ARK Laboratories

Case Study

Started On

April 1st, 2019

Review Period

3 Months

Collection Increased

$700,000 to $1 million

Revenue Increased by

30%

Summary of our work

ARK Laboratory had outsourced their medical billing to a company that was not successfully managing claims. As a result, the lab was struggling financially, and it had become apparent that a complete overhaul of their revenue cycle management was needed. Medcare MSO was contracted to take over handling old AR and to implement a new system for managing claims and collecting payments. The billing company started on April 1st, 2019, and a little over three months later had increased monthly collections from $700,000 to about $1 million—a revenue increase of nearly 30% for the same amount of work being done by the lab.

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Challenges

Medcare MSO set out with three goals:

1

Identification

Identify and correct errors in the billing system created by the previous billing company.

2

Achievement

Achieve maximum recovery of outstanding balances in old AR.

3

Increment

Achieve maximum recovery of outstanding balances in old AR.

The state of the lab’s billing presented several challenges. Insurance portals had not been set up, making it difficult to find the status of existing claims and the software that had been in use was outdated and only limited information could be recovered, providing an incomplete record of claims and AR. Many phone calls to payers were required to determine claim statuses and reasons for denials.

Careful examination of unpaid claims found several errors commonly occurring:

  • Auto insurance and worker’s comp claims submitted without the required injury/case date
  • Non-covered diagnosis codes (not related to the accident/injury) being submitted as auto insurance and worker’s comp claims
  • Claims submitted to the incorrect payer or with the wrong payer address or payer ID number
  • Submissions with ineligible referring providers listed
  • Incorrect or under-coding for polymerase chain reaction (PCR) and pharmacogenetics (PGX).

Solutions

Medcare MSO’s team immediately set to work collecting old AR records and establishing the status of existing claims. It took about two weeks to collect the needed information and implement and launch the new billing software. The new billers also acquired insurance portals and modified the laboratory information software (LIS) to provide compliant access to patient personal information and test results.

Implementing Medcare MSO’s system identified and resolved the following issues:

Coding issues:

Claims were billed with old or deleted CPT codes for toxicology, which resulted in denials and could have been a red flag in the insurer’s system triggering an audit.

PCR and PGX coding issues:

These newer procedures can be a high-revenue source of income for the lab, but the payers’ billing requirements are rigorous, and most people don’t know how to fulfil them. Medcare MSO’s team recoded custom PCR panels according to CMS guidelines and set up the proper process so that these claims now get paid.

Payment posting:

A large number of claims had been paid, but payments as far back as six months had not been posted, so the status and the lab’s revenue was unclear.

Unresolved claims:

The existing records indicated that many claims had been denied and never reworked, leaving a large sum of billed services unpaid. Where actions had been taken, there were no notations to indicate what was done or the status of the claim.

Credentialing errors:

The lab had not received any payments from one major payer, BCBS Florida, even though the claims indicated they had been paid. The new billing team figured out that payments weren’t going through because the provider’s address had not been updated in the payer’s system. Correcting this resulted in $100,000 being collected from BCBS Florida.

Patient billing:

The existing records indicated that many claims had been denied and never reworked, leaving a large sum of billed services unpaid. Where actions had been taken, there were no notations to indicate what was done or the status of the claim.

Medical necessity errors:

The necessary examination of test results had not been done to document medical necessity, resulting in denied claims.

Results

Medcare MSO’s process includes analyzing charges and payments and generating reports that make the revenue flow clear to their clients. Analysis of ARK Lab’s billing and collections showed an increase in collections of nearly 30% over the first three months, bringing total monthly receipts from about $700,000 to approximately $1 million. Some of the specific accomplishments that brought about this result are:

  • 10-15 day turnaround time for getting claims submitted and paid
  • Up to 70% of claims paid without rejections or denials
  • 50% decrease in old AR (Over the first two months)
  • Clean claims resulting in up to 30% decrease in denials
  • Effective AR management and reworking claims for up to a 30% increase in payments
  • Achieved an all-time high reimbursement total of $1.1 million in the month of July 2019