August 2012
Feature Story

Jan Bowers

They are proficient at performing basic functions—issuing invoices, submitting claims, tracking receivables—but can a laboratory’s billing system really impact the bottom line? Yes, say vendors of such systems, and the part they play in enhancing profitability is becoming more pertinent.

“As margins on lab tests decrease, lab providers will need to know which clients, tests, and payers are profitable,” says Jim Schroeder, health care revenue management product manager at Infor, the parent company of Lawson Software. “Financial decisionmakers need data at their fingertips to highlight trends and provide decision support for better business management to head off financial catastrophe.” Billing systems can now provide that data—sliced, diced, and served up in almost any format you can imagine.

In the past year, some vendors of laboratory-specific billing systems have introduced or beefed up business metrics tools that allow detailed scrutiny of virtually every aspect of the revenue cycle. To help determine the profitability of an individual client, for example, a chief financial officer or lab manager can use the analytic tools in Lawson’s Healthcare Revenue Management system to determine not only how much revenue a client generates, but also the mix of payers. The tools can also be used to determine how many errors riddle the data being sent by the client and, consequently, how much work is required by staff to bill and collect. “Knowing the answers to these questions helps CFOs ensure they’re maximizing their revenues and margins,” says Schroeder. He adds that a client who habitually sends data with deficiencies that delay billing may need to be dropped, or at least trained to send cleaner data.

Recent enhancements to Telcor’s business metrics tool set provide users with additional ways to view and manipulate data. It used to be that laboratories could examine employee productivity or client errors only for a specific time frame, explains Telcor executive vice president Deb Larson. “Now you can pick a territory or sales rep, measure the kinds of errors you’re getting in that territory, then send the sales rep out to those clients.” A new graphical tool allows the user to view data in rows and columns on the top half of the screen and see the same data in graph form on the bottom half. “Then you can minimize the graph and drill down to the supporting details if you need to,” Larson says.

McKesson’s Horizon Lab Financials application, too, sports new graphical tools that allow customers to extract analytical data to assess productivity, says Joseph R. Stabile, senior product marketing manager. For example, a manager who wants to evaluate the productivity of individual employees can review by user the number of errors found through rules processing, the amount of revenue affected by those errors, and the average time required to correct those errors, he explains. With one click, the data can be exported to Excel for further analysis.

To improve the business intelligence reporting capabilities of its SoftA/R system, SCC Soft Computer recently introduced multiple dashboard views that allow users of the system to simultaneously view several different aspects of, for example, all denials for a given month. By clicking on a month, users can see denials broken out by financial class on one side of the dashboard and, on the other side, the actual tests denied, says SCC general manager Mark Droste.

Clinical data and financial data “have been separate for all these years,” says Droste. “Now we’re marrying the data together, and it’s telling a complete story about the profitability of the hospital lab and the lab’s clients.” And that’s a key advantage for directors of hospital-based labs, because “if you’re demonstrating profitability, it’s going to get you additional staff and equipment purchases and allow you to expand your business beyond the walls of the hospital.”

McKesson’s Stabile agrees. For reference labs aligned with a health system, the business metrics tools are invaluable in proving “the value that outreach programs provide to the parent organization,” he says.

To achieve profitability, laboratories are tackling costs at the front end of the billing cycle and trying to bill and submit claims with “fewer denials, fewer employees, and in less time,” says Susan Bollinger, director of sales and marketing for Hex Laboratory Systems. Much of the billing and claims process within the Lab/Hex Billing and Cash Management system is now rules based and automated, she adds, reducing labor and errors.

For some vendors, including Hex, a major undertaking during the past year has been preparing to transition to the ICD-10 diagnosis and procedure codes, required as of Oct. 1, 2014. Hex has integrated into its Lab/Hex Billing and Cash Management system the ANSI 5010 format, as well as ANSI 270 and 271 for benefit eligibility inquiry. The latest development at Schuyler House is integration of ANSI 5010 and incorporation of ICD-10 and ICD-9 into the SchuyLab system, says Schuyler House vice president Janet Chennault. Schroeder says Lawson’s system will allow clients to receive, store, and bill tests in either the ICD-9 or ICD-10 code set, cross-referencing and translating based on client- and payer-specific rules.

In addition to becoming ICD-10 compliant, Sunquest Information Systems has enhanced its billing options by adding new claims-management reports, allowing client invoices to be generated in PDF format, and providing rule-based e-mail notifications to outreach clients, says product manager Brad Reed. He maintains that providing labs with more flexible invoicing and reporting options “helps them better assess profitability and provide more customized services to their outreach clients.” In the works, Reed adds, is a feature that will allow labs to create patient invoices to reflect multiple billable events for a patient, saving time and eliminating workarounds for lab staff.

Cortex Medical Management Systems too has been enhancing its invoicing options. In many labs using Cortex’s RCM+ system, patients represent a growing portion of the payer mix, explains Cortex president Stan Gordon. Therefore, to help clients get paid more quickly, the company has forged an arrangement with ZirMed, the claims clearinghouse most frequently used by Cortex clients. Under the agreement, Cortex invoices will direct patients to a payment portal maintained by ZirMed. (The portal is available only to those patients whose tests are conducted by a lab that uses ZirMed’s services.) “It’s branded with the laboratory’s name, so patients think they’re on the lab’s Web site,” says Gordon. “They pay with a credit card, and our client gets a file the next day that can be posted electronically. No one at the lab has to manually key in patient payments.” Another enhancement to RCM+ is the electronic staff work queue, which Gordon describes as a “big to-do list” customized to the responsibilities of individual staff members.

Health care reform will continue to play a major role in shaping the demand for laboratory billing services, some vendors predict. As more hospitals and reference labs become part of accountable care organizations, labs will need billing systems that can “keep up with the upcoming complex new payment models, such as episodic bundling and capitation,” says Sunquest’s Reed. Without those systems, “they will see their revenue shrink.”

With health care reform has also come broader adoption of electronic medical record connectivity. This provides an “opportunity to target information capture and data scrubbing in the front-end process, which can significantly improve back-end claims processing” and result in fewer denials, says SCC’s Droste.

Increasing reimbursement pressures will accelerate the drive to improve productivity and increase automation, concludes Telcor’s Larson. “Laboratory business owners,” she says, “are looking for exception-based systems that are highly rules-driven to reduce the number of people it takes to bill and that help them get paid for the services they provide.”

CAP TODAY’s billing/accounts receivable/revenue cycle management systems product guide includes systems from the aforementioned companies and from several other vendors. Readers interested in a particular product should confirm that it has the stated features and capabilities.

Related Links

• Billing/accounts receivable/RCM systems (PDF, 363 KB)