News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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A Dark Daily Extra! Overcoming the Common Challenges Facing Molecular Diagnostics Labs to Maximize Revenue

This is the second of a three-part series on revenue cycle management for molecular testing laboratories and pathology practices, produced in collaboration with XiFin, Inc.

Second of a 3-part series, this article will detail what molecular diagnostics and pathology groups need to understand about coding, billing, and denial management to maximize revenue and cash flow successfully.

In the first article, we discussed how molecular diagnostics and pathology groups can enhance the patient experience, physician engagement, and payer relations. Now, we will detail how denial management can successfully maximize revenue and cash flow. As we discussed in the last article, revenue cycle management (RCM) is much more than billing.

Today’s rapidly changing environment of directives and expectations from payers, patients, and health systems require deeper understanding, great agility, and strategy in every aspect of business. Creating opportunities to provide better service, adopt state-of-the-art technologies, and build robust processes and partnerships can make or break the long-term success of a laboratory or pathology practice.

Technical assessments are often required to establish clinical validity and utility to achieve payer coverage for novel genetic tests. Achieving payer coverage requires a deep understanding of how-to code tests compliantly and to facilitate reimbursement.

“We recommend that molecular diagnostics laboratories consult with coding experts to fully understand the coding requirements for each genetic test,” says Clarisa Blattner, XiFin Senior Director, Revenue and Payor Optimization.  “Ensuring reimbursement requires knowing payer policies and to track denial trends by payer over time to identify changes.”

Blattner noted that payer policies and behavior are constantly changing. Labs, and their billing partners must stay abreast of changes to avoid lengthy delays that denials and subsequent appeals can cause. Understanding the documentation that is required with claims is invaluable. Knowing these requirements up front and submitting complete claims with all required medical records and documentation of medical necessity goes a long way toward facilitating reimbursement.

Payers are adopting increasingly rigid policies that are often inconsistent with others. Reimbursements continue to be cut while quality reporting requirements rise.

Diagnostics laboratories that conduct genetic testing must also overcome four common challenges:

  1. Achieving and expanding payer coverage with coverage determination that defines reasonable and medically necessary services and tests.
  2. Knowing how to code the tests correctly with medical nomenclature to report services and/or tests to a payer.
  3. Ensuring payment/reimbursement for services/tests based on services/tests rendered and coverage determination.
  4. Maintaining compliance and keeping abreast of billing compliance and having a voice in reform

“We also recommend that laboratories conduct internal audits that reconcile laboratory information system (LIS) data with RCM system data,” Blattner continued. “Labs with a robust business intelligence (BI) solution can proactively identify outliers, such as accessions that exist in one system but not the other.”

Maintain Your Billing System and Maximize Clean Claim Submissions

Laboratories should be sure that these four payer services are being handled appropriately, whether it is by the lab or an RCM partner:

1.         Payer relations: An effective payer relations team monitors denials and coordinates with payers. This team reviews front-end payer rejections, coordinates with clients (i.e., ordering physicians), and identifies and updates edits based on payer policies and behavior changes.

2.         Electronic data interchange (EDI) enrollment: This team handles monitoring and proactive enrollment for electronic submissions and helps ensure bidirectional transaction automation.

3.         EDI analysts: Experts in healthcare EDI who investigate errors, participate in standards development and testing, as well as payer education and coordination.

4.         EDI operations: These specialized technicians configure files and ensure the reconciliation of claim-level submissions.

Efficiently Upload and Store Medical Records and Documentation

Although laboratories do not directly control patient medical records, it is essential to understand that diagnosis codes alone are generally insufficient.

Laboratory sales representatives must work with clients and ordering physicians to ensure medical records have all the information required for payment. Ensuring that the payers expedite payment requires efficient uploading and storing of medical records and documentation:

  • Align with payers on clinical utility evidence requirements, current billing policies, and preferred coding approach.
  • Leverage the support and advocacy of key opinion leaders (KOLs).
  • Collaborate with clinicians on the prior authorization process.
  • Select an RCM partner that helps you maximize process automation and front-end edits.
  • Leverage a business intelligence (BI) system that simplifies the tracking of key performance indicators (KPIs), helps identify payer policy and behavior changes early, and highlights changes in key business trends.

The RCM system must be able to upload and store medical records and documentation. The required medical information typically includes the following:

Who? Ordering/referring provider.

What? What service(s)/test(s) is/are being ordered?

Where? Where is the specimen being sent?

When? What is the date of service (DOS)?

Why? What are the patient’s signs/symptoms, or what prompted the test to be ordered?

How? How are the test results used to manage the patient’s medical condition?

But even after including all of the correct medical information, denials are inevitable. There are important steps labs can take to streamline denial management.

The Importance of Patient Engagement in Maximizing Reimbursement

Patient engagement plays an essential role in facilitating reimbursement and maximizing cash collection. Patients expect transparency and ease of information access from their healthcare encounters, just as they experience in all other areas of their lives. Because most laboratory, pathology, and molecular encounters are not directly patient-facing, proven payment accelerating engagement tools are essential. Dynamic portals, electronic statements, and text messages are essential, especially when it comes to communication regarding errors and patient financial responsibility.

