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Revenue cycle services: can they quell billing woes?

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Anne Paxton

October 2018—Envision a long stretch of roadblocks of all shapes and sizes, staffed by unsympathetic and ever-changing guards, with new roadblocks springing up all the time, and you’ll probably have a fix on how most laboratories have viewed billing, going back decades. Thousands of payers, each with its own rules, constantly shifting federal and state regulations, and back-office human error have long made denied claims par for the course.

Revenue cycle management (RCM) applications, available for purchase from several software companies, have helped hospitals and laboratories more efficiently navigate the payer and regulatory landscape as they conduct their own billing. But an emerging option for laboratories is to remove even more of the stress from the process by subscribing to an RCM service.

Dr. McQuain

With its new Telcor Revenue Cycle Services (TRCS), software company Telcor hopes it has struck on the next big thing in RCM by offering to liberate labs from billing almost entirely. “Soft launched” on a subscription basis to a small number of customers in 2017, TRCS is having no trouble finding buyers. “We were only expecting to have a few customers to begin with, but business has definitely increased dramatically in a short period of time,” says Kwami Edwards, vice president of the Lincoln, Neb.-based firm.

Recent startup laboratories are among those that seem most primed for a service like TRCS to take billing off their hands. At Alimetrix, a newly formed laboratory that uses multiplex PCR-based technology to provide gastrointestinal and sexually transmitted infection tests, the decision to subscribe to Telcor’s TRCS late last year was driven by frustration with its former third-party billing service, says chief technology officer Mark McQuain, PhD. “As a new startup in the diagnosis-of-disease space, we didn’t have an established billing structure. But we weren’t getting much direction from our third-party biller. We weren’t issuing bills, they weren’t sure what the problem was—nothing was getting done.”

The laboratory pays a monthly fee whether or not it submits claims, plus a percentage of collected payments. But the billing space is complicated, Dr. McQuain notes. “We depend on Telcor to navigate it for us.”

Implementing TRCS took considerable staff effort at Alimetrix, including setting up a virtual private network to increase the security of the system. “But that’s really not that daunting. You also have to set up a faxing service, and Telcor guides you through doing that with a third-party vendor.” To organize the billing, a number of questions had to be answered. “For example, Telcor wants to know all the CPT codes you’re actually doing. Then they can advise you on how to bundle those appropriately, so that you’re submitting bills in the customary manner that the payers have come to expect.”

To date, Dr. McQuain has found Telcor to be thorough in examining the causes for denials and issuing appeals. “Some of them just can’t be collected on. It can’t be helped. But Telcor does seem to chase down all the loose ends to see if there’s anything to be done. Sometimes it’s too late because appeals can’t be resubmitted. But they can pick it up and say, ‘Well, here’s what we need to change going forward.’”

The Telcor data metrics have been useful, Dr. McQuain points out. “They may tell us the areas where we’re getting a lot of patients in our offices who may not have insurance coverage. We get a report from them on a claim-by-claim basis showing which patients are covered by which plan and which office they are coming from.”

So, for example, Telcor told Alimetrix which patients had payers who required prior approval in order to pay a claim for certain procedures. “We were able to tell our sales staff, here are the offices where you need to post a flyer saying, ‘If you have a patient covered by this particular insurance plan, you need to request prior approval for a test.’ And that helped us get paid or helped the patient to receive payment from their insurance company.”

Those are services he could not duplicate with his own staff, he says. “It would take a lot from our staff to collect all those metrics.” But even more valuable is the knowledge Telcor brings to the table, he points out. “For example, if denials are a problem, Telcor can advise on next steps. In some cases, you’re better off moving on and just writing them off. But in other cases, they might say the only thing that will help is in-network status and you need to be focusing hard on getting that. They seem to have more of a game plan for all of the scenarios that get thrown at us. And because they get paid a percentage of collected revenues, they are incentivized to make you do the right things to get paid.”

