Expert Q&A: Trends and Challenges in Lab Billing and Coding

Billing and coding present many challenges for laboratories, with the COVID-19 pandemic adding a few more issues for leaders to contend with. Ann Lambrix, vice president of RCM Solutions at Lighthouse Lab Services, discusses recent developments in lab billing and coding, the biggest challenges for labs, and how they can avoid major problems.

Q: What have been some of the key trends in laboratory billing and coding over the past few years?

A: We saw a lot of changes when it came to the procedural codes with COVID-19 testing during the public health emergency (PHE) and then the same with diagnosis codes. Now that the PHE is over, the U codes (U0001 through U0005) have been done away with.

We also saw lab testing for infectious disease roll under the MolDX Program. The LCD [local coverage determination] requiring Z-codes for infectious disease molecular testing went into effect for most states by June 2023. That was a big deal with billing and coding for many labs that had converted from COVID testing and brought in infectious disease testing. MolDX implemented the Z-code requirement and technical assessment process to include infectious disease testing.

The other trend is something that’s not new, but we’re seeing more of, which is an increase of PLA (proprietary lab analytes) codes.

Q: What are the biggest challenges for labs when it comes to billing and coding?

A: The way that the US payer structure is set up. We have thousands of commercial insurance plans, 50 states that administer Medicaid, Medicare, and then you may have managed Medicaid plans and Medicare. There are all these payers and each one may have a different policy on reimbursement. I think that’s the number one challenge—making sure that you’re very quickly adapting to current or new policies and implementing new procedures if necessary.

Q: What are some other ways labs can avoid billing and coding issues?

A: One of the things that a lab can do is make sure they’re performing routine audits on the whole picture, not just one segment of the billing—but the whole thing from start to finish—and identifying opportunities to improve the process. If a policy has changed, you’re going to see it in the denials and the reimbursement. If you’re doing routine audits, you’re going to catch those issues before they become a big problem.

Q: What are your top tips for ensuring reimbursement in today’s environment?

A: Proper setup is key. Make sure you’re set up right on the front end, with the LIS [laboratory information system] properly interfacing with the billing side, to ensure information is correct at each stage of the process—from when the order is put into the LIS, sent to the billing system, and then submitted to the payer.

Don’t forget about reimbursement when developing or expanding your test menu. Look at who your top five payers will likely be, what their policies are, and whether or not those payers are going to cover the testing you’re thinking of adding. What are the potential challenges that may impact reimbursement, and what does the lab need to do proactively, if anything, to address these issues?

Stay on top of back-end denials. This will help you on the reimbursement side as denials can give you clues of procedural or policy issues that will impact reimbursement. You can use that information to be more effective in your revenue cycle at the very beginning.

Q: It seems there are tons of revenue cycle management solutions and partners out there for labs. What key questions should leaders ask to determine the best options for their labs?

A: It’s important to understand what [a potential partner] is best at and who their core client base is. For example, a third-party biller may be really good at billing for primary care, but they know nothing about the laboratory. A lab has its particular nuances and if the potential biller has no laboratory clients, it might not be a good fit. That is important to ask of any type of technology or partner—what do they specialize in and who are their core clients? Is the laboratory represented there and is it represented well?

Finding good partners in this space is important because a lab cannot do this entirely alone. They need good partners that not only have the expertise with labs, but are invested in the lab’s success, not just in terms of revenue, but in helping labs understand the billing and coding side and staying on top of trends and the payer policies, etc.

Q: How do you expect the key trends/developments in lab billing and coding to progress in the future?

A: Following the relaxed billing rules as well as payer oversight such as audits put on hold due to the pandemic, we’re now seeing increased scrutiny from payers looking at billing behavior. In particular, payers are looking at areas such as overutilization of tests and medical necessity, or, if labs are running panels, are they stacking codes versus billing the panel code, etc.

Many payers are requesting documentation from labs, but that documentation is lacking in many cases. There are very clear guidelines for what the payer wants when it comes to documentation, but labs are not doing their due diligence of making sure that when they’re submitting documentation, it’s meeting requirements.

Another thing to note is reimbursement does not equal coverage. Just because you’re getting paid doesn’t mean it’s paid correctly. Medicare is a pay-and-chase payer and a lot of other payers are as well. They have algorithms in their system that are going to flag issues such as overutilizing tests. It may not be anything you’re doing incorrectly, but you have to be prepared to support that [testing with documentation]. That’s where labs are sometimes falling short. If that documentation isn’t sufficient, the payer will take that money back and will potentially put “prepayment review, postpayment review, 100 percent denial.” We’re seeing a lot of that because [labs are] failing to recognize that just because they’ve been paid on a claim, doesn’t mean that the payer can’t come in and ask labs to support it.

Q: Apart from ensuring proper documentation, what are some other ways labs can prepare for this return to normal scrutiny?

A: Routine audits. The OIG’s model compliance plan for clinical labs builds a really good framework around what labs should be doing in terms of due diligence and operating in good faith. It is worth noting, however, that having a compliance plan doesn’t mean you’ll never get audited. If you’re billing insurance companies, most likely at some point you will receive an audit. The challenge is preparing for those audits and making sure that when a payer does come knocking at the door, you’re prepared. A good billing compliance plan will support this.

For example, the model compliance plan for labs talks about the things that you should be reviewing routinely, such as coding, billing, and payments. When looking at those things, one should make sure there are no signs of either potential erroneous payments or potential risk that the payer is going to flag. If there is, labs need to be prepared to support the reason why and potentially refund the payment if necessary. If something is identified, what is your policy for self-reporting and refunding? All of these things should be clearly outlined for a lab, and they should have a compliance officer who is managing that and monitoring the billing compliance. That’s how labs can best prepare for the increased scrutiny and policy changes and the other changes that have come. It will put them in a better place because they’ll be able to identify those problems before they become big issues.

Our goal when we do audits for our clients, is to not only identify areas of concern, but also identify areas where we can improve a process. Is there an opportunity where we need to fix a process because what we have in place is causing the lab to bleed money? It’s important to be more systematic in our approach and keep an eye on things because if you let it go and you’re not paying attention, months and months go by and you’re performing this test and you may never get paid for it. Labs lose money all the time that way, because they’re not monitoring and auditing their processes.

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Ann Lambrix serves as Lighthouse’s VP of RCM Consulting, heading up the division’s day-to-day operations. With more than 20 years in the medical insurance and billing industry, her experience provides for an insightful analysis of revenue cycle and the payer trends impacting reimbursement. Ms. Lambrix holds a MSJ in Health and Hospital Law.