How Does Laboratory Billing Services Work?

Touseef Riaz

January 28, 2022

Laboratory Billing Services
A laboratory gathers samples of patients ordered by a physician and runs the required test. Experienced and highly specialized pathologists are required to run these tests. After the tests are done, results are forwarded to the healthcare physician, who then diagnosis and treats the patient based on the test results. Lab tests can be carried out in a separate facility (no patient–pathologist interaction) or in the same facility where the pathologist has performed the E/M (Evaluation and Management services). In the latter case, lab bills for the services they rendered.

Types of Laboratory medical billing Services:

The two major types of laboratory billing services include:

Clinical Laboratory Billing:

It involves an examination of the human specimens, based on which the prevention, diagnosis, and treatment process are determined.

The test involved in clinical lab tests include:

Chemical or biological

  • Microbiological or serological

Diagnostic Laboratory Billing:

These lab services are different from the clinical billing or tests. Diagnostic tests require the physician or any other certified professional to perform the test. Following are the types of diagnostic laboratory services:

  •         Cytopathology
  •         Surgical Pathology

Laboratory Billing Services- ucontrolbilling

Common Challenges faced in Laboratory Billing:

Ensuring that your medical billing team is aware of all the challenges and errors of medical billing laboratory testing is essential (so they don’t make the same ones). Laboratory billing comes with its own set of errors and challenges and the changing billing and coding guidelines, laws, and the insurance payer’s rules and regulations don’t help. All of this contributes to making errors common in medical billing. Following are some of the challenges or errors faced in clinical laboratory billing and coding:

Issue in the payments:

A medical claim with certain errors like submitting a claim for unnecessary laboratory services or tests and inadequate documentation or information to support the claim. This results in the claim denials and, therefore, late payments.

Medical necessity behind the test:

As mentioned earlier, to submit a claim for a lab test, the medical claim must have proper and complete documentation to support the medical necessity.

Orders intent:

Claims are often denied or rejected if the physician has no specific order for the lab test to be billed.

– Incomplete or incorrect documentation:

In many cases, to get a certain test done, patients must have an authorized physician referral. In case this authorization isn’t present, the claim can result in denial or rejection. Also, the documentation when submitting a claim must be complete and accurate.

– Verification:

Medicare doesn’t cover all the healthcare services, so verifying the eligibility criteria for the patient and the lab test is crucial to be reimbursed for the services rendered.

In order to avoid the above-mentioned errors, following the laboratory billing documentation guidelines, use of the right CPT or ICD codes, complete and accurate documentation is very crucial.

 Laboratory Billing: The Guide

Medical billing for laboratory services is a complete cycle based on the type of lab services rendered. A laboratory billing system is a medical billing that helps in improving the revenues and financial state of a lab by providing the highest quality of service and hospitality.

How does it work?

When a lab test or service is performed, procedure and diagnosis codes are assigned to the test. This helps the insurance payer identify the medical necessity behind the service rendered and whether to pay the claim or not. The two major types of coding systems used for laboratory billing are ICD (The International Classification of Diseases) and CPT (Current Procedural Terminology) codes.

How do labs bill Medicare?

Lab tests reimbursed by Medicare need to be billed directly by the physician or laboratory rendering the service. In the case of an outside laboratory performing the test, the lab test can only be billed legally to Medicare by the reference laboratory unless the referring lab:

– Is part or located in the rural hospital

– Is wholly owned by the reference lab, vice versa, or both of them wholly owned by a third party.

– Not more than 30% of the diagnostic tests received another laboratory performs requests annually (by the referred lab).

Medicare program covers diagnostic x-rays, laboratory and other diagnostic tests, including services rendered by the technicians and the materials required.

Important definitions: A reference laboratory is a Medicare-enrolled lab that actually performs the test on the specimen received from another referring lab for testing. A referring lab is a Medicare-approved lab that receives and refers the specimen for testing to another lab.

Regardless of where the services were rendered, a diagnostic lab test is considered a lab service. The laboratory services can be rendered in any of the following:

– A physician’s Office

– An independent Laboratory

– A hospital laboratory

– A RHC – Rural Health Clinic

– An HMO or HCPP (Healthcare Prepayment Plan)

Note that if a hospital performs a test for a non-hospital patient, the hospital laboratory is acting as an independent laboratory.

Like every other diagnostic service, the covered laboratory services must be ordered by the physician regarding the patient’s illness or injury.

(The above-mentioned guidelines are provided by Medicare Claims Processing Manual – Chapter 16, Laboratory Services)

Here is a catch: to get paid by the insurance payers, the laboratory must be certified by CLIA (Clinical Laboratory Improvement Amendments certification). Any errors in the coding or billing can lead to claim denials or rejections.

Laboratory Billing Documentation Guidelines:

CERT (Comprehensive Error Rate Testing program) identified the reason behind the majority of the improper laboratory payments, i.e., the inadequate or insufficient documentation. It means that some of the required information or documentation is missing from the patient’s medical record. Some of the important documentation required for a laboratory medical claim is:

– Documentation for “Intent to order” behind the lab test. For this, signed progress or notes, a signed physician order, or an office visit (signed) must be available to get proper payment.