XiFin customer data show a substantive increase in patient payments received in the first 30 days of the dunning cycle after integrating texting and automated calls into the traditional process. For example, a XiFin customer collected 26.6% more of the revenue in the first 30 days after implementing a text reminder between the first and second paper statements. Prior to implementation, the customer followed a traditional three-statement dunning cycle:

  • 42.6% of total payments received occurred after the first statement (within the first 29 days of the dunning cycle).
  • 34.8% occurred after sending the second statement (between days 30-59 of the dunning cycle).
  • 22.6% were received after sending the third and final statement (during days 60-90 of thedunning cycle).
Dunning Cycle PeriodBeforeAfterIncrease/ (Decrease)
Days 1-2942.6%69.2%26.6%
Days 30-5934.8%27.8%-7.0%
Days 60-9022.6%3.0%-19.6%

The convenience of text messaging allows patients to connect to the call center or to the patient portal, where a payment can be made immediately. XiFin customers can customize their dunning cycle, depending on how their specific patient population responds to texts, paper statements, and the timing between billing cycles. Studying the behaviors of patient interactions at the client level, rather than only referencing the status quo of macro-level trending, empowers a more strategic approach to engagement and improving overall patient satisfaction.

Denial Trends Driving Reduced Revenue and Higher Costs

Denials extend time in accounts receivable, contributing to bad debt on services already rendered and laboratory expenses absorbed. Denials also often require the most attention from staff – increasing the cost of billing. Hard denials, such as Medical Necessity, make up the most challenging revenue to collect, comprising about 5-10% of total denials received. In addition to creating delays and revenue loss, denials illustrate how payers administer their policies, even when those policies are unpublished.

Fundamentally, an effective RCM process is rooted in the ability to file clean claims to the degree that is possible. Improving those outcomes requires focus on the exceptions – the dirty claims – the denials.

“At XiFin, we invest in front-end configurations and workflows to catch denials prior to submitting the claim to the payer,” continued Blattner.  “As we monitor denial trends, we build more robust front-end workflows and add automation (such as integrating with insurance discovery and prior authorization vendors) to reduce the associated burden on billing teams.”

In addition, molecular testing coverage continues to expand, reducing non-covered denials. The stabilization of these medical policy-related denials is positive. The jump in demographic denials, however, requires additional consideration.

Paid vs. Denied by Payer Group

Denial patterns vary among payers. The percentage of claims denied also differs by segment, largely due to the type of testing performed.

Of the claims XiFin processes annually (approximately $50 billion in charges), 22.5% are denied. The graphs below demonstrate molecular testing’s higher propensity for denial (27.5% of claims billed), driven by non-covered, medical necessity, and prior authorization requirement challenges.

Routine pathology has closer to a 20% denial rate overall. The average percentage of billed claims that are denied by segment are:

■ Clinical: 13.62%

■ Molecular: 27.19%

■ Pathology: 19.82%

Molecular testing has a higher propensity for denial (27.5% of claims billed), driven by non-covered, medical necessity, and prior authorization requirement challenges. Routine pathology has closer to a 20% denial rate overall.

Clinical laboratory denial rates averaged 13.62% in 2021. As seen in the table below, clinical laboratories saw a significant decline in experimental/investigational denials between 2018 and 2021.

Denial TypeMolecular % of Total Denied 2018Clinical % of  Total Denied 2021Variance (% change 2021 vs. 2018)
Benefit Maximum Reached39.3%29.7%-24.4%
Claim Specific Negotiated Discount17.6%18.1%2.8%
Coordination of Benefits4.1%16.3%298%
Coverage Terminated6.6%13.4%103%
Diagnosis Not Covered11.3%6.4%-43.4%
Duplicate Denial8.3%3.4%-57.8%
Experimental Investigational0.1%2.7%2600%
HSA2.1%2.4%14.3%
Incorrect Payer0.9%1.6%77.8%
Non-Covered2.2%1.1%-50.0%
Patient Cannot be Identified0.7%0.8%14.3%
Patient Enrolled in Hospice0.5%0.5%0.0%
Prior Authorization0.2%0.2%0.0%
Procedure Code Inconsistent with the Modifier Used  or a Required Modifier is Missing1.6%0.1%-87.5%
Procedure Not Paid Separately0.5%0.1%-60.0%
Service Not Payable per Managed Care Contract0.1%0.0%-100%

Molecular claims continue to experience the highest denial rates of any laboratory segment. With an average denial rate of 27%, molecular continues to be a revenue recovery workflow heavy on the back-end. As a percentage of the total denial population, between 2018 and 2021, XiFin experienced increases in patient-coverage denials, such as coordination of benefits (298%), coverage terminated (103%), and experimental/investigational (2600%). Decreases in diagnosis not covered denials (-43.4%) and duplicate denials (-57.8%) are also recognized.

Exome/Genome Testing must be administered by specialized technicians with specific credentials, creating potential backlogs. They can take 8, 12, or even 16 weeks to complete, depending on testing methodologies. This presents a high risk of timely filing denials for the many payers that have adopted 90-day timely filing limits. XiFin recommended practice: Explore amending your payer contracts to extend timely filing limits on these tests.

