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.

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.  …

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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…

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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…

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Labs, AP Groups Confused about UnitedHealthcare’s Test Registry

CONFUSION CONTINUES among clinical laboratories and anatomic pathology groups about how they should comply with UnitedHealthcare’s new Laboratory Test Registry Program. The program goes into effect on Jan. 1, 2021, but labs and pathology groups must register all tests and testing procedure…

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Medicare Pays 500% More for Molecular Test Claims

CEO SUMMARY: Rapid growth in what Medicare spent for molecular tests in recent years may lead federal investigators to increase scrutiny of fraudulent billing for clinical laboratory and molecular pathology tests, according to a lab consultant who has tracked such spending in recent y…

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UnitedHealth Sets More Billing Rules for Labs, Pathologists

SUBMITTING CLINICAL LABORATORY AND PATHOLOGY TEST CLAIMS to UnitedHealthcare (UHC) will be more complex after the nation’s largest health insurer announced three significant changes in its claims processing procedures. The three changes involve: • Requests for refunds from anatomic pa…

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DOJ Indicts Ten Individuals for Pass-Through Lab Test Billing Fraud

PASS-THROUGH LAB TEST BILLING SCHEMES involving rural hospitals and $1.4 billion in fraudulent lab test claims are at the core of multiple indictments announced recently by the federal Department of Justice (DOJ). Ten individuals—including laboratory owners, billing company…

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UHC Ready to Implement New Lab Test Registry

CEO SUMMARY: UnitedHealthcare announced that its new Test-Registry Protocol will become effective on Jan. 1, 2021, creating a major billing hurdle for labs and pathology groups. By that date, a lab must register each type of test before it can submit claims for these tests to the nati…

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UHC Issues Details about How Labs Register Tests

CEO SUMMARY: As of January 1, UnitedHealthcare will require all clinical laboratories and anatomic pathology groups to register every type of test before labs can bill for those tests. Not only is the COVID-19 pandemic disrupting normal activity, but the administrative burden UHC is i…

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Health Insurers Push Back On COVID-19 Test Claims

CEO SUMMARY: Under new federal laws, health insurers are required to pay for testing for the novel coronavirus without cost-sharing, prior authorization, or medical management limits, but insurers are questioning these COVID-19 lab test bills and denying many of the claims, a healthca…

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