new Laboratory Test Registry Protocol just got a 90-day reprieve. UHC has delayed the start date to April 1, 2021.  …

Read More



Medicare COVID Test Coding May Become a ‘Logistical Nightmare’

STARTING JAN. 1, 2021, clinical laboratories performing COVID-19 tests using high-throughput systems for Medicare patients must comply with a complex new coding rule when submitting claims for these tests.  The federal Centers for Med…

Read More



Medicare to Cut Payment for COVID Tests Starting Jan. 1

CEO SUMMARY: Starting Jan. 1, CMS will lower the COVID-19 test payment to $75 when labs with “high-throughput systems” report a COVID-19 test result after 48 hours. This is the federal government working at cross purposes, since other federal agencies are diverting COVID-19 testin…

Read More



How Much Laboratory Business Intelligence Have You Missed?

Lab leaders rely on THE DARK REPORT for actionable intelligence on important developments in the business of laboratory testing. Maximize the money you make-and the money you keep! Best of all, it is released every three weeks!

Sign up for TDR Insider

Join the Dark Intelligence Group FREE and get TDR Insider FREE!
Never miss a single update on the issues that matter to you and your business.

;