A Comprehensive Guide to Laboratory Billing

A laboratory, which can be of any size and iteration, is a unique part of a medical facility. Many laboratories are located inside or near hospitals to help physicians diagnose and prescribe treatment to patients. As a lab contributes to a hospital’s total revenue, you should pay attention to its revenues. You can focus on other essential tasks if you distinguish your billing from other lab activities.

But before starting to work on laboratory billing, you need to know what it is, how it works, and its most important aspects. Here is a comprehensive guide to laboratory billing that will help you to learn about it in detail. Let’s dive in.

What Is Laboratory Billing?

A laboratory bill is the consistent interactions between a doctor ordering a test, the lab offering services, and the insurance company or other payer providing compensation for the labor, materials, and time used. The billing cycle may take days and months to finish. It usually involves interactions between multiple parties before resolution. Most laboratories have different coding and billing departments to navigate the billing process.

How Does the Laboratory Billing Cycle Start?

The laboratory billing cycle starts with an order from physicians/other entities through a code for the specifically requested laboratory test. Once the specimen/sample analysis is done, labs perform diagnosis/procedural coding indices used in the medical industry. Such codes give the insurance company or other payers the required information so they can decide if they would pay the claim.

How to Use Billing Information to Grow Your Laboratory?

Your laboratory billing information gives you all the required details to identify areas for possible growth. To grow your lab, you must be aware of the primary lab economics.

Here are the ways to use billing information to grow your laboratory:

Track Patient Volumes

You should track the entire patient volume to assess daily and monthly patient activities at all locations on the most basic level of analytics. Plus, you should know the total charges and CPT codes related to all patient interactions.

Calculate Expected Monthly Gross Billing

You must calculate the expected monthly gross billing and compare it to your actual patient activities on a broader level. This KPI helps you understand if your average charge level matches your demand and if your billing cycle reaches your workflow level. The revenue reports represent the cash your laboratory receives for working and clearly show your billing department’s efficiency.

Focus on the Percentage of Collected Cash

You should know much more than only total revenue. Focus on the percentage of cash collected for all patient interactions, which is the accrual rate for every payer. Compare the accrual rates and relationships with every year and the cost of different CPT-code procedures.

Determine Profitability of Every Procedure

Use analytics to assess the profitability of every procedure, client contract, payer relationship, and other costs, including accession and overhead. You can use the same projection to determine the profitability of possible opportunities. Remember, dysfunctional lab billing procedures can cause undesirable effects in your laboratory. Accounts receivable time can extend as claim denials increase if you implement incorrect coding/billing procedures. Cash flow shortages in your laboratory can ruin your efforts to deliver services or use cutting-edge equipment consistently.

Why Should You Outsource Laboratory Billing?

Many laboratories use Laboratory Information Systems (LIS) to get electronic records. This system can boost your internal operations and the communications between your laboratory, patients, medical providers, and payers. LIS helps to streamline your billing procedures. Installing software is not enough as you need to analyze the data collected by your billing system, develop the vital skills to understand the analysis, and work on different areas accordingly.

Outsourcing laboratory billing can help to understand the detailed revenue analysis and save resources for other vital activities. It is a much more effective approach to lab billing rather than only installing a software system.

Here are the key reasons to outsource laboratory billing:

Save Operating Costs and Improve Cash Flow

When you have your laboratory billing department, you must pay software fees and primary and consistent training costs to retain salaried and talented employees on the payroll. Outsourcing lab billing helps in cutting overhead costs while improving cash flow.

Eliminate Billing and Coding Errors

Most medical claims have some kind of billing error. Outsourcing your laboratory billing to a company, which uses cutting-edge billing software, diminishes your chances of submitting claims with coding and billing errors that can delay payments and increase billed hours. Accurate billing and coding deliver improved data in analysis reports.

Automate Billing Verification

Inaccurate verification and eligibility are the leading causes of claims denials. Outsourcing your billing verification services can improve accuracy if you have an internal billing staff to verify coverage, medical requirements, and other claims information. An automated system manages and decreases the number of hours spent on laboratory billing by your staff. You won’t require time and effort to keep your team updated with coding modifications.

Speed up Bill Processing and Payment

Automating billing tasks helps in quickly completing your billing cycle. Using automated software to file an inaccurate claim prepared by a skilled coder can finish the payment in a few days rather than the months required to process a standard paper claim.

A Perfect Solution to Staffing and Analysis Issues

Outsourcing billing services can always be an excellent initiative for your lab. Managed laboratory billing services can be the perfect solution for your staffing and analysis issues. Outsourcing your laboratory billing can save you time in billing procedures and supply better data for analysis. Higher quality data can help you identify weak areas and improve efficiency accordingly. Outsourcing can help you plan strategically to grow your lab and significantly boost your cash flow.

Your laboratory needs every possible effort to boost productivity, revenues, and growth opportunities. Hopefully, this guide to laboratory billing has helped you understand its value. If you don’t have time or resources to focus on laboratory billing, reach out to Innovative Lab Solutions. We can help manage your laboratory revenue to generate more and grow your lab. Get in touch with us today for custom billing solutions for your laboratory.