Category: For Laboratories

Movement continues on CMS reimbursement of Advanced Diagnostic Laboratory Tests (ADLTs) and Molecular Pathology testing during the 14 days following a hospital stay.

Recently it was announced that CMS will exercise enforcement discretion until January 2, 2019, for the laboratory date of service (DOS) exception policy for ADLTs and molecular pathology tests excluded from Hospital Outpatient Prospective Payment System (OPPS) packaging policy.

If you are a performing laboratory prepared to bill Medicare directly for ADLTs and molecular pathology tests subject to the new laboratory DOS exception, this enforcement discretion period does not prevent you from doing so before January 2, 2019. However, in no case should both the hospital and the performing laboratory bill for the same test for the same beneficiary.

Labs that have billed tests under the DOS exception and experienced denials, including where Medicare is secondary, may want to contact their Medicare Administrative Contractor (MAC) for further direction on these claims.

The policy may be found here.

For a brief overview of the Medicare Hospital Outpatient Prospective Payment System (OPPS) and revisions for 2018, you can check out this blog post.

How are some of the payers’ Prior Authorization (PA) programs impacting your laboratory’s bottom line and what can you do about it? Increasingly, retroactive authorization after performing lab tests is becoming a less viable option; as is fighting denials for lack of Prior Authorization during the appeal process. While some payers still allow retroactive authorization, in general, laboratories who test specimens without prior authorization run the risk of performing uncompensated testing.

Quadax, a long-standing provider of Revenue Cycle services for the laboratory market, explored Anthem’s and United Healthcare’s prior authorization management programs’ real impact on: claims processing timelines, receipts, payment timeliness, denial trends, and more. Our data driven analysis focused on the variance before and after implementation  revealed the following:

Overall, denials have increased since program implementation, UHC denials increased 49% and Anthem 22%.  Testing for inheritable genetic disorders is being hit the hardest by these programs. Perhaps due to increased scrutiny, these tests are experiencing the highest increase in denials. For some CPT codes, denials have increased by over 70%.

When a lab test required a PA by the payer, denials increased substantially when claims were filed without prior authorization. Since program implementation, 85% of claims submitted to UHC without the required PA have been denied. The chance of being paid by Anthem is slightly better, as 66% of claims submitted without PA have been denied. Even when prior authorization is filed appropriately, the claim may still be denied (45% of the time by UHC and 29% by Anthem).

When labs successfully navigated payer requirements and the payer program processing, overall payment turnaround time was faster (UHC 26%; Anthem 13%).

Attempting to overturn a denial using an appeal process has been less successful since program implementation and resulted in fewer dollars. The appeal allowable contribution after initial denial for no PA was substantially decreased by 40% at Anthem (UHC – too soon to tell). Regardless of how robust a lab’s appeals process might be, the numbers are showing diminishing returns since program implementation. Labs may no longer be able to “make it up” in the appeal process after having missed payer prior authorization requirements.

 Quadax continues to investigate these trends on behalf of our laboratory clients. Our findings suggest that laboratories need to re-evaluate their prior authorization strategy. As recent as early last year, retroactive authorization was a normal operating procedure – a lab would accession the specimen and go right to testing. At that time, the lab would begin their revenue cycle starting with benefit investigation. In today’s environment, this process exposes the lab to the full cost of acquiring the specimen, transporting the specimen, all of the consumables, and the cost of the lab kit while offering no guarantee of payment. If the payer’s Date of Service (DOS) rules dictate using the specimen collected date, similar to Medicare and Medicaid, any attempt by the lab’s staff to obtain PA is considered a “retro” authorization. When a payer no longer allows retro authorization and prior authorization was not done by the ordering physician, data shows that the lab stands to have a diminished chance of getting any reimbursement.

In response, some labs have moved prior authorization discovery to earlier in the process, some handling it at the same time as accessioning. The lab’s staff starts to work with the referring physician earlier, prior to testing, to acquire the necessary authorization. At this point the lab still has the physician’s attention. Wanting and waiting for the test results, physicians may be more attentive to lab requests for medical necessity documentation. By not immediately performing the test, the lab can avoid the cost of processing the specimen until they have acquired payer authorization. However, this does not resolve the fact that the lab is still forced to request the authorization in a “retro” state if date of service is collection date and the physician has not started PA. More importantly, current Anthem and UHC policies require the ordering provider to initiate Prior Authorization. If testing is delayed specimen stability may become a concern and, from the stand point of personalize medicine, delays can have a negative impact on the patient’s clinical care. This is an unintended consequence of these burdensome programs that payers have put into place.