Denial TypePathology % of Total Denied 2018Pathology % of  Total Denied 2021Variance (% change 2021 vs. 2018)
Prior Authorization28.9%36.1%24.6%
Duplicate Denial21.5%21.2%-1.9%
Non-Covered14.1%10.1%-27.7%
Services Not Prov. By Network/Primary Care Provider8.8%8.5%-3.4%
Procedure Not Paid Separately4.4%5.1%15.9%
Services Not Authorized by Network/Primary Care Provider3.6%3.8%5.6%
Procedure Code Inconsistent with the Modifier Used  or a Required Modifier is Missing1.5%3.3%120%
Coverage Terminated2.2%2.6%18.2%
Coordination of Benefits3.8%2.4%-34.2%
Patient Cannot Be Identified3.1%2.3%-25.8%
Remark Code5.9%2.1%-64.4%
Experimental Investigational1.0%1.2%20.0%
Benefit Maximum Reached0.4%1.0%175%
Patient Enrolled in Hospice0.4%0.1%-75.0%
Incorrect Payer0.0%0.1%100%
Service Not Payable per Managed Care Contract0.2%0.0%-100%

Anatomic pathology denials have increased by approximately 5% from 2018 to 2021. As a percentage of the total denial population, the lack of prior authorization is the highest contributor to this increase, having grown 24.6%. There was an increase in procedure code inconsistent with modifier denials (120% increase) and a decrease in non-covered denials (-27.7%).

Importance of an Efficient and Effective Appeals Process

Front-end edits and configurations help mitigate backend denials. Capturing potential denial-related issues proactively are the most effective way to maintain a manageable AR and improve the propensity to pay. For example, payers that observe National Correct Coding Initiative (NCCI) and Medically Unlikely Edits (MUEs) will consider all Current Procedural Terminology (CPT) codes billed for that patient for the same Date of Service (DOS), even when not billed on the same claim form.

Denials are inevitable if your current billing process does not have edits in place to perform a historical review of charges for the same patient on the same DOS.

Denials are unavoidable, and not all known issues can be addressed on the front end of the process. An example of this is denial code CO252, which is an additional information denial. It indicates the payer is requesting additional documentation (i.e., clinical information, medical records, and test results) before issuing payment – essentially performing an audit to ensure the services billed are reasonable and necessary and medical necessity is justified and documented.

“These are not always complex molecular tests; they can be routine pathology claims,” said Blattner “Each time we receive a CO252 denial it has to be appealed with additional documentation found in the patient’s medical records. Though it is inevitable, we must wait on the denial before we can take action.”

SegmentAppeal-Payments as  % of Total Insurance Payments ReceivedAverage Payment  Amount per Appeal
Clinical0.11%$121
Molecular6.56%$1,420
Pathology1.12%$327
Industry Average3.39% $623

Payment collection per appeal continues to be stable in the pathology (averaging 1-2%) and clinical segments, where appeals are less prolific. Revenue recovered by corrected claims is excluded since these claims follow a separate process and impact denial codes such as CO97 (Procedure or service isn’t paid for separately), CO18 (Duplicate), and CO234 (Procedure not paid separately). Further, a single appeal process is not sufficient. A robust appeals process here becomes critical. Specifically in molecular testing, appeals carry a heightening impact on revenue collection. In 2020, appeals accounted for 5% of the total revenue generated by XiFin customers. In 2021, that increased to 6.5%.

Appeal Success Rates by Payer Group by Segment

The next four charts show appeal success rates by payer group for 2021, overall and by market segment for clinical, molecular, and pathology. The fifth chart illustrates the incremental impact of multiple appeal attempts by market segment.

This assessment only includes activity related to revenue recovery through an appeals process. Some denials can be addressed by filing of a corrected claim and can be a much more efficient process. Although ideal, corrected claims are not always possible, depending on denial type and individual payer preferences.

 % of Total  Appeals Filed% of Appeals Paid after 1st Attempt% of Appeals Paid after 2nd Attempt% of Appeals Paid after 3rd AttemptAvg Payment per Appeal
Clinical 17.4%17.8%9.9% $ 276
Additional Information70.1%20.9%20.3%10.0% $ 258
COVID Medical Necessity8.9%3.9%50.0%  $ 78
Medical Necessity4.8%30.4%18.4%  $ 553
Out of Network6.9%4.4%2.4%  $ 594
Prior Authorization0.0%14.3%0.0%  $ 421
Underpayment9.3%6.9%6.3%  $ 10

The clinical laboratory segment maintains the lowest volume of denials. But this does not negate the need for robust editing processes. Implementing robust front-end logic and leveraging intelligent automation to correct potential issues dramatically streamlines the process from submission to payment, especially in the high-volume clinical laboratory segment.

 % of Total  Appeals Filed% of Appeals Paid after 1st Attempt% of Appeals Paid after 2nd Attempt% of Appeals Paid after 3rd AttemptAvg Payment per Appeal
Molecular 21.4%17.2%19.4% $1,420
Additional Information47.7%23.9%20.7%23.3% $1,285
Medical Necessity23.0%17.6%14.0%12.8% $1,518
Prior Authorization11.4%18.9%11.7%13.1% $1,944
Experimental and Investigational / Non-Covered5.6%13.2%9.0%9.0%$4,234
COVID Underpayment3.8%44.7%24.6%10.7% $52
Timely Filing3.5%10.1%8.3%18.9% $551
Out of Network3.5%14.0%10.8%8.4% $2,513
Underpayment1.1%31.2%17.8%15.3% $2,154
COVID Medical Necessity0.4%46.4%27.0%0.0% $124

Appeal Trends: Molecular and Genomic Testing   At $1,420, the average payment per appeal for molecular testing is more significant due to the high-dollar value of the testing. Additional information appeals account for 47% of the total appeals filed in 2021 in the molecular segment and have an average success rate of 23%. Another 23% of appeals are for claims denied for medical necessity, followed by prior authorizations at 11.4% of total appeals filed. Prior authorization appeal volumes have remained consistent year-over-year in this segment, averaging 10% in 2020, despite a higher volume of prior authorization requirements than pathology or clinical laboratory.

