Get Paid With Less Stress

Occasional denials from payers are just part of doing business for health care providers. But labs face challenges getting paid that clinicians don’t. In this two-part series, you’ll learn how to keep your rate of denials as low as possible, and what to do when payers refuse your claims.

Coding errors are one of the most common reasons for denials from payers, says Elizabeth Woodcock, president of the consulting firm Woodcock and Associates. However, in most cases, the coding will have been done by the physician’s office that referred the patient or sent the samples to you. You can’t do anything about problems with codes that your office didn’t assign. Or can you?

“Labs get denials all the time because of incorrect diagnoses from the providers,” says Tammie Olson of Management Resource Group, a firm offering financial management and support services for the health care community. “Often I see the lab sending queries back after the denial, but it might be better to screen for this and send queries back to the provider before submitting the claim. If the lab sees something specific that they know is not covered, then they really should query the physician for a better diagnosis before submitting the claim.”

And if coding is very often the reason for denial, quite often the basis for the denial is that the test was “not medically necessary.” This type of denial poses special challenges for labs. “Labs are generally at a disadvantage when it comes to demonstrating medical necessity. In a lab, you don’t have a direct relationship with the patient, and you don’t have access to the full records and history of the patient, so making sure your claims pass the ‘medically necessary test’ can be tricky,” says Debbie Parrish, of Parrish Law Offices, a firm specializing in obtaining and protecting reimbursement for health care systems, physicians, and laboratories. But you don’t have to just sigh and write off these bills. You have more control than you might think.

Being aware of the policies of the payers you typically work with (and these policies can vary a great deal from payer to payer, Woodcock points out) is crucial. “Before you bill for laboratory services, research your payers’ websites for their reimbursement and billing guidelines,” advises Olson. This way you’ll know beforehand when your claim is likely to hit a snag.

Then you need to carefully review the diagnosis code. “Make sure that the diagnosis linked to the procedure is correct, specific, and accurate. For example, a doctor wouldn’t order a CBC for someone with high cholesterol, but he or she might have to order one because the patient is taking a certain medication for high cholesterol that may cause adverse effects. So a more accurate diagnosis would be ‘use of high risk medicine’ and not ‘high cholesterol.’” Often, though, the problem with the diagnosis is not lack of accuracy but lack of specificity. “Most insurance providers do not cover the code General Health Profile, CPT 80050, but it is a favorite of providers to order,” says Olson.

Some situations are specific to Medicare claims. “Prior to running a test that is likely to be deemed not medically necessary by Medicare, you need to make sure that the provider has provided an ABN (advance beneficiary notice/Medicare waiver of liability) before you run the test. Otherwise, you will not be able to bill the patient if the claim is denied as not medically necessary,” explains Olson. Providers are required to give Medicare patients this waiver of liability for any services they provide that may not be covered or are considered not medically necessary.

Of course making sure the coding is right and ABNs are available when they should be may take a little diplomacy. “Clinicians are busy, and tend to get cranky when asked to justify their clinical decisions. There is a fine line between getting the information you need and becoming a nuisance,” says Parrish. Some labs find that bundling their queries is more effective than addressing them as they come up. Since you probably bundle your claims as well, this should be relatively easy to fit into your workflow. The important thing is to know your clients and work with them with courtesy and respect. Once you make a habit of checking codes before you submit, and querying providers about any potential problems, you are likely to find a pattern to your denials. Once you’ve worked out the bugs with your providers, many of these will go away.

No matter how careful you are, though, some claims will bounce back. Next month, we’ll talk about what to do when that happens.

Takeaway: Laboratories face unique challenges when it comes to claim denials but still have opportunities to reduce denials by taking steps before submitting to make sure claims are as clean as possible.

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