It is ideal to perform the prior authorization at the time of, or before ordering the test (during the patient’s visit with the physician)—before the patient goes for specimen collection. However, this process increases the administrative burden for the ordering physician. Many laboratories lack the necessary patient access management (PAM) tools on the front end to help ease the ordering physician’s burden and navigate the payer prior authorization programs successfully, or even be aware that prior authorization is required.  One of the greatest challenges standing in the way of PA is that physicians are used to ordering procedures for their patients through their respective EMR systems. However, many EMR systems lack the ability to manage the constantly evolving lab requirements and/or accommodate the lab’s needed data. Physicians are inundated with a variety of online portals already and having them log into one more portal just adds to the growing “portal fatigue” physicians already experience. This creates another burden for the lab to manage.

In the wake of these reimbursement complexities, the new programs originally intended to promote appropriate, cost-effective healthcare may be preventing access to critical laboratory services used in the prevention, diagnosis, and monitoring of disease.

By developing a set of prior authorization tenets, the American Clinical Laboratory Association (ACLA) seeks to improve the payer processes that have begun to pose serious risk to patient care, and minimize the delays in laboratory testing and negative impacts created from such processes. The traction these tenets do or do not get with payers, will be something to watch for.

What can your lab do to navigate changing prior authorization requirements? Explore your options. Walt Williams, Director of Revenue Optimization and Strategy at Quadax, presents his new webinar, “Implementing a Prior Auth Program: Choosing the Right Strategy for Your Lab” on Thursday, July 19 at 2:00 p.m. EST. Quadax is proud to be your guide with 45 years of experience successfully navigating healthcare change.

Is your cash stranded in the vastness of your lab’s accounts receivable (A/R)? Targeted revenue search and rescue efforts can improve your lab’s financial performance. Know where to send the search party—monitor key performance indicators (KPIs) Days in A/R and Aged A/R.

Representing many of the most prominent laboratories in the diagnostic market space, Quadax solves cash flow issues surrounding aged A/R. We advise clients and provide the resources to closely monitor revenue cycle performance which starts with analyzing the aged accounts receivable.

When performance is measured, performance improves.

Where metrics measure data, KPIs relate and compare metrics to measure performance and track progress toward achieving a lab’s financial objectives. Calculated on a regulated, recurring basis, often from month-to-month, KPIs compare and contrast current to historic values to identify underperforming areas, anomalies, and trends. Management can then investigate and determine what action should be taken to achieve performance targets.

Defining performance – good, better, and BEST.

Charting your lab’s revenue cycle course and direction, consider goal setting that recognizes multiple levels of performance—good, better, and best. In addition to meeting baseline targets, aim to exceed expectations with “stretch” goals that move the needle. Mining historic data to establish past norms, create growth goals that model your financial expectations.

Translate reimbursement performance goals into KPI targets. Communicate targets as a range, a discrete number, or use a directional trend for those targets that are based on estimates. The more clearly defined the targets, the easier it will be to measure and rate performance.

KPI Best Practices

A KPI’s reliability is directly related to how it is calculated, what data is used in its calculation, and how its results are interpreted. Once you determine what KPIs you will monitor, it is best to use the same calculation from week-to-week, month-to-month so performance is consistently measured. Also consider using exclusive data groups that can provide insight into the performance of your lab’s payer strategies (in- and out-of-network) and test service technology platforms. If the data is too far reaching, it may contain outliers that can hide underperformance. When investigating KPI results that are out-of-target, you may want to reference historic trends as a basis for assigning significance and impact. For the most reliable performance tracking, it is best to monitor a balanced scorecard of several different KPIs, providing various views into your lab’s revenue cycle performance. Need help building your lab’s KPI Scorecard? Contact us for a list of recommended KPIs.

How to Monitor Your Lab’s Receivables

To measure your lab’s A/R performance, monitor Days in A/R and Aged A/R. Consider the following:

How many days of sales are sitting in accounts receivable? Determining the average number of days it takes to collect payment on services rendered, Days in A/R measures the rate of A/R turnover. Also referred to as Days Sales Outstanding, Days in A/R can project payer turnaround time (TAT). Computed by payer and test, a laboratory can compare TATs and target areas of underperformance. Although there are multiple formulas, it is most commonly calculated as Net A/R divided by Average Daily Net Revenue. When calculating Days in A/R, consider any seasonality within your sales cycles and select a time period for computing Average Daily Net Revenue that minimizes impact—once selected, use it consistently over time.

