Home 5 Lab Industry Advisor 5 Lab Compliance Advisor 5 Compliance Guidance-lca 5 Choosing and Using the Right Compliance Solution

Choosing and Using the Right Compliance Solution

by | Apr 25, 2024 | Compliance Guidance-lca, Compliance-lca, Essential, Lab Industry Advisor, Reimbursement-dtet

Factors laboratories should consider when evaluating their compliance challenges, needs, and goals to select compliance solutions

Compliance is a challenging prospect for labs, especially as the legislative landscape changes and payers’ documentation requirements shift.1 Many are turning to software-based solutions or third-party management to monitor compliance and avoid the potential for error—but choosing the right solutions and integrating them into existing processes and systems carries its own set of complications. To find out more about the difficulties hampering labs’ compliance efforts and the factors involved in selecting the best tools for the job, we spoke to Karim E. Sirgi, chair of the College of American Pathologists’ Practice Management Committee.

Compliance challenges

“Labs are currently facing a variety of prepayment audits for signature requirements and documentation requirement reviews,” explains Sirgi. “Additionally, variable prior authorization requirements present significant concern in cancer diagnostics and surgical pathology.” He also highlights the industry-wide challenge of obtaining the documentation payers need. Typically, it’s the ordering or treating provider who retains the documentation—but, as the billing entity, the lab holds responsibility for obtaining and submitting medical records including encounter notes, treatment plans, and the relevance of lab results to the patient’s care. For high-cost tests like those used in oncology and surgical pathology, the requirements are often particularly stringent.2

Good planning and processes can support labs’ compliance efforts. “Proactive internal audit programs remain the basic tool for identifying weaknesses in coding and billing practices,” says Sirgi. “Depending on the setting and size of the laboratory, the audit process may be supported through software programs or through export of system reports that allow for randomized selection of lab encounters for audit.” Either way, he emphasizes that consistency in information-gathering, review, and reporting is vital. To achieve this consistency, he recommends planning a regular schedule of service area auditing alongside any necessary system updates or follow-up education. He adds, “Successful internal audit programs rely on well-trained staff who are familiar with the regulations, coding guidelines, testing methods, and reporting requirements for the departments throughout the laboratory. A collaborative approach with shared information between the medical, clinical, coding and billing teams will provide the most success.”

Supportive software

A range of technologies can help labs with their compliance efforts—but choosing the right one is not always straightforward. “The challenge is to determine where the budget is best used for software versus staffing,” says Sirgi. “A billable order begins with knowing that the provider is eligible to order and that the patient’s demographics and insurance eligibility are valid. These are areas where software can help with clean claims and successful submissions for payment. Systems that check for excluded providers, Medicare enrollment status (where applicable), and validate national provider identifier (NPI) information are beneficial. For independent providers and reference laboratories, a state-by-state review of ordering limitations based on provider taxonomy may require manual searches and compiling of internal documents to ensure that ordering providers meet the state licensing requirements for ordering of labs or pathology services.”

Another area in which Sirgi finds software helpful is screening orders for medical necessity. “Several vendors offer solutions that will compare CPT (test) to ICD-10-CM (diagnosis) for tests and procedures that have published coverage policies.” Some software also supports customized rules that allow labs to screen tests that are frequently denied, but may not have a published local or national coverage limitation. Finally, there are vendors who offer rule- or logic-based auditing solutions, but not all labs will find this necessary—or attainable. Sirgi recommends this option for large systems, but suggests that smaller labs may benefit more from focusing their resources on knowledgeable staff who can define and manage an internal audit process.

What factors should labs consider if pursuing a software-based solution? First and foremost, they should ask about the vendor’s policies and procedures to ensure that their practices support the lab’s compliance initiatives. “The delegation of coding, billing, or revenue cycle management to an outside vendor does not remove the laboratory’s responsibility to ensure compliance,” Sirgi cautions—so labs will need to continue auditing internally to ensure oversight.

Additionally, labs should be acquainted with the external personnel assigned to their account. “What experience, training, and ongoing education requirements are defined for staff assigned to coding, billing, follow-up, and auditing for the laboratory?” Sirgi asks. “What support staff from your laboratory will be needed to assist the vendor in managing your account? Are those resources better spent on internal management than on managing a vendor?” If opting for external support, communication is key—and timely reporting of trends both good and bad can help labs resolve any potential issues.

When trouble strikes

Sirgi’s immediate advice: “Don’t panic.”

Establish policies in advance to provide guidance if your lab encounters a compliance issue—especially one that may have broader implications, such as an accidental False Claims Act violation.3 That will enable you to respond quickly and adhere to any reporting requirements.

“Upon identifying a risk item, one of the first steps is to gather additional information to validate the scope of the issue,” says Sirgi. “Next is to focus on identifying the root cause (manual, automated, or system logic). Is this a longstanding systems issue that has grown over time or a recent one that became evident after a workflow change?”

Once you’ve identified and documented the cause and scope of the problem, you can bring the information to your lab’s legal, compliance, or leadership team for guidance on reporting. With their support, you can then define and implement corrective actions, provide any necessary education to lab staff, and scale up your monitoring and auditing processes to ensure that the issue doesn’t recur.

Although each lab is responsible for its own compliance, Sirgi emphasizes that laboratory professionals aren’t alone. In addition to support from administration, software solutions, and compliance management providers, he highlights the work professional associations do to advocate for a better regulatory environment—providing education, working with accrediting bodies, and even lobbying government representatives to make life easier for laboratorians and patients alike.


  1. Centers for Medicare & Medicaid Services. Complying with Medical Record Documentation Requirements. Medicare Learning Network. March 2024. https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/downloads/certmedrecdoc-factsheet-icn909160.pdf.
  2. Bueno E, Wilmot M. Compliance and Regulatory Enforcement Update for Labs. Nelson Mullins. January 4, 2023. https://www.nelsonmullins.com/insights/blogs/healthcare_essentials/enforcement/compliance-and-regulatory-enforcement-update-for-labs.
  3. Healthcare Fraud Prevention Partnership. Examining Clinical Laboratory Services. May 2018. https://www.cms.gov/files/document/download-clinical-laboratory-services-white-paper.pdf.

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