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Myndshft Blog

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July 3, 2019

The RCM Pitfalls of Limited Visibility to Patients Prior to Service

by Patrick | Revenue Cycle Management

Revenue cycle departments at diagnostics labs face some really daunting challenges when it comes to managing patient copays and billing. 

We wanted to get a better understanding for the pain points that they face on a day-to-day basis, so we commissioned a market research firm to conduct a series of interviews with revenue cycle executives from across a spectrum of lab services types. This is the first in a series of five blog posts that will reveal the findings from these interviews. You can also download the full report

Myndshft Report cover

Limited Visibility to Patients Prior to Service

When you conjure up the patient intake process at a hospital or physician’s office, the scenario is pretty familiar. The patient checks in and provides their insurance card. The front desk assistant runs the card, determines eligibility, and asks for a copay if one is required. 

This scenario doesn’t hold true for diagnostics labs, however. 

In contrast, lab and diagnostic providers rarely collect the right patient information prior to a visit, nor at the point of intake. They may identify the copay but won’t always  verify eligibility, calculate a patient’s financial responsibility, or address a prior authorization requirement.

Instead, they commonly receive specimens from a referring hospital or physician along with an order containing patient demographics, and procedure and diagnosis codes. And herein lies the potential for problems. 

If just one piece of information on the order is inaccurate or incomplete, it will likely get kicked back as a denial when the lab submits the claim to the payer; call it a case of “garbage in, garbage out.”. 

But that’s not all.  

When a claim gets denied, diagnostics labs have to work through the referring hospital or physician’s office or patient to track down any missing information or correct any errors so that they can resubmit it. As you can imagine, this sets off a cascade of time-wasting events. 

A flurry of emails get exchanged.

Phone calls go to voicemail. 

Faxes pile up.

At some point in this process, the diagnostics lab needs to determine whether “the juice is worth the squeeze.” If the dollar amount for a specific claim is insignificant, the revenue cycle team may decide that it’s not worth the effort and write it off as bad debt.

While writing off a $50 claim here and a $75 claim there is inconsequential, they add up to some big numbers when you consider the huge volumes of accessions that these labs handle. Some labs write off as much as 15%-20% of billable revenue as uncollectible.

The challenges don’t stop there though.  

Since diagnostics providers have limited visibility into a patient’s insurance coverage until after the test is completed, they are often unaware of what tests are covered under the patient’s health plan. Nor do they understand the patient’s financial responsibility for the services rendered. Flying blind like this is bad for the lab but it’s also bad for the patient. 

When a patient receives a bill from the lab days or weeks after service, they may be frustrated to learn after the fact that the procedure isn’t covered by their health plan. Since the charge is an unwelcome surprise, the patient may be reluctant to pay the bill. That reluctance may turn into full-scale resistance that leads the lab to write off the charge. 

Conclusion:

By virtue of being one step removed from the patient point of care, and required to rely on the accuracy of the referring provider, diagnostics labs are often thrust into the position of rendering services before they have a complete picture of the patient: their benefits eligibility, propensity to pay, or whether there is a prior authorization requirement. 

This lack of timely transparency leads many diagnostics providers to write off as bad debt a significant amount of revenue that they should be collecting. 

To download our entire report, “Diagnostics Lab Execs Reveal Their Biggest Revenue Cycle Challenges,” click here

To learn more about how Myndshft automates and accelerates patient intake and revenue cycle management, please click here