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.
Non-COVID Part B Lab Spend Declined by 15.9% in 2020
MEDICARE PART B CLINICAL LABORATORY FEE SCHEDULE CUTS mandated by PAMA continue to bite deeply. A new government report shows that during fiscal 2020, the Medicare program spent 15.9% less for lab tests, when COVID-19 test payments are excluded. The fed…
Labs, Pathology Groups Face Reduced Revenue
CEO SUMMARY: In recent years, certain clinical laboratories and pathology groups found they can generate more revenue by remaining out of network whenever possible. But when the No Surprises Act goes into effect Jan. 1, labs and pathologists may find advantages in being in network. …
PAMA Test Price Cuts Deferred: It’s a ‘Huge Win’ for Labs
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Federal Rule to Revise Out-of-Network Billing
CEO SUMMARY: Remaining out of network with health insurance companies may boost revenue for providers, including anatomic pathologists and emergency room physicians. But the good times may soon end. Last month four federal agencies issued rules that implement new requirements under …
Insurers Get Aggressive with Years-Old Audits
CEO SUMMARY: Not only are health insurers looking back to find overpayments and funds paid erroneously, but payers also are requiring documentation for overpayments. If clinical labs and anatomic pathology groups do not appeal such claims quickly, they may be liable for any amount i…
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…
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…
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,…
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…
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…
CURRENT ISSUE
Volume XXXII, No. 6 – April 21, 2025
Now that a federal judge has vacated the FDA’s LDT rule, The Dark Report analyzes the judgement and notes the various steps the FDA could take in response. Also, lab testing at pharmacies is proving to be less successful than was once anticipated.
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