What Makes a Laboratory Billing System Successful?

Laboratory Billing System

Billing methods for labs is part of the same overall coding and billing system in use in the various medical fields throughout the US, but billing services for laboratories are unique in several different ways. One of the key differences between labs and other types of medical offices is the number of claims processed. Labs typically service many more patients every day, which results in a high number of claims being submitted.

Another difference and one which makes billing for such healthcare organizations particularly challenging are that lab claims are for relatively small amounts. This makes it difficult to devote time to handling each denial or rejection because labor costs can quickly outweigh the value of the claim. The problem with giving up on denials is that the accumulated amount of unpaid claims can rapidly rise to an unsustainable amount, putting the lab at risk of failing as a business entity.

The Best Services Have a Reliable System

For laboratory services to be sustainable, it needs to be based on a system that encompasses all aspects of the lab as a business and includes the details of billing for each patient from contact through payment. Having a system in place establishes a repeated process so time isn’t invested in figuring out how to do things that have already been done, and routine problems with claims don’t result in lost revenue.

How to Choose Lab Billing Company

The system should include training of all employees on the parts they are involved with, from the front office that takes the appointment to the billing staff who send statements to patients when they have a balance due after testing. The system also needs to include a procedure for generating reports so that the revenue cycle management (RCM) practices are analyzed and principals are aware of how successful that aspect of the lab is.

Tips for Successful billing

Make sure to use billing software that is constantly being updated. Codes are updated annually, but insurers and government payers make changes at different times.

Verify eligibility and determine that you have the proper authorizations when an appointment is scheduled or a patient arrives as a drop-in.

Collect the patient’s part of the charges when they check-in. It’s much easier to collect upfront than to get payments for a bill in the future.

Code claims continually. Allowing work to accumulate before it is billed lets more get overlooked and confusions are more difficult to sort out after more time has passed.

Scrub claims daily. An experienced medical biller should check each claim for errors before it is submitted. These services are much more efficient when they include a procedure for scrubbing that is repeated for each claim.

Track claims until they are paid. Rejections and denials often get put aside and not reworked, so they never get paid, but this results in up to 25% of revenue being lost, which is more than medical labs can afford to lose. The system should include a way to track claims and a process for following up on unpaid claims.

Review reports, analyze problems and communicate results with staff. It is important to verify that the amount you are paid is increasing as a percentage of the amount you are billing, and the time it takes to get paid is decreasing (or at the minimum reasonable time). Rejections and denials should be assessed to determine if there are particular payers that are problems, so the associated issues can be found and eliminated. When problems are found, it is important to come up with a solution and make sure all staff involved are informed so no one makes the same mistakes in the future.

5 Ways to Avoid Denial of Laboratory Billing Claims

Laboratory Billing Claims


Laboratory billing is challenging, but there are five simple ways to avoid denials for increased collections. When it comes to denials in laboratory billing, there are two distinct types—“hard” and “soft” claims. Hard claims cannot be reversed because the revenue has been completely written off due to the age of the account or other factors. Soft claims; however, are only temporary denials and can be reversed if the claim is corrected within the allotted time. The five most common reasons for denied claims in laboratory billing are inadequate insurance coverage, service already adjudicated, duplicate claims, expired filing time, and missing information. Below is a breakdown of each claim denial.

Common Causes of Denied Claims

  • Eligibility: When a procedure, test, or service is not covered by a patient’s insurance plan, and they did not confirm their benefits before services were rendered.
  • Service adjudicated: This is when the services are covered by the patient’s insurance; however, a claim has already been submitted as part of another service.
  • Duplicate claims: These are claims that have been submitted multiple times by the same provider for the same patient on the same day.
  • The Limit for filing expired: This type of laboratory billing denial occurs when the medical claims have not been submitted within an allotted time frame since the service was provided. This can happen for numerous reasons, the biggest one being that rework rejection (usually done by an automated system) can sometimes take a long time to be completed.
  • Missing information: Leaving a required field empty or incorrectly entering information are small mistakes that regularly cause denials in laboratory billing. Simple errors such as incorrect or missing date of birth, social security number, insurance ID, etc. are common causes for claims to be returned.

How to Avoid medical Claim Denials

So, what can you do to ensure claims are properly processed and approved? These simple precautions will drastically reduce denials and improve collections:

  • Submit to the correct insurance carrier: Since submitting information to the wrong insurance can lead to a quick rejection of claims, it’s important that if a patient has multiple carriers, they are listing the right one and specifically stating that it is the primary coverage.
  • Up to date insurance requirements: The requirements set by insurance carriers change frequently, so it’s important that you keep a close eye on any industry changes that have been made. As soon as you note anything different, it would update the information and your laboratory billing specialists.
  • Eligibility verification: This means that for every patient encounter, you need to verify insurance coverage before services are rendered to avoid rejection of claims.
  • Proofreading: This means just what it says. Make sure to always double check the information you have entered before submitting, and checking a third time never hurts. It takes just a few minutes to proofread but reversing denials due to simple mistakes is costly and time-consuming.
  • Information collection: Make sure the receptionist or front desk personnel are requesting and documenting changes in patient information at every visit. Undocumented changes in personal information and insurance coverage quickly trigger denials.

Understanding the reasons for laboratory billing claims denials is just the first step of improving collections; implementing a system to avoid rejected claims is essential to the success of any medical facility. For reduced denials, reversed claims, and shortened reimbursement cycles, consider outsourcing to a reliable billing team that specializes in laboratory billing services.

Medcare MSO is a trusted name in billing services because we believe in providing extraordinary solutions that go above and beyond standard practices. We provide customized insurance & patient billing services, healthcare recovery assistance, and practice management solutions to organizations of all types and sizes. Our innovative medical software is engineered to simplify all aspects of practice management and patient engagement and is currently being utilized in over 80,000 healthcare facilities nationwide.

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