Managing claims denials has become an important part of many organizations’ revenue cycle process. While increased claims denials affect the healthcare industry at large, laboratories are perhaps affected more acutely. Lacking infrastructure to aggressively pursue payers and rework denials, many labs consistently leave revenue on the table. However, like much of the industry, healthcare automation has the potential to play a major role in helping labs approach this problem.

Reasons for denials

There are many reasons a laboratory claim could be denied. For example, failure to secure prior authorizations for commercially insured patients, submitting claims without specific diagnosis codes, or neglecting to document medical necessity significantly impacts reimbursement. However, it can be difficult to obtain pre-authorization from referring doctors and maintain an organized account of the pre-authorization guidelines for each insurance carrier. 

Payers have also increased denials due to missing demographic information, missing documentation, and codes that exceed the Medically Unlikely Edits limit. Even if the test is deemed medically necessary on the front end, some payers are requiring post-payment audits. Payers request medical records to confirm that the ordering/treating physician has documented the patient’s diagnosis. In doing so, they obtain the clinical justification for requesting the test, the test’s impact on clinical decisions, and the treatment plan. 

Overcoming denials

Whatever the reason claims may be denied, labs can take a systematic approach on two fronts to ensure their revenue cycles are less affected by increased denials: they can make efforts to prevent them from happening or they can have mechanisms in place for successful resolutions. 

Denial prevention: clean claims

Reworking claims, even when successful, can be costly, time-consuming, and harmful to the customer experience. Thus, submitting a clean claim with accurate demographic, clinical, and billing information is imperative. Automating steps in the revenue cycle process can help produce fewer denials and provide increased transparency for all parties. For example, Medical Laboratories Observer (MLO) suggests that labs consider “using automated tools to verify patients’ address and insurance information, including eligibility verification.” MLO also recommends a tight integration between LIS and RCM systems. Using rules-based systems, the RCM software should identify any issues with invalid or missing information. Finally, labs should facilitate education with referring physicians about utilizing the appropriate diagnostic codes and documentation in clinical records. 

Appealing denials

Inevitably, some denials still occur. When they do occur, the less time it takes to rework the denial, the more profitable the smaller claims can be upon fulfillment. Thus, automating the reconciliation workflow is just as important on the back-end as it is in preventing the claim denials. With increased transparency and decreased room for human error, labs can quickly resolve denied claims. 

However, labs can anticipate an increase of denials from payers due to the No Surprises Act. The Act protects the patient from having to face financial responsibility and instead prompts the payors and providers to settle outstanding medical bills. Thus, it is imperative for labs to prepare to facilitate more denial management. With a partner like Credence Global Solutions, labs can be better equipped for this uptick in denials. 

Our solutions

Credence Global Solutions brings extensive experience supporting diagnostic laboratory teams across the country. We can help you overcome the burden of patient payment processing or claims denials by optimizing your end-to-end revenue cycle, tracking payer guidelines, managing disputes, and much more. Our patient engagement platform, iConnect, empowers labs to connect directly with patients. iConnect’s personalized, self-service platform allows labs to inform customers of physician referrals and claim submissions instantly, increasing transparency and efficiency throughout the payment process. Contact us today to see how we can help you overcome excessive denials and inefficiencies.