Vol. 23 • Issue 9 • Page 14
The demand to control healthcare costs has resulted in regulatory and policy changes that significantly reduce laboratory reimbursement, threatening profits and the very survival of some clinical laboratories and pathology groups. Recent updates in molecular pathology codes and the impact on coverage and pricing, CMS’s commitment to review “misvalued” codes, as well as the new Protecting Access to Medicare Act of 2014 (PAMA) legislation are just a few of the comprehensive changes anticipated to impact laboratory medicine in the years ahead. Labs and pathology groups must take advantage of existing revenue opportunities and identify new sources of revenue to remain viable and competitive. Below are some strategies for getting started.
1. Know Your Business: Measure What Matters
To have the greatest impact on the bottom line, evaluate existing operations using reliable business and revenue cycle performance indicators to identify areas with the highest potential for improving revenue. Key operating benchmarks, ideally from an integrated LIS, billing, and analytics platform, should be evaluated, including days in accounts receivable, turnaround times, net revenue and bad debt to get a complete operational picture. What are the obvious areas with lagging performance and bottlenecks? How much money is owed? What percentage of claims are being denied? Where can resources best be allocated to improve cash flow? You can’t manage moving forward what you can’t measure.
2. Process Claims Faster & Cleaner
Faced with declining revenues, it is imperative to manage billing and collection operations aggressively, and generate accurate and timely billings. Revenue can be increased by improving billing and claims management efficiency using automated, rules-driven revenue performance management systems designed to handle exceptions. Exception-based systems allow editing and error-checking to occur automatically while flagging claims requiring additional error processing so that staff focus only on the claims with errors instead of reviewing every single claim. The reduction in claims turnaround is substantial, often reducing processing time from weeks to just a day.
Revenue performance systems need to communicate in real time with other related systems such as LIS, CRM, computer assisted coding, and CPOE to collect all information required to process a claim while providing visibility into potential billing problems early in the revenue cycle process. The goal is to produce clean claims that are accurate and payable before submission to payors to optimize cash collection.
3. Focus on Denials
Implementing an effective denial management program can have a big impact on improving revenue. Focus on identifying, correcting, and re-submitting the highest denial value claim opportunities first to immediately begin collecting cash. Next, evaluate obvious problem areas and establish a program to monitor and prevent future denials to improve profitability. Start by determining the denial rates for the top 20 tests by dollar value and payor, or the highest volume test codes. Drill down to identify the most frequent denial reasons, the root cause for high-value denials, and any denial trends by payor. Automated processes that can flag and help prevent potential denials before the claim is submitted are critical to cash flow. Determining payor requirements in support of the denial appeal process, such as timely filing deadlines, documentation and requirements for patient approval to appeal on their behalf are critical to an effective denial management program.
4. Offer a Diverse Testing Menu That Includes Molecular Diagnostics
Reimbursement cuts are anticipated to impact routine, high-volume tests the hardest. To mitigate this potential financial loss and add new revenue streams, consider diversifying the services menu to offer a broader level of tests. This may include bringing in additional test services where there are known rate increases, or adding new genetic and molecular tests that demonstrate value in terms of improved clinical outcomes or competitively meeting the needs of your clients. Although the number of tests performed, adoption rate, and pricing are important, how the pathology group achieves successful reimbursement for molecular and genetic tests will determine financial success. A billing partner with experience in this specialty as well as the newest automated billing technologies is beneficial.
5. Leverage LIS System Capabilities and TCPC Split
For private payors, labs can expand their revenue by offering revenue sharing programs that split the technical and professional billing components. For example, the lab can provide the technical component of the test (IHC, Flow, FISH, PCR, etc.) and allow their qualified customers or partners to report the professional component. Systems designed to separate technical and professional components for revenue sharing programs are unique in the industry, and offer both the reference lab and the pathology practice new revenue opportunities.
Other changes that we have been seeing are new coding and submission requirements for frequently utilized platforms such as IHC, FISH, and prostate biopsies, as well as medically unlikely edit (MUE) limits being continually modified. A system that can capture these ongoing changes, as well as give insight to both posted and hidden MUEs is essential.
In addition, leading LISs provide comprehensive reporting modules that consolidate all results (IHC, FISH, molecular) into a single patient summary report to help physicians makes sense of complex pathology data and neatly summarize all findings, targeting the specific needs of referring physicians.
6. Prepare for Legislative Data Collection Mandates
On April 1, Congress passed legislation for a 12-month patch to the Sustainable Growth Rate formula called PAMA. The bill delays a payment reduction for physicians and other service providers treating Medicare patients, replacing a 24% cut with a 0.5% increase in payments through December of this year. Starting Jan. 1, 2016, PAMA will require applicable clinical laboratories to report detailed data such as volumes of tests, and pricing by payor by test, which CMS will use to determine clinical lab fee schedule pricing. Having the right system in place will enable pathology groups to comply with PAMA reporting requirements, which are onerous and carry $10,000/day fines if the deadline is missed or the information is erroneous.
7. Develop Strategic Partnerships, Alliances and Networks
Pathology groups will benefit by forming new and mutually beneficial strategic partnerships that help scale operations, expand programs, and drive revenue growth. Partnerships, mergers, or joint venture arrangements with hospitals and health systems, ACOs, or specialty labs can help increase market share, offer service and test menu diversification, and strengthen the bench for contract negotiations. Lab professionals and pathologists can also benefit by using pathology networks as a means to increase revenue through consultation and outreach services to geographic areas requiring subspecialty expertise. Pathology networks also help pathologists create professional connections, share cases, and expand working relationships.
Bill Taylor is chief marketing officer, and Rina Wolf is VP of Commercialization Strategies, Consulting & Industry Affairs at XIFIN Inc.