By Sean McSweeney bio
Should you contract with the Blues? Many BCBS insurers around the country are opening up to paneling laboratories where previously that had not often been possible. They are offering extremely low rates, typically 10%-35% of the Medicare rate depending on the code, which is atrocious and often below the cost of processing the sample.
So why would you consider this? First, most labs collect nothing on these samples because the normal billing process fails entirely. Checks are sent to patients and the lab is never notified that the claim was processed and paid, how much was paid, or the patient responsibility. Most billing departments of labs or laboratory billing companies wait to hear back from payers on payment or denial, and only start to follow up after 60-90 days if they don’t hear anything (if they follow up at all).
By this time, several months have passed. Someone contacts the insurer and finds out a check has been cut and mailed possibly months earlier. The patient gets sent a statement requesting payment. This invariably fails and the laboratory does not get paid. The patient does not turn over the money that he or she received from the insurance company, even though it is not his or hers to keep. The money is now spent—and the lab collects nothing. Part of the problem is that a small number of people are dishonest and solely want to keep the money, but even the great majority of patients who are typically honest are likely to keep the check and spend it. Some are just confused and see a check made out to them and think it is theirs. Most of the rest deposit the money and are prepared to give the money to the laboratory, but are living paycheck-to-paycheck, so if the money is left in their account very long, it invariably gets spent.
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Many labs simply send these samples out to a reference lab, which is contracted to avoid the cost and the loss—and to allow someone to collect on them.
There is a different, proactive process that yields much better results. This process notifies the patient of a pending check prior to them receiving it, and then includes outbound calls to patients anticipating a check and right after receiving the check. This results in a high collecting rate of those payer checks. Asking the patient for his or her share of cost also yields additional collections. On net, a laboratory can make more money OoN than contracting.
| Calculation example: | |
| BCBS contracted rate for 2 tests | $42.21 |
| BCBS allowed OoN average | $250 |
| BCBS payment average | $150 |
We often collect 70-80% of out-of-network checks that went to patients, which nets a much higher average reimbursement than $42. And this does not even include anything billed to the patient of the $100 balance he or she would owe. Asking patients for a reasonable amount—or even negotiating and settling on the phone for something like $20 for the patient balance—increases average collections significantly.
The math shows that we are much better off financially being out of network. Even if we only collect on half the checks and receive nothing from the patient, we are still better off.
So why contract with the Blues? Being able to say you’re in network with referring physicians could help your marketing and sales. The BCBS samples could be your loss leaders to get many other samples.
Doctors are sick of dealing with patients being upset about balances, and are sick of trying to figure this out. Many labs are now starting to get in network when they used to be out, or are buying labs that are in network, or are starting up under a pathologist to get in network under their contracts. In states where it is permissible, the ordering physicians own the lab. This means it is increasingly more difficult for labs to be completely out of network in order to sell new practices on referring them business. The doctors may think it is not worth the headache.
If the marketing benefit is not worth the loss in revenue, stick with billing out of network to make more money on those samples—as long as you have a strong program in place to collect the checks going to patients. If the loss of revenue is worth being able to say, “We’re in network,” then take the BCBS contracts.