XiFin’s RCM platform has integrated automation with prior authorization partners, allowing claims meeting prior authorization criteria to be submitted to a prior authorization solution automatically.  Utilizing “real-time data exchange” via application programming interfaces (API) without partners, XiFin can more quickly acquire the necessary prior authorization number and update the patient’s information in XiFin RPM upon those values being returned.

 % of Total  Appeals Filed% of Appeals Paid after 1st Attempt% of Appeals Paid after 2nd Attempt% of Appeals Paid after 3rd AttemptAvg Payment per Appeal
Pathology 22.6%20.6%21.8% $327
Additional Information33.4%28.8%23.4%27.9% $337
Medical Necessity19.0%23.5%23.4%27.6% $398
Out of Network17.9%17.6%12.4%17.7% $318
Prior Authorization12.2%21.5%32.9%36.5% $350
Experimental and Investigational / Non-Covered9.2%17.8%8.9%3.1% $195
COVID Underpayment5.8%9.0%3.4%16.7% $31
Timely Filing2.5%20.5%15.6%13.3% $191
Underpayment0.1%52.2%0.0%  $177

Appeal Trends: Pathology

Approximately 2% of the pathology accessions received into XiFin RPM require an appeal. Those appeals will be responsible for approximately 1-2% of the pathology practice’s revenue. As noted above, the revenue reclaimed is largely attributed to the first attempted appeal. A robust process that includes multiple attempts is critical in revenue recovery in the event the first appeal is not overturned.

If Not Documented, It Did Not Happen

Payer edits and guidelines can be difficult to follow, particularly if physicians, coders, or billing staff are expected to memorize those requirements.

Making the situation even more challenging is the fact that edits vary widely among payers and are constantly changing. RCM platforms should be updated routinely (XiFin RPM is updated monthly) with payer edit updates, while remaining configurable so that custom edits can be easily built to accommodate specific payer requirements.

Whether it is a payer audit or packaging an appeal, documentation in the pathology report and/or clinical notes should clearly outline the services provided and the medical necessity of those services. If it is not documented, it did not happen. Further, understand the various programs that drive payer edits and guidelines. These edits drive an increased need for discipline and documentation. Be conscious of payer-specific requirements. Cigna, Aetna, and UHC require proprietary forms to be completed when appealing claims.

Benchmarking Productivity

Proactively preventing a denial and avoiding the need to submit a corrected claim or file an appeal reduces the time to reimbursement by four to eight weeks, depending on the payer and type of denial. If denials are not addressed properly and manual workflows persist, diagnostic labs will continue to experience a loss of revenue, and staffing will be insufficient to keep up.

Productivity rates for anatomic and molecular billing teams historically average between 12,000-15,000 accessions per person per full-time equivalent (FTE) per year (clinical laboratory is often much higher). However, with the increases in denials, the resulting demands on back-end teams have increased substantially and impacted productivity rates. This holds particularly true for particularly non-covered, medical necessity, and prior authorization denials.

Further, speed to payment is also improved. By automating appeals, the turn-around-time on submitting back to the payer is reduced, on average, from 45 days to 1-3 days, as seen in the blue bar in the chart above.

By installing front-end edits to help maximize clean claims, up to an additional 54 days can be saved, moving from 135 days to just 30 days for full adjudication.

Automating Workflows with AI

Opportunities to automate the process will reduce time and labor and make decisions more consistent. Once there is a deep understanding of coding, billing, denial management, and strategic appeals, there is the ability to automate the important processes across the RCM process. Automation and AI-powered workflows pave the way for consistent, optimized molecular diagnostics and pathology RCM.

Part 3 will demonstrate how AI can be used in RCM to inform, accelerate, automate, validate, and generate. Watch for updates here at DarkDaily.

— Leslie Williams

­A Dark Daily Extra!

This is the first of a three-part series on revenue cycle management for molecular testing laboratories and pathology practices, produced in collaboration with XiFin, Inc.

Setting Your Organization Up for Success: Maximizing Revenue for Molecular Diagnostics and Pathology Testing Starts Well Before Billing

What progressive revenue cycle management technology reveals about revenue levers, test clearances, and strategic planning for molecular and pathology testing.

CFOs and other leaders of molecular testing laboratories and pathology groups need to raise their awareness of the most vulnerable aspects of revenue. To this end, this article outlines three specific areas of potential revenue cycle management (RCM) improvement so molecular diagnostic and pathology organizations can better identify and adapt to localized market dynamics and individual patient needs.

“Many people look at RCM as just billing or getting a clean billing process, but laboratory testing is getting more complex; consequently, reimbursement is getting more complicated, and continually changing payer policies are also making it more challenging for labs to keep up. It is important for business executives, revenue cycle leaders, and CFOs to look more broadly at the revenue cycle,” explained Clarisa Blattner, XiFin Senior Director of Revenue and Payor Optimization. XiFin recommends lab and pathology leaders consider revenue cycle within the broader context of the patient journey, which generally includes, among other things, three key revenue-impacting patient engagement stages.

The first of the three stages, patient access and financial clearance, begins when patient demographics and insurance information are captured. Following demographics and insurance details is a determination of benefits coverage and verification of eligibility. Financial information on any required copay and deductibles are determined, and pre-payment is collected. Finally, the patient receives a financial responsibility estimate for any out-of-pocket expenses.