Analyzing my lab’s A/R, what payers and which products are not clearing A/R in a reasonable amount of time? A trending indicator of receivable aging and collectability, Aged A/R can measure your lab’s ability to get services paid in a timely manner. Depending on your mix of test types and payers, KPI may target % of A/R > 90 or % of A/R > 120. Showing the distribution of open A/R across 30-day aging buckets, Aged A/R is most commonly presented as a series of percentages where each percent is calculated as the Net A/R summary for each aging bucket divided by the total Net A/R. This allows for early detection as A/R ages and shifts to the older buckets, allowing the lab to target operations and claims follow-up efforts. When setting up these calculations, consider which start date will be used in determining a claim’s age – date of service or date billed. This consideration is particularly relevant as it applies to secondary and tertiary claims. Will your lab re-age the claim restarting with the secondary bill date or will it continue to track aging from the original date of service?

Next steps… Continuous Improvement

As performance tools, KPIs monitor revenue cycle patterns and trends to detect changes, quantify variance, and target investigation. Laboratory management assigns significance, first, by setting performance targets, and second, by investigating when targets aren’t met. KPIs may not be silver bullets, but they can aim your revenue search and rescue efforts.  As you monitor performance, update targets, and refine financial expectations, learn how our lab-centric revenue cycle solution can provide you the quality data-driven analytics you need. Check back for future blog segments on measuring and tracking reimbursement performance.

Healthcare may be the only industry where a company has no idea how much it will get paid for services rendered, or whether or not it will be paid at all. This is especially challenging for laboratories that are on the cutting edge with new procedures and technology. For a lab to accurately track expected reimbursement, it is necessary to know whether or not a lab test is covered by a patient’s insurance and who will be paying what. The good news is that with timely benefit investigation, properly performed, a patient’s eligibility and financial responsibility can be identified before the lab performs the test and incurs the cost. One way to accomplish this is to integrate patient access management (PAM) functionality into the lab’s ordering portal. In this way, financial clearance can be expedited as an adjunct to ordering a lab test.

Applying one-stop-shop methodology, automated eligibility verification and bill estimation can be incorporated into the test ordering decision process to make it easy for physicians and patients to do business with your lab. For a self-serve PAM solution that is fully integrated into your current order processing, consider augmenting your lab’s ordering portal with PAM functionality powered by application programming interfaces (API) packaged for plug and play integration.

While reviewing your current PAM process, explore how quicker results, more complete information, efficient automation, and ease of use could help improve your lab’s reimbursement outcomes.

Patient Eligibility and Responsibility

Start with an efficient and reliable process to verify insurance and coverage for every patient. Knowing what payers will cover and their pre-service administrative requirements can help patients make informed decisions and physicians to help meet pre-test requirements. You’ll want a PAM solution that can guide a user through data entry and assist in payer selection, ensure the correct patient data is used to find patient coverage, give your staff a consistent process across all payers, and save your staff the hours spent foraging multiple payer sites for patient benefit information. Find a PAM partner you can trust, one who has the insurance intelligence you require and can transform the payer’s data into actionable information by providing it when, where, and how you need it.

Patient Out-of-Pocket Estimate

More than 80% of covered employees have an average annual deductible of $1,505. Most patients will need to pay at least a portion of their lab bill. Patients require an accurate out-of-pocket estimate (OOPE) to help them make informed choices and be aware of their financial responsibility. Being able to provide patients with an accurate, comprehensive OOPE properly sets patients’ expectations and improves successful collection of patient balances. To automate the patient OOPE process, your lab will need a PAM solution that can normalize the differences and inconsistencies found in how various payers report patient insurance coverage and create a workable single format across all payers. For ongoing maintenance of this normalization subroutine, your PAM partner will need to regularly monitor payer eligibility responses for changes in order to ensure that estimates continue to be accurate.

Bringing Ease of Access to the Physician and the Patient

Deploy PAM processing at a point when it can provide your lab greatest benefit, during the test selection and ordering process. Behind-the-scenes you can seamlessly integrate PAM APIs into your ordering portal’s workflow while maintaining your lab’s branding and unique experience. You need a PAM processing partner who can provide your program engineers with a library of developer-friendly API resources. The goal is to bring ease of access to the PAM user, whether it be the physician, patient, or your laboratory billing staff. While on your lab’s ordering portal, PAM information need never be more than a click away.

