Getting paid: policies, pressures, and a power struggle

April 2022—All things billing, revenue, income, and business-related were tossed around when representatives of four billing companies met online Feb. 14 with CAP TODAY publisher Bob McGonnagle. With them were Vachette Pathology founder Mick Raich and Al Lui, MD, of Innovative Pathology Medical Group, Torrance, Calif.

The No Surprises Act, pathologist shortage, pharmacies, and SARS-CoV-2 testing post-pandemic were just some of what came up. Artificial intelligence too. “In the next two or three years, the payers are going to use AI to deny claims,” Raich predicts. “They’re going to know which claims are less likely to be appealed when they’re billed.”

And that will only make more difficult an already tough situation. In the past year, says Kyle Fetter of Xifin, “there’s been an increase in the use of the CO-252 rejection/denial code.” Chris Condon of APS Medical Billing agrees, saying the job of the carrier “is to figure out ways to not pay pathologists.”

Here is more of what the roundtable participants had to say.

CAP TODAY’s guide to billing/accounts receivable/RCM systems begins here.

Janet Chennault, what are you hearing from your clients about billing?
Janet Chennault, VP of Product Management, CGM SchuyLab, CompuGroup Medical: We have about 100 labs using our billing system, and many of them are in the Caribbean or Canada or other places around the world. We have not heard from even one of them about problems in billing for COVID. We’ve not had any requests to change a billing submission, a transmission, or some other sort of report. And this no news is big news. Many of these clients are doing complex billing, such as in the islands in the Caribbean where they do testing for cruise ships, which have people from all over the world on them. Yet we’re not hearing anything from them. The billing for COVID has been an invisibly easy process for them.

Kyle Fetter, what is top of mind for people in the current market and within normal laboratory work billing, outside of COVID, in surgical pathology and molecular testing?
Kyle Fetter, chief operating officer, Xifin: The larger national laboratories are acquiring more than they typically would. There was the Labcorp and Ascension announcement last week, and Sonic Healthcare acquiring ProPath, for example.

There are a lot of people who wouldn’t typically be sitting on this much cash and are trying to figure out how to convert that cash by acquiring businesses outside of COVID. That’s driving up the multiplier valuation of pathology groups and others because buying groups that are more heavily weighed toward surgical pathology procedures, cytogenetics, immunohistochemistry, et cetera, is a nice way to take COVID-related revenue and use it to leverage yourself into other types of businesses.

Your clients are upbeat because they have cash to expand their business, essentially.
Kyle Fetter (Xifin): They’re also trying to figure out where the next source of revenue is going to come from. Acquisition is an easy place for them to focus.

Being acquired must look appealing, I’m assuming, when the big guys are on a buying binge.
Kyle Fetter (Xifin): Especially for those that don’t do a lot of COVID testing, it is a good opportunity to get acquired.

Kurt Matthes, what are you hearing from clients?
Kurt Matthes, vice president, RCM service and reengineering, Telcor: Top of mind for laboratories we talk to are things that are impacting immediate operational needs, one of which is the No Surprises Act. It’s still an in-progress perspective, trying to determine how to appropriately communicate and adapt operations so patients are billed according to the spirit and parameters of the No Surprises Act.

Also top of mind are the increasing requirements from payers around prior authorization and the need to operationalize that process and try to relieve the administrative burden, no matter where it lies.

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Al Lui, what is your perspective as a provider?
Alfred Lui, MD, president and medical director, Innovative Pathology Medical Group, Torrance, Calif.: With the disclaimer that I’m not in a situation where I’m involved in billing now, I think one of the things hitting pathologists is related to contracting, whether it is having contracts—being in network—or being noncontracted. The No Surprises Act plays into that. I think it’s driving pathologists who might’ve otherwise been noncontracted to sign contracts with any payers they can.

Another item is billing for the professional component of clinical pathology to sustain pathologists’ income. The ability to do that and get paid differs markedly from state to state.

One other thing that is not related to billing but to pathologists’ attempt to keep their income stable is the recently developing shortage of pathologists. The shortage hasn’t yet translated to increased fees for pathology services from payers. So pathologists are working harder to try to maintain the same level of income.

Tom Scheanwald, what are you seeing?
Tom Scheanwald, president and chief operating officer, APS Medical Billing: Professional component billing is still popular, but like billing for other services for pathology and lab, the professional component of clinical pathology is under fire, again. Cigna decided last spring to stop paying the professional component by July 2021. Then it rescinded its decision. And last fall it reintroduced the policy to stop reimbursement for the professional component. For years, Aetna’s and United Healthcare’s national policy was to not pay the professional component. That’s still the case today.

Going back to laboratory, I think there’s going to be a significant change in how COVID testing gets paid based on medical necessity, meaning there has to be a reason for the COVID test. A simple screening may come into play when we’re outside the national emergency period where it may or may not be paid.

The pressure on payments and fee schedules at the laboratory level is incredible. Kurt mentioned prior authorization denials, but you have to look at all the other denials labs get en masse. They’re trying to deal with all the different payer policies and processes out there.

A lot of labs are evaluating where they go from here. How do we get better production, not just out of our billing but out of our own lab operation? How do we better communicate with the referring physicians who are ordering these tests? There are a lot of communication and educational needs.