In stage 2, clinical/medical clearance requires ordering physician engagement to address medical necessity questions and obtain supporting documentation. Clinical assessment and diagnostic testing are conducted. The encounter document is completed. Results are shared via secure, seamless, connected communication between the ordering physician’s office, the lab of the diagnostic provider, and the patient. Finally, the claim is submitted for reimbursement with all relevant supporting documentation.

The third stage is when payer management activities are essential to maximizing reimbursement by ensuring claim submissions include prior authorizations, clinical documentation, proprietary payer forms and comply with payer policies and requirements. Through this stage, patient engagement ensures all the correct data is in place, and insurance information or coverage hasn’t changed or is appropriately updated. Anticipating payer responses and subsequent actions is critical to collecting the full amount payers are responsible for to minimize patient financial impact. Once all payer activities are exhausted, the patient must be sent their statement for the remaining balance in their preferred communication method (paper, text, email, portal, etc.). Additionally, payment collection is accelerated when a diagnostic provider makes it easy and convenient to make payments, manage payment plans, and change payment methods.

These three stages in the patient journey encompass important revenue levers that cannot be overlooked. They are foundational to automating the financial performance engine needed for molecular diagnostics and pathology practices, Blattner continued. Whereas specialty diagnostics are rapidly coming to market and localized with varying reach, availability, and insurance coverage assurance, activating specific “clearance” functions or “engagement” opportunities within these levers will be key to smooth claims processing, timely filing, and optimizing all payment avenues.

Blattner stresses that when not built into automatic administrative functions, these three types of stages (i.e., patient access, physician engagement, and payer management) will slow or indefinitely stall payment for molecular diagnostics and pathology providers.

Market Expansion and Shift in at-Home Testing Stresses Traditional Administrative Approaches

Novel diagnostics are being introduced in record numbers as physicians and diagnostic business leaders seek to address and fulfill unmet diagnostic and medical needs to support better health outcomes. Along with these new medical breakthroughs comes the demand for traditional administrative approaches to reinvent themselves – including RCM. This major operational shift and frequent payer policy changes with advanced diagnostics have strained traditional administrative practices. According to Blattner, when executives realize that manual processes and inadequate electronic billing functions have reached a breaking point, specialized automation is the natural next step. The items corresponding to the highest value revenue cycle activities may sound surprising within the three revenue levers—patient access, medical clearance, and payer management.

Patient Access, Engagement, and Financial Clearance

“Making it easy for physicians to order molecular diagnostics and pathology tests is so important for success in today’s market,” Blattner continued. Ordering physicians and lab teams must have accurate and timely information regarding a patient’s ‘financial clearance’ (the likelihood a test will be covered, what the patient is likely to be charged out-of-pocket, and whether prior authorization is required). Patient portals and multi-channel communications are important parts of effective RCM functionality that facilitate patient access and financial clearance.

“It used to be that a patient went to the lab, and a phlebotomist saw the patient, but now more tests involve specimen collection at home. A kit is distributed at the physician’s office or ordered online and shipped to the patient,” Blattner said. “There is more follow-through needed to make sure not only did the test get done, but did it get returned, because while there are upfront costs to serve the patient, the lab doesn’t get paid until the test is completed, returned, processed and the diagnosis is determined for the claim to be processed. That is an evolution as these tests leave the laboratory or the business and enter the home environment.”

Patient access and engagement tools provide various benefits, including offering a cost-effective alternative to traditional customer service calls and supporting patients’ communication preferences. Effective physician access and engagement programs and technology help diagnostic providers offer self-service tools that enable patients to securely log in, anytime, to:

  • View statements
  • Make credit card payments
  • Set up payment plans (using lab-specified rules and parameters)
  • Establish paperless billing
  • View patient responsibility estimates
  • View test results

Another critical aspect of patient financial clearance for diagnostic testing is the ability to provide patients with an accurate estimation of their out-of-pocket costs associated with a test. Practical patient communication tools enable ordering physicians’ staff members to assist patients in preparing for out-of-pocket expenses, which increases test completion rates and has been proven to reduce write-offs.

To accurately assess a patient’s financial responsibility, the estimation tool must consider relevant provider and plan specific pricing and test or procedure information, as well as provide access to real-time eligibility data. A proper estimation of a patient’s out-of-pocket expenses is also predicated on receiving complete and accurate information from the payer. Examining payer behavior can uncover responses that create inaccurate patient responsibility estimates.

Price and Volume Modeling

Physician Engagement Programs Facilitate Clinical Clearance

Physician engagement programs help diagnostic providers integrate communication and data exchange more deeply with ordering physicians and complete clinical clearance. Clinical clearance involves things like medical necessity, familial history, and social determinants of health. Robust RCM also requires diagnostic providers, laboratories, and pathology practices to be able to seamlessly communicate with patients to ensure that samples, devices, or readings are collected and returned to the diagnostic provider so that services/tests can be completed.

Effective physician engagement and clinical clearance increase ordering volume, maximize clean claims and automate denials and appeals management. Physician engagement technology, including electronic communication tools such as portals, helps physicians and their teams streamline the online correction of missing information and errors. This improves satisfaction, expedites reimbursement, and provides cost savings. With effective physician engagement programs and technology tools, physicians and their staff can more effectively:

  • Perform order entry
  • Access clinical decision support
  • Examine statements at the line-item level
  • View test information and pricing
  • Correct billing errors upfront to expedite reimbursement
  • Provide patients with an estimate of their out-of-pocket cost

Payer Management

Molecular diagnostic and genetic tests are famously complex and present many unique operational and financial challenges for laboratories. Payer policies and behavior are constantly changing, and labs (and their billing partners) must stay abreast of changes to avoid lengthy delays that denials and subsequent appeals can cause. Intelligent automation of prior authorizations, insurance discovery, and benefits determination are especially important for these tests.