When Cedar Diagnostics, a full-service clinical toxicology and pathology laboratory in rural southwest Colorado, decided to sign on to Telcor’s Revenue Cycle Services, it was quite a leap for a laboratory that didn’t even do billing in its own laboratory information system, says Alex Cudkowicz, MD, general manager. “We would just send all our paper off to the billing company. So we went from probably the most primitive system in the country to the most sophisticated, with no stop in between.”

As the July 1 go-live date this year approached for TRCS, he was expecting implementation to be “a complete and utter disaster” because of the laboratory’s inexperience with billing. A lot of work was required to get implementation done on schedule, and the learning curve has been steep, he admits. “But in my opinion, implementation went very well.” Thankfully, he adds, “I would say it was only a mild nightmare.”

Cedar Diagnostics’ clients are primarily smaller hospitals, multispecialty physician groups, and government entities. In exchange for their using Cedar exclusively for all laboratory services, “we provide a lot of added-value services,” Dr. Cudkowicz explains. “That includes helping clients with their in-office facility or hospital-based labs. We help them control the costs of expensive and esoteric tests, understand how to bill, and bring efficiencies to their lab operations.”

Sometimes the approaches seem counterintuitive. “The typical lab company thinks, ‘I’m going to get paid x amount of dollars for this test. Therefore the more of this test I can get billed, the more money I can make.’ Our philosophy is the opposite because we are partnering with our clients.” His laboratory will look at the client’s test menu, usually quarterly, and might say, “‘Hey, you sent us 100 PSAs in the last 90 days. Maybe you should bring that test in-house. And if you did, here’s the cost, here’s how you would bill for it, and here’s the revenues you would expect to gain from doing it.’ Then we’ll help them write the procedures and do everything needed to bring that test in-house.”

Dr. Cudkowicz

Since the laboratory has subscribed to TRCS, Dr. Cudkowicz is pleased with how responsive it is compared with the prior third-party billing service Cedar contracted with. In the past, “we really struggled with understanding exactly why denials were happening and how much money we were losing from denials and other issues.” With Telcor’s icon now displayed on his computer desktop, answers are a click away. “If I have a question like how many claims is Blue Cross denying, I can just go into the TRCS app and get that information.”

Saving the expense of staff to do manual entry of data is another plus, in his eyes. “To use Telcor, we added one FTE to our staff and then assimilated other work into the responsibilities of existing staff. So it’s been a very efficient system.”

His background in medical lab billing is limited, he says. “Revenue service management is giving me a much better understanding of billing.” And down the road, Dr. Cudkowicz thinks, lie exciting possibilities stemming from the Telcor data that can be mined from the billing. “There will be a lot of amazing data I can use with my clients. It’s a very robust program and has more data than I’m even aware of at this point.”

He believes much of the lab industry is on the wrong track now in the quest for savings. “A lot of companies are beating each other up for pennies to have a slightly cheaper test than their competitor. But the real savings comes from providing a test utilization management system, in which you work with clients in a complex disease situation,” to follow an ordering algorithm.

Cedar has set up certain tests in its computer system for which, if they are ordered, the pathologists will review the lab data and call the client if the test is not appropriate. Initially, there was worry that questioning clinicians on their test orders might meet with resistance. “But our experience has been the opposite. Because with a lot of these complex molecular tests, our doctors don’t understand what they’re for. There is a fear that if they don’t order them, somehow it’s malpractice. It’s been very positive for our company because the doctors are appreciative of the information,” Dr. Cudkowicz says.

Through TRCS, the move away from a paper-based billing system has had a big impact, he says. “Already, in the first two months, we’re seeing a substantial increase in revenue from the insurance companies. I can click on my icon to see where we’re at with each claim in the process.”

But Telcor won’t drop a claim until it’s complete, and flagging such claims does more than just hustle them through to payment. “We can see what tends to be missing, and I can get with my people and say Dr. Smith never gives us a date of birth, customer service will go out and talk with Dr. Smith, and we can solve that problem.”