– Documentation supporting the reason and medical necessity behind the services ordered.

In order to avoid any such errors in medical billing, the following are some documentation guidelines for laboratory billing:

– All the diagnostic radiological X-rays, lab tests, or any other diagnostic test must be ordered by the physician treating the patient. These tests are used by the physician to manage a patient’s symptoms or to provide a consultation. Note that lab tests that the physician does not order aren’t considered a medical necessity.

– The progress report prepared by the physician must include all the tests to be performed (supporting the intent to order). The diagnostic test order will be only considered by the medical review contractors if;

o   The specific test is listed on the signed order

o   The physician’s intent to order that specific test must be proved and supported with an authenticated medical record.

– The medical necessity of the specific lab test must be supported by the documentation in the patient’s medical record (according to CMS – Centers of Medicare and Medicaid Services).

So these are key physician billing guidelines for laboratory services.

– Following is the list of documents that should be presented in laboratory billing services if requested:

o   Progress notes or office notes of the physician

o   Physician’s intent to order the service

o   Lab test results

o   Attestation or signature log

  • According to Medicare, all the orders for diagnostic tests must be signed by the physician in order to avoid any claim denials.
  • For unsigned requisitions or orders by the physician, the attestation services are unacceptable.

To avoid errors and increase the reimbursement rate, most providers find it more efficient to outsource the laboratory billing services to a laboratory billing company or medical billing service provider like UControl Billing.

Outsourcing Laboratory Billing Services:

For timely and accurate payments, error-free medical claims along with accurate documentation must be submitted. Several laboratory billing systems have a wide range of functions, but obviously, the data entered must be free of any error.

Plain and simple, there are lesser chances of errors when the experts deal with medical billing and coding. This is where medical billing service providers like UControl billing step in. we have a team of highly specialized and certified medical billers and coders on board. UControl Billing’s very foundation is summed up in just one word “Experience.” This is all that matters.

Why choose UControl Billing?

With a team of certified medical billers, working on reducing errors and increasing your revenues. All our laboratory billing services team is highly experienced in performing every medical billing related task and position like:

– Charge Entry

– AR (Account Receivables) Follow-ups

– Electronic Data Interchange

– And a number of other crucial routine tasks as well.

All of these are just to increase revenues and reimbursement rates for your healthcare practice.

With our timely follow-ups and billing in 24 hours, we consider ourselves as a “Remote Business Office.” Giving you the feeling that we are right there with you, none of your calls or emails will go unanswered – we will never be too busy for you, you will always be updated about your accounts with uninterrupted service and stability.

UControl Billing knows how to enhance your medical billing, and the plus side is that you won’t even have to shift to a new EHR/EMR. Our team of specialists will work with your EHR. With UControl Billing you get a team that’s highly proficient in:

– Improving your coding accuracy

– Working with ICD-10 CM, CPT, HCPCS, NDC, and Modifiers

– Specialty and payer based medical coding services

– Rule-based Claim Review

– HIPAA Compliant

– Tracking the claims and reducing denials and rejections

Not only this, with our affordable pricing, you can also get yet another huge plus. UControl Billing’s pricing package exceeds the basic medical billing package out there. You don’t have to worry about the fixed costs anymore, and your billing cost will depend on the monthly receipts.

Services we offer:

Medical billing and coding can be really tricky but are crucial areas for running any medical or healthcare practice, and we aim to increase your revenue collections, reduce errors and increase your cashflows. Not only this, but with UControl Billing, you also get software flexibility. Following are the services offered by UControl Billing:

– Medical Billing services

– Medical coding Services

– Revenue Cycle Management (RCM)

– Front Office Management

– Telemedicine Billing Services

– Medical Transcription Services

– Medical Credentialing Services

– Value-Added Services like

Frequently Asked Questions (FAQs)

  • How do laboratory billing services work?

Laboratory medical billing is not like any other healthcare specialty or billing service (physician, hospital, or DME billing). It is a process of interaction between the pathology or clinical lab and the insurance payer. Laboratory billing uses a specific set of CPT codes to evaluate the samples obtained from a patient based on their physician’s orders. (The results are later forwarded to the physician who decides the treatment procedure based on them).

  • What type of provider is the laboratory?

When we talk about clinical laboratory services, there are three different settings or types;

  1. I) Laboratories based in hospitals
  2. II) Laboratories based in Physician’s office

III) Independent Laboratories

Among all these, only independent laboratories can be categorized as the provider type 43. (Note that the clinical laboratory must have a current CLIA – Clinical Laboratory Improvement Amendments certification for any lab test performed).

  • How do labs bill Medicare?

The lab test performed by the physician or laboratory must be directly billed to Medicare. Suppose the test performed took place in an outside laboratory (referred by the physician or other lab). In that case, the procedure performed can only be legally billed to Medicare by the reference lab – exceptions included.

  • What is a laboratory service?

Laboratory services are referred to as any and all lab tests, like specimen or sample collection, diagnostic and clinical tests. It involves testing the specimen, recording the results of the test ordered by the physician, and later laboratory billing services (according to the laboratory billing guidelines) are rendered.

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