Unfortunately, it is common for diagnostic providers to only learn about a change in reimbursement after the month-end close. These changes manifest in billing as:

  • New denials
  • Changes in denial rate
  • Changes in reimbursement rate
  • Change in time to payment

Failure to quickly recognize and adapt workflows to payer reimbursement changes can result in costly appeals and write-offs. XiFin recommends that providers adopt a proactive strategy to identify changes in reimbursement earlier. It is essential to understand the impacts and risks of price discrepancies and changes in pricing to patients. Staying abreast of policy changes for Medicare and commercial payers enables molecular diagnostic laboratories and pathology groups to proactively employ front-end billing system edits to avoid denials.

Revenue Cycle Management Process

Keys to Success

For molecular diagnostic providers and pathology groups to maximize reimbursement, CFOs, and revenue cycle leaders must take a broader view of RCM. The RCM process starts well before billing and runs parallel to the patient journey in many respects. This means that effective RCM technology and tools also stretch beyond the billing system to incorporate seamless communication between systems and parties throughout the patient journey.

Adaptive RCM approaches require automation, intelligence, and real-time communication for the three key revenue-impacting stages discussed in this article: patient access, medical clearance, and payer management. This involves seamless integration with various tools that enable insurance discovery, patent demographic and eligibility verifications, patient financial responsibility estimation, and reporting and analytics that allow early identification of and response to changes in payer behavior.

Molecular diagnostic labs and pathology practices must have tools and technology to align with payers on evidence requirements, including clinical utility evidence, current billing policies, and preferred coding approaches. They must have seamless connectivity to ordering physicians to order tests and ensure the completeness of medical necessity and medical record documentation.

Finally, XiFin recommends that diagnostic organizations use analytics to enable early insight into changes in payer behavior, address root causes, and be able to adjust to changes in ordering patterns and client data quality. Be sure to consider an RCM platform that has embedded artificial intelligence (AI) to drive efficient automation of workflow adaptation to payer changes and future-proof your RCM investment.

Financial executives seeking to maximize market access and capitalize on growth opportunities in key markets will want to explore how successfully their administrative teams are navigating the unique revenue cycle landscape specific to molecular testing and pathology.

Part 2 of this three-part series is coming soon. Watch for updates here at DarkDaily.

— Leslie Williams

HHS Office of Inspector General Report Finds ‘Steep Decreases’ in Medicare Beneficiaries Receiving Clinical Laboratory Testing During COVID-19 Pandemic’s Early Months

OIG warns that without adequate clinical laboratory testing healthcare organizations could see more deaths and increased spending

Clinical laboratory leaders and pathologists know that lab test volume decreased dramatically during the early months of the COVID-19 pandemic. That was primarily because community lockdowns stopped people from seeing their doctors for the standard range of chronic health conditions, many of which require clinical laboratory tests for diagnosis and chronic disease management.

This early and substantial drop in the volume of medical laboratory testing done in the early months of the pandemic has been confirmed and quantified in a recently published report by US Department of Health and Human Services (HHS) Office of Inspector General (OIG). The report describes the  “steep decreases” in the number of Medicare beneficiaries receiving Medicare Part B lab tests in early 2020, by month, as follows:

• 24% reduction in Medicare Part B test volumes in March
• 53% in April
• 30% in May

The decline of Medicare patients visiting clinical laboratories continued through the balance of 2020. During the first 10 months of the pandemic—March through December 2020—Medicare beneficiaries who pursued lab testing decreased by about 9% compared to the same 10-month period in 2019, according to a news release.

This is a strong indicator that the government’s response to the pandemic had a measurable effect on clinical laboratory testing volume among all age groups, especially among the elderly.

Kyle Fetter

“The cumulative decline in lab test volume across all client labs for [March 9 to April 12] was just over 40%. But in that time, some of our lab customers were hit with a decline of maybe 50% to 60% in test volume,” Kyle Fetter (above), COO, XIFIN, told The Dark Report in 2020. Clinical laboratory testing that originates from a routine patient visit to a doctor—such as blood testing—may have been affected the most, Fetter explained. (Photo copyright: XIFIN.)

Clinical Laboratory Tests Key to Well-being of Patients with Chronic Conditions 

The OIG study was limited to Medicare beneficiaries and thus did not provide information about testing fall-off among people who have private health insurance. But in “From Mid-March, Labs Saw Big Drop in Revenue,” Dark Daily’s sister publication The Dark Report reported early in 2020 on a 40% decline in test volumes and the pandemic’s varying effects on clinical labs, anatomic pathology (AP) groups, and AP subspecialties.

The OIG’s Report in Brief on its study recognized that medical laboratory testing is critical to helping healthcare providers manage chronic conditions that affect patients’ well-being and increase their healthcare costs.

“Lab tests are important for beneficiaries with chronic medical conditions, which are associated with hospitalizations, billions of dollars in Medicare costs, and deaths,” the OIG said.

The OIG audit collected data on the numbers of Medicare beneficiaries receiving all lab tests as well as specific lab tests for Type 2 diabetes mellitus, Chronic kidney disease, and Chronic ischemic heart disease during the period March through December 2020, as compared to the same months in 2019.

