Is Your Staff Struggling with How to Bill Lab Services? 4 Steps to Better Results

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As laboratory services are one of the highest revenue-producing departments in most health systems, it’s incredibly important to bill these services correctly. However, it’s also an area fraught with guidelines and restrictions—and with many staff members throughout the hospital system working laboratory accounts, there is a high risk of errors and inconsistencies. This is a situation we have seen and helped correct in health systems nationwide.

If your organization is struggling with coding laboratory services consistently and accurately, here are the four steps you need to take.

  • Step 1: Review Lab Services Billing

    First, review all aspects of billing laboratory services. This includes everything from ensuring non-hospital patient laboratory services are billed on the correct bill type and that ESRD laboratory services are billed appropriately, to ensuring the hospital system and/or staff appropriately combine bill services subject to the payment window for inpatient admissions.

    Pay particular attention to the outpatient diagnostics treated as inpatient services billing, as this is an area of focus for Medicare and the OIG. Other payers have similar requirements for inpatient combine billing. It’s important to test all billing scenarios in your hospital system regularly to reduce the potential exposure for an audit.

  • Step 2: Ensure Tools and Resources Are Current

    The hospital staff responsible for checking medical necessity for an ordered laboratory test may be using industry tools that require regular updating. For example, a medical necessity checker typically pulls information from Medicare Laboratory NCDs and Medicare Regional MAC Local Coverage Determinations (LCDs). Both Medicare and the Medicare Administrative Contractors (MACs) issue updates almost daily for covered and non-covered diagnosis codes—so you need to stay on top of these updates. When these tools and resources are not current, the hospital may erroneously bill a patient’s diagnosis that is not covered by Medicare/Medicaid (or other commercial payers).

  • Step 3: Educate Staff

    It is also important to make sure laboratory and hospital staff understand the process for communicating back to the ordering physician when a laboratory service may be non-covered due to missing or insufficient diagnosis.

    This process may involve issuing an Advance Beneficiary Notice of Non-Coverage (ABN) to the patient. This part of the process should be addressed in the hospital or laboratory written policies and procedures and audited periodically to ensure there are no gaps that can lead to denials and non-payment. Work with applicable hospital staff and the Health Information Management staff to ensure ABNs are being issued, signed, and stored in the patient’s hospital record.

  • Step 4: Review Policies and Procedures

    Finally, be sure to review your laboratory’s written policies and procedures against current charge capture processes and billing processes for the laboratory services and then update accordingly.

    These policies commonly address all the laboratory operations but fall short or are outdated when it comes to processes for charge capture, coding, billing, and non-covered laboratory tests. Laboratory and hospital systems are periodically updated or changed, so the policies and procedures will need to reflect how the processes have changed. Review the updated policies and procedures with applicable staff to ensure the correct processes are followed.

Education Is Key to Staying Compliant

The bottom line is it takes a village to maintain laboratory coding and billing compliance. Laboratory and other hospital staff responsible for ensuring clean claims require the necessary tools and education to stay abreast of current regulatory guidance for coding, billing, and coverage.

The hospital laboratory may require outside resources from time to time to aid in maintaining policies and procedures and educating staff. There are laboratory coding and billing specialists in the healthcare industry who can provide this level of support.

Written by: Tiffani Bouchard, CCS, Director of Revenue Integrity

Tiffani has more than 25 years of experience in chargemaster management, hospital bill auditing, claims issues resolution, and coding and documentation reviews for PPS and CAH hospitals nationwide. She has extensive knowledge of CMS coding/billing guidance and regulations and provides on-site training for chargemaster staff, claims processing, and department leadership.