Full access to data metrics is one of TRCS’ strongest features. In addition to monthly custom reports, “If you’re sitting at home at 3 AM wondering, ‘How many of my urine colony counts are being billed?’ you can go online and look it up.”

Telcor estimates that most TRCS customers will recoup their investment after one year, and Dr. Cudkowicz believes Cedar is on track to meet that goal. “I’m seeing the return on investment already because TRCS is a fraction of the cost of the old system, and we’re making substantially more money in the first months before the system is even fully functional.”

Another initial worry concerned the possible loss of personal customer service in switching to an impersonal computer for clients and patients to deal with. But Telcor, he reports, has figured out the right balance between automation and personal service.

In fact, that is what impresses him most about TRCS, he says, citing the Lean principle of “autonomation,” an Anglicized combination of “autonomy” and “automation.” “It means finding the right balance between a machine and a person,” Dr. Cudkowicz says. With TRCS, “Telcor is giving you all the automation and data you could ever want or need and yet making the system transparent and easy enough to use that even a non-computer guy like me can answer a client’s question.”

Navican Genomics opened its doors in April, but the new Salt Lake City company had decided some nine months earlier that it would subscribe to TRCS, says Kara Gorder, director of revenue cycle management. A wholly owned subsidiary of 23-hospital Intermountain Healthcare, based in Utah and Idaho, Navican provides molecular genomics testing for advanced-stage cancer patients. Few such patients get testing or benefit from action based on the testing, in some cases because their providers don’t understand or respond to test results, Gorder explains. “That’s where we saw a hole in the marketplace.”

Gorder

Navican’s business model is to perform the lab testing with its next-generation sequencing, then have Intermountain’s molecular tumor board of oncologists review the results and stack-rank, or prioritize, therapies they recommend based on the results. Navican already serves clients from Maine to Washington State.

When she was at Intermountain, Gorder says, it used Telcor’s billing software as standalone billing software. “Now that I’m at Navican, we use both that and TRCS, which does the billing on our behalf.” Navican is in the process of integrating its LIS with the new TRCS billing system.

The laboratory sends Telcor information on the patient and charges for each test. “Then they go through their claim scrubber and send the claim to the payer with the letter we would like them to send. And we can have all the administrative denials handled for us.” Telcor’s claim editing is thorough, Gorder says.

Having revenue cycle management has helped Navican limit the number of staff assigned to billing, she says. One staff member, of a total of three assigned to billing, handles the payers’ different required prior authorizations, which are a chronic issue. “But we don’t need a full staff in-house to do all the denials, which is important, as our business is just starting out and the genomics testing Navican does is still seen by some payers as experimental or investigational,” she says.

Telcor believes one of its most effective tools in coping with the number of payers and the variety of processes and requirements is its user groups, Edwards says. “We try to put together labs of different specialties and have them network with each other, share the issues and hurdles they are encountering, and find the best ways to navigate them. We’ve had many conversations and might find, for example, that there is a rule known to industry but a certain payer has deviated from that rule and stopped paying claims.”
“What do you do if you’re just a single lab? How do you stand up to payers such as that?” By bonding as a community, labs in the user groups can often come together and have more of an impact on the payers, in his view. “But it is definitely a daily challenge trying to navigate the requirements that do come up, sometimes out of left field.”

Edwards

Edwards has seen the hurdles increase steadily during his eight years at Telcor. “It used to be with certain tests, whatever you performed you could bill. Now you see more and more rules. You can only bill so many of a certain test, you can’t use a certain CPT code, you have to use a special identifier, or you may need documentation to get the test paid. Sometimes we’ve even seen some Medicaid payers where if you provide too much information—possibly because their processing systems are outdated and a claim gets flagged—they will use that as a reason not to pay a claim.”