According to the OIG’s report:

  • Beneficiaries receiving clinical laboratory tests in general decreased 9%.
  • Beneficiaries with type 2 diabetes receiving lab tests declined 14%.
  • Beneficiaries with chronic kidney disease getting lab tests fell 11%.
  • Beneficiaries with chronic ischemic heart disease receiving lab tests decreased 19%.

“The information may be useful to stakeholders involved in ensuring that beneficiaries avoid the potential bad outcomes that may result from missing or delaying appropriate care,” the report noted.

Overall, 23.7 million Medicare beneficiaries received medical laboratory tests during the first 10 months of the pandemic, down 2.4 million from 26.1 million in 2019, the OIG reported.

Overall Medicare lab test volume and spending also declined during the reported period:

  • Part B clinical laboratory tests for Medicare beneficiaries decreased 15% from 419.9 million tests in 2019 to 358.4 million tests in the first 10 months of the pandemic.
  • Medicare spending for these tests decreased 16% from $6.6 billion in 2019 to $5.5 billion during the first 10 months of the pandemic.

“OIG’s audit of Part B clinical laboratory tests, reimbursed under the Clinical Laboratory Fee Schedule (CLFS) is a useful benchmark for how Medicare beneficiaries received fewer lab tests during the pandemic, especially during the early months,” said Robert Michel, Editor-in-Chief of Dark Daily and The Dark Report.

Medical Laboratory Tests That Were Down Most During COVID-19

The following 10 clinical laboratory tests experienced a 10% or more decline in Medicare beneficiaries seeking them during the pandemic period as compared to pre-pandemic, according to the OIG report:

  • Basic metabolic panel down 18% to 4.8 million Medicare patients.
  • Urinalysis with microscope analysis down 13% to 4.6 million Medicare recipients.
  • Automated urinalysis down 16% to 3.4 million Medicare beneficiaries.
  • Vitamin B12 decreased 11% to 3.4 million Medicare patients.
  • Complete blood count (CBC) down 13% to 3.2 million Medicare beneficiaries.
  • Comprehensive urine culture test fell 16% to three million Medicare patients.
  • Uric acid level blood down 13% to 1.9 million Medicare beneficiaries.
  • Evaluation of antimicrobial drug decreased 17% to 1.74 million Medicare patients.
  • Folic acid level down 12% to 1.73 million Medicare beneficiaries.
  • Urinalysis manual test plunged 28% to 1.4 million Medicare patients.

Beyond Medicare, Clinical Laboratory Test Volume Dropped 40%

OIG was not the only organization to analyze medical laboratory testing volume during the pandemic’s early phase.

The Dark Report correlated data tracked by XIFIN, a San Diego-based health information technology (HIT) company providing revenue cycle management services to clinical laboratories and pathology groups. XIFIN’s collected data showed a steep drop in routine test volume as COVID-19 testing ramped up.

“Starting in the third week of March, we saw medical laboratories suffer a sharp drop in routine testing. But at about the same time, many labs began to offset those revenue losses with testing for the novel coronavirus,” Kyle Fetter, XIFIN’s then Executive Vice President and General Manager of Diagnostic Services told The Dark Report in 2020. Fetter is now XIFIN’S Chief Operating Officer.

“Over four weeks beginning March 9, we saw a cumulative drop of over 40% in test volume from all of our lab clients,” he added.

According to XIFIN’s data, lab specialty organizations experienced the following drop in routine testing during the period March 9 to April 16, 2020:

  • 58% at clinical laboratories.
  • 61% at hospital outreach laboratories.
  • 52% at molecular and genetic testing laboratories.
  • 44% at anatomic pathology (AP) groups.
  • 70% to 80% at AP dermatology and other AP subspecialties.

Many medical laboratories are still recovering from the COVID-19 pandemic’s effects on testing volume.

Notably, the OIG’s report acknowledges the importance of adequate clinical laboratory testing and declares that—without these essential lab tests to manage some healthcare conditions—the healthcare industry could see increased morbidity, deaths, and Medicare spending.   

Donna Marie Pocius

Related Information:

Full Report: The Number of Beneficiaries Who Received Medicare Part B Clinical Laboratory Tests Decreased During the First 10 Months of the COVID-19 Pandemic

Press Release: The Number of Beneficiaries Who Received Medicare Part B Clinical Laboratory Tests Decreased During the First 10 Months of the COVID-19 Pandemic 

Report-in-Brief: The Number of Beneficiaries Who Received Medicare Part B Clinical Laboratory Tests Decreased During the First 10 Months of the COVID-19 Pandemic

From Mid-March Labs Saw Big Drop in Revenue

Keynote Speakers at the Executive War College Describe the Divergent Paths of Clinical Laboratory Testing as New Players Offer Point-of-Care Tests and More Consumers Want Access to Home Tests

27th annual meeting of medical laboratory and pathology managers delivers insights on the path ahead for diagnostics, ranging from the supply chain shortage and the ‘Great Resignation’ to advances in artificial intelligence and whole genome sequencing in service of precision medicine

Divergent paths of diagnostic testing are among the central topics being discussed at the 27th annual Executive War College on Laboratory and Pathology Management happening this week in New Orleans.

What’s coming as healthcare providers move to post-COVID-19 pandemic workflows will be of keen interest to clinical laboratory leaders attending this critical event. Several new and dynamic market changes are reshaping the development of, ordering, and reimbursement for medical laboratory tests. They include:

  • Millennials as change agents in how care is accessed and delivered.
  • New buyers of large volumes of clinical lab tests, such as retail pharmacies.
  • How clinical laboratories can earn new sources of revenue while supporting precision medicine.

