The Centers for Medicare & Medicaid Services (CMS) has released a new provider compliance fact sheet concerning laboratory medical billing.

The fact sheet noted that a HHS report revealed "laboratory tests – other" (e.g., urine drug screening, medication assays, genetic tests, tissues examination, blood tests) had an improper payment rate of 39 percent, with a vast majority of improper payments due to insufficient documentation.

The reasons for denials were as follows:

  1. Insufficient or no documentation to support the intent to order the test
  2. Insufficient or no documentation to support the medical necessity for the test of the individual patient
  3. Unsigned medical record documentation by the treating physician or non-physician practitioner

To prevent denials, CMS notes the following conditions must be met:

  • All diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests must be ordered by the treating physician and other eligible professionals; that is, the physician who furnishes a consultation or treats a beneficiary for a specific medical problem and who uses the results in the management of the beneficiary's specific medical problem. Tests ordered by a physician who is not treating the beneficiary are not reasonable and necessary.
  • All diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests must be ordered for the treatment of the individual patient. Medicare defines any orders that do not specifically address an individual patient's unique illness, injury or medical status, as not reasonable and necessary.
  • The physician or other eligible professional who ordered the service must maintain documentation of medical necessity in the beneficiary's medical record.
  • Entities submitting a claim must maintain documentation received from the ordering physician or other eligible professional.

Examples of documentation that may be requested for medical review of claims for laboratory tests are as follows:

  • Clinical evaluations, physician evaluations, consultations, progress notes, physician's office records, hospital records, nursing home records, home health agency records, records from other healthcare professionals and test reports. This documentation is maintained by the physician and/or provider.
  • Other documents include any records needed from a biller in order to conduct a review and reach a claim determination.

CMS notes that an order may be delivered via the following forms of communication:

  • A written document signed by the treating physician/eligible professional, which is hand-delivered, mailed, or faxed to the testing facility. Although no signature is required on orders for clinical diagnostic tests paid on the basis of the clinical laboratory fee schedule, the physician fee schedule, or for physician pathology services, documentation in the medical record must show intent to order and medical necessity for the testing
  • A telephone call by the treating physician/eligible professional or his/her office to the testing facility for transcription of a verbal order.
  • An electronic mail by the treating physician/eligible professional or his/her office to the testing facility

If the order is communicated via telephone, both the treating physician/eligible professional or his/ her office, and the testing facility must document the telephone call in their respective copies of the beneficiary's medical records. While a physician/eligible professional order is not required to be signed, the physician/eligible professional must clearly document, in the medical record, his or her intent that the test be performed.

In the compliance fact sheet, CMS also provides several resources to help providers avoid improper laboratory billing payments.

A new report by Grand View Research examines the growth of medical billing outsourcing. Grand View projects the outsourcing market to grow by more than 150% from 2015 to 2024.

Here are five of the factors that will contribute to the significant growth, according to Grand View:

  1. Current systems in practice for managing revenue are gradually becoming obsolete due to lack of expertise in new payment models and revenue management tools.
  2. Providers are facing increasing challenges in managing claims and reimbursement, resulting in losses.
  3. Outsourced billing companies are developing new, advanced technological solutions that allow them to provide more efficient and cost-effective services.
  4. Providers are struggling to keep up with ever-changing, ever-growing regulatory billing requirements.
  5. Growth in bad debt and uncollectable accounts (likely due to in-house billing shortcomings) have cut into providers' revenue and profitability.

PGM Billing, a leading provider of outsourced medical billing, has experienced significant growth in the use of its revenue cycle management (RCM) services.

As Grand View notes, "Large medical groups with high claim volume are experiencing significant revenue growth due to outsourcing. ... Implementation of RCM by medical providers has improved their cash flow, reduced claim denials, and helped them gain an analytical approach to allocate resources and ensure effective revenue management."

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