Matt Zaborski, would you like to add anything?
Matt Zaborski, VP of sales and marketing, APS Medical Billing: I manage a lot of groups that are in hunts for pathologists, and the increasing demand for fresh out of residency, fresh out of fellowship pathologists means higher and higher wages and ownership, without putting in the time to earn that ownership, from the perspective of the groups that are hiring.

Top of mind, too, is general lab staffing. They’re spending so much time training and retraining staff, making sure processes aren’t falling apart. And their pocketbooks continue to get hit and they have to worry about running a business that has a positive cash flow and meets income expectations while everything else is moving at once, including clinical lab cuts that haven’t taken place because of the delays in the PAMA reporting but are still looming next year. And then same with the cuts on the physician fee schedule that were implemented at the end of the Trump administration. There’s a lot of uncertainty about what revenue is going to look like while there’s greater expectations with the workforce today.

Janet, do you hear some of this from your clients and their laboratories?
Janet Chennault (CompuGroup): What I mostly hear from laboratories that are doing large amounts of active billing, in general, is the result of a failure to philosophically differentiate between production billing and OCD-like meticulous handcrafting, which is to say that using any of the modern lab information systems that do billing, you should be able to do production billing of, say, 80 percent. If you have medical necessity screening turned on, and demographics are in good shape, et cetera, you should be able to do a high percentage of your billing automatically. So the problem I am seeing in clinical laboratories has nothing to do with COVID or reimbursement; it has to do with the philosophy of how you run a billing department.

Al Lui, can you comment on that? There is an excessive individual attention in billing, but for most people there’s also worry about claims being rejected and kicked back, is there not?
Dr. Lui (Innovative Pathology): Yes, and I’m glad Janet mentioned that because in our experience it is this slight battle of philosophies—we talked about capturing every billing code. There used to be a mythology among pathologists that the only people who can do that accurately are pathologists. In our experience that’s not true. If you have good coders who are backing up what the pathologists do, reviewing the reports, and making certain everything’s documented—even, for example, having the appropriate controls noted for immunoperoxidase stains—it makes a difference of a few percent in terms of all the work you do, what might be referred to as nonautomatic billing.

For the billing in a clinical laboratory, most of that’s going to be captured by the information systems. The anatomic pathology piece of it is highly individual. It’s hard to get pathologists to focus on it. If you have someone with expertise following it and making sure you capture everything, the increased dollars are substantial.

Kyle, can you comment on well-designed automated billing in which everything is going through because it’s being prepared properly versus the difficulty in some individual instances, not only in surgical pathology but also across molecular pathology?
Kyle Fetter (Xifin): The difficulty with the historical approach where every claim is touched is profound when you take into account a couple of things. One is the cuts in the fee schedule. The bigger one that gets implemented somewhat more insidiously on the payer side is coverage edits. What they do is start to request medical documentation at a much higher percentage, whether their published policies reflect it or not.

Over the past 12 to 13 months there’s been an increase in use of the CO-252 rejection/denial code—request for additional documentation—for pathology-related services, and not just for molecular pathology services. On some level you end up having a justified concern on the billing side that they have to produce this type of documentation, so they better review it before they release a claim. That’s not truly an option for most groups; it’s not efficient enough. You have to be able to automate not just the front-end process but also be efficient in how you code. From our perspective a huge focus is, How do you automate? How do you automate the attachment information? How do you automate if you have to do prior authorization?

Payers assume there’s automation happening within pathology—perhaps an assumption that digital pathology will make everything faster and easier. It’s another gap between perception and what’s pragmatically going on in practices. Payers are assuming there are cost offsets within pathology groups, so they’re cutting fee schedules. From that perspective, whether you’re in a small pathology group or a large one, you must assume you have to automate everything you can so you have enough time to fight the denials on the other side.

Give us an example of what you do for some of your clients that helps with the automation and minimizing denials.
Kyle Fetter (Xifin): Most billing systems have the ability to consolidate codes based on payer requirements in a way that is still compliant. When you know you’re going to get a request for additional documentation, we’ll set it up so with a given payer, a certain document will get thrown up for review so people can run through their worklist quickly if they need to.

But if they don’t need to for a given payer, because all they do is request documentation, we’ll attach it in the X12 format automatically. Even if that reason code comes back, the system will reattach it automatically and send it back to the payer. Most of the bigger payers have formats for accepting that; with some of the smaller ones, you configure your systems to send it out via an electronic fax, for example. You can remove the need to touch those. You only want somebody to review a document if you know there’s payer sensitivity, in which case you need a quick worklist review process.

Kurt, I assume you’re doing something similar on behalf of your clients?
Kurt Matthes (Telcor): We see laboratories embracing technology. The last thing anybody wants to do is throw bodies at their problems, especially when there are technological solutions that can bridge the gap. I understand Janet’s comment about OCD billing; trying to tackle some of those things head-on is imperative for any billing service or vendor of billing software.

What Kyle described needs to be 100 percent integrated; billing services or vendors that provide billing software need to be doing all the heavy lifting on behalf of labs. Many labs don’t have an in-office workforce, so if those activities have to take place, they’re in a new paradigm with how they’re deploying their teams, because most of them are remote and it doesn’t look like that will change.