Start Smart – Physician and Patient-Friendly PAM Processing

Integrating PAM capabilities into your lab portal ordering process and your lab information system can bring revenue cycle efficiencies and increased reimbursement to your organization. It can also enhance your lab’s relationships with referring physicians through ease of use and increased patient satisfaction. With upfront hassle-free PAM processing, there are no financial surprises—physicians and their patients know what to expect. Starting smart, your lab’s revenue cycle is optimized, reimbursement outcomes are maximized, and referring physician loyalty is enhanced.

A Solution that Goes Beyond Software – Business Process Outsourcing (BPO)

Even with the best PAM solution, there will always be a need for billing and claims follow-up. When reimbursement is denied, delayed, or underpaid, it helps to have healthcare billing specialists fully trained and current in healthcare regulations and payer requirements on your team. Managing a staff to process specialized laboratory claims can be an arduous undertaking. Does your PAM partner supplement insurance intelligence and efficient technology with a BPO service solution to fully realize the optimizing effects of PAM throughout your lab’s entire revenue cycle? You need a partner who can provide you the service options you require. To learn more about how Quadax can help, visit our start smart revenue cycle solutions for labs.

By: Quadax and Gordon Brown, A&R Consultants LLC

When it comes to gaining coverage for a Laboratory Developed Test (LDT), insurance companies are not the enemy. Payers are willing to cover and reimburse for an LDT that is clinically relevant, improves patient outcomes and hopefully reduces healthcare spend. So, what gets in the way of a laboratory achieving clinical relevance for their new tests?

Clinical Utility and Health Economics 101

New diagnostic tests are developed by laboratories to address unmet needs in patient healthcare. Intended for a specific audience and use, the performance of these tests must be validated to demonstrate a clinically relevant impact on the treatment decision, confirmation it was the right decision and an improved patient outcome. Also important are quantified health economics which either hold a payer’s cost curve, or preferably, improve it. If results provide positive impact on treatment decisions through improved patient outcomes and health economics, insurance companies are likely to consider coverage options. The burden is on the laboratory to establish this evidence.

Clinical Relevance Defined

The collective goal is to improve upon the standard of care and patient outcomes. It all starts with the lab test’s ability to accurately and reliably measure what it was designed to measure. The measurement is then used to predict outcomes for a specific patient population within a well-defined, intended use. An LDT becomes useful when it provides new, relevant information to confirm or impact a treatment decision. When the treatment decision produces an improved patient outcome, the benefit can then be valued using a health economics model. Using this model, it is possible to demonstrate the lab test’s economic impact on the intended patient population. When a lab properly establishes clinical relevance, it can influence and assist in gaining payer coverage for the lab’s new diagnostic test.

What Gets In the Way of Demonstrating Clinical Relevance and Obtaining Coverage?

A laboratory must be aligned internally when seeking coverage and reimbursement for an LDT. Investors and senior management may focus too early on driving revenue, versus evidence development, on an overly aggressive timeline. When launching an LDT, a lab’s marketing team may want to promote to a broad audience which often leads to inappropriate use. In its pursuit of growth and volume, a company may hire a large sales team to drive utilization well before the evidence is ready to support broad coverage and reimbursement. These approaches have unintentional consequences of high costs and minimal revenue. As a result, demonstrating clinical relevance suffers and insurance companies choose to either not cover the test or cover with many restrictions and at a sub-optimal rate.

Where can your lab go for help?

Pursuing payer coverage requires continuous alignment and commitment to demonstrate clinical relevance at a value-based price. It can and will take years to achieve, but it can be done with a well-defined strategy and execution to develop the necessary evidence while supporting a controlled commercial launch.

Quadax provides a lab-centric revenue cycle solution. From patient advocacy and payer management to claims and remittance management, Quadax software, service, and support is sized to fit your lab’s needs. While your lab is working to establish clinical relevance and utility, our appeals strategy to increase revenue and decrease denials can help you defend the payments you deserve, get ahead of changing payer requirements, and influence payers toward ongoing acceptance of your tests.

An effective appeals strategy, run concurrently with both traditional and innovative evidence development, can help drive private payer coverage. For information and discussion on strategy design, register for the Q1 pre-show webinar Leveraging an Effective Appeals Strategy for Private Payer Coverage presented by Gordon Brown on February 1 at 10:00 a.m. EST.