Other nuances arise with medically unnecessary edits, which are applied to claims against a procedure code for medical services rendered by one provider or supplier to one patient in one day. “Within our software, the nice thing is you can define that MUE limit by payer and by CPT code. For some payers, if you performed a quantity of four tests and they take only three, our system has the ability to just send the three. Others just want to see three on a line and the fourth one on a separate line. So then we have the flexibility to move the fourth one down for those claims.”

A lot of clean claims start with making sure the claim has listed the right insurance coverage on the patient. “That’s captured before the claim goes out the door,” Edwards says. “But then our system also ensures that the claim is coded correctly according to the rules and edits we have and that the tests are grouped appropriately, which some payers require. All those things go into diminishing the number of ‘errored’ claims on the back end and increasing the number that are paid.”

The company promises to help its clients collect the maximum allowed amount, and Edwards explains how. “First and foremost, we have every opportunity with our systems to make sure the claim is as clean as possible, from benefits eligibility to all the rules scrubbing. But then on the back end, there are no blind spots. So no matter when it went out the door, they should be able to track where a claim is, not just in terms of payment but any initial status the payer provides. After insurance has come back and paid and adjusted, the system can easily automatically roll the balance to the patient. They can set parameters by payer before the claims hit ‘timely filing’ requirements and are no longer collectable. The laboratory never loses sight of where things are.”

Claims that evoke no response are often claims where hidden dollars are, Edwards notes. “It may be that there were multiple claims, or the payer, in its relationship with the clearinghouse [a company that serves as an intermediary to forward claims to insurers], didn’t receive those claims, or they don’t have it on file for whatever reason. Our TRCS team is able to highlight all the claims and re-send them in one click, in one fell swoop, back to the payer to get those claims adjudicated.”

As they search for new ways to be profitable, laboratories can benefit from the increased efficiency that Telcor’s RCM and TRCS facilitate, Edwards says. “Labs may not be able to increase their volume. And if they can’t, what else can they do? One big thing is to measure and manage your costs.” Typical customers are able to increase their productivity from 20 to 35 percent, he says, and as a result they can increase collections from five to 30 percent. “A lot of that comes from having the flexibility to manage the many rules.”

The ability to run queries in the Telcor database lets customers look at both operational and financial metrics. “They can see what their throughput is, how they are doing financially, how long it’s taking to get paid, and what are their denial trends. When they appeal, what was the collection tied to that? When we correct and edit, how much money was tied to that? We’re able to give them more of a lens into what is happening on a day-to-day basis so they can take action.”

That data also gives labs negotiating power. “In many cases the labs are ahead of the payers. They’re trying to provide more predictive medicine, and I think the payers can be slow to respond. They may be saying, ‘This is an experimental test so we’re going to deny it.’ But the genetic and molecular labs can go back and use some of the collection and denial information as ammunition when they’re sitting across the table from the payers, to get their tests recognized.”

Labs can use RCM and TRCS data to more quickly respond to market needs, Edwards adds. “We’ve seen customers who are looking to diversify quickly by bringing on new testing. In our system, they can do profitability modeling and see what the costs and reimbursements would be and what their ultimate net income would be if they changed their services and added physicians. Or if they acquired another lab. If a requirement changes for a payer, it simply means checking a box and that rule can take effect.”

“So our system allows labs to be more predictive and more nimble in responding. If they want to switch to a different line of testing, they can model a client’s volume, reimbursement, expense, and profitability, then set that model as a target. When they bring on that business, they can compare their true performance to what was modeled. If it’s not panning out as expected, they have the data to show whether it’s because of denials or because the client isn’t providing good information. Then they can try to rightsize that situation.”

If laboratories sign on to Telcor’s billing service and decide over time they want to bring billing back in-house, Edwards adds, they aren’t locked in. “They can take over the system themselves,” Edwards says. “We allow that option to customers. So it really depends on where the lab is at and what their focus is—and their appetite to manage their own billing or not.”

Anne Paxton is a writer and attorney in Seattle.

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