Clinical Labs Should Prepare for the ‘Coming Roller Coaster Ride’

Robert L. Michel, Editor-in-Chief of Dark Daily’s sister publication, The Dark Report, and Founder of the Executive War College, described the “coming roller coaster ride” for the pathology and clinical laboratory industries.

Amid the usual operational issues labs deal with (e.g., workforce shortages, supply chain disruptions, regulatory pressures), he noted the emergence of new and powerful forces pulling clinical laboratories and pathology groups in all directions.

“One primary factor is how Millennials will use healthcare differently than Gen Xers and Baby Boomers,” Michel noted. “Similarly, Millennials will make up 75% of the pathologists and the lab workforce by 2025.

“Another major force for change will be new buyers of clinical laboratory tests,” he continued. “For example, expect to see national retail pharmacy chains build thousands of primary care clinics in their retail pharmacies. These clinics will need lab tests and will become major buyers of near-patient analyzers and lab tests.

“A third interesting factor is that a new class of in vitro diagnostics (IVD) manufacturers are developing analyzers and test systems that use minimal amounts of specimens and return answers in minutes. Primary care clinics in retail pharmacies will be interested in buying these lab testing solutions,” Michel concluded.

Robert L. Michel
Robert L. Michel (above), Editor-in-Chief of The Dark Report and Founder of the Executive War College, has studied and worked with leaders of clinical laboratories and pathology groups for more than four decades. During his keynote address, he predicted that powerful economic forces are about to be unleashed on the traditional market for clinical laboratory testing. Those forces include the use of artificial intelligence (AI) in digital pathology, primary care in retail pharmacies, and increased focus on precision medicine. (Photo copyright: The Dark Intelligence Group.)

Peer-to-Peer Learning Opportunities

With approximately 90 presenters scheduled, clinical laboratory leaders from such prestigious institutions as Johns Hopkins Hospital, Mayo Clinic, United Indian Health Services, and more will facilitate peer-to-peer learnings throughout the conference.

In addition, industry executives scheduled to deliver keynotes include Jon Harol, Lighthouse Lab Services Founder and President; Stan Letovsky, PhD, Vice President for AI, Data Sciences and Bioinformatics as well as other executives from Labcorp; and Curtiss McNair II, Vice President and General Manager of Laboratory Services at American Oncology Network.

In addition, several sessions and panel Q/A discussions will cover critical legal and regulatory issues and payer challenges facing the industry.

New Technologies, Workflows, Analytics

The 2022 Executive War College master classes, breakouts, panel discussions, and benefactor sessions will highlight several significant themes:

  • Lab data analytics and utilization. Sessions this year are heavily weighted toward data analytics, aggregation, and utilization. Look for case studies demonstrating the value of lab data, and where and how data has become actionable and monetized. As Dark Daily previously reported, useful data structures have been difficult to achieve for clinical laboratories; however, the case studies featured during this week’s conference will demonstrate signs of progress and highlight lessons learned.
  • Automation. Several case studies are planned that focus on expansion and modernization using laboratory automation. From Butler Health System, an independent hospital system in western Pa., Robert Patterson, MD, Medical Director of Pathology, Laboratory Medicine, and Laboratory Outreach, will detail steps Butler took that enabled its labs to better compete with other area health systems and national reference laboratories. Likewise, Eric Parnell, System Supervisor of Microbiology for Bronson Healthcare in southern Mich., will discuss his lab’s transition to and implementation of total laboratory automation.
  • Genetic testing and next-generation sequencing (NGS). Quickly becoming the foundational disruptor technology on which many new and powerful clinical laboratory tests and procedures are based, genomic testing has now become accessible and affordable. Many clinical laboratories and pathology groups are using molecular diagnostics testing to deliver clinical value to referring physicians.

Other sessions include:

  • Launching and scaling clinical NGS testing in a clinical environment (featuring a project at Rady Children’s Hospital in San Diego).
  • How labs and payers can work together to achieve better outcomes and health equity using genomic testing.
  • Effective ways to repurpose PCR and other genetic test instruments to build specimen volume and increase lab revenue.

Paths Forward for Clinical Labs and Pathology Groups

Another important topic being discussed at the 2022 Executive War College is how to position clinical laboratories and pathology groups for the next phase of modern healthcare.

Legal experts and consultants from McDonald Hopkins LLC, Advanced Strategic Partners, Pathology Practice Advisors, and ECG Management Consultants, among others, will answer questions on:

  • Attracting capital for clinical labs and pathology groups.
  • Emerging concepts in growth strategies.
  • Business valuation factors.
  • Unexpected disruptions during sales closings.

These are just a few highlights of the informative sessions and expert speakers scheduled during this week’s 27th annual Executive War College in New Orleans. Look for more coverage in Dark Daily during the days ahead and in upcoming editions of our sister publication The Dark Report.

Full details about the 2022 Executive War College can be found by clicking on this link. (Or copy/paste this URL into your web browser: http://www.executivewarcollege.com.)

Speakers, session topics, and the conference agenda can be viewed by clicking on this link. (Or copy/paste this URL into your web browser: https://executivewarcollege.darkintelligencegroup.com/executive-war-college-agenda-2022.)

—Liz Carey

Related Information:

Executive War College on Lab and Pathology Management

Executive War College: Efficient Data Structure Can Bring in More Reimbursement Dollars and Allow Clinical Laboratories to Sell Aggregated Information

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