As discussed in Part 1 of this 4-part series, too often we see hospital and health system leaders expecting outreach and outpatient laboratories to use the hospital’s enterprise revenue cycle management (RCM) module that is offered as part of the EMR/EHR software. While the health system may believe that the enterprise RCM system is the most cost-effective option, this fails to take into account the specific needs of the lab to maximize its revenue contribution and effectively manage compliance risk.
In this post, we’ll be discussing the second of six key considerations for hospital outreach and outpatient lab administrators for selecting the best RCM system for the lab.
Does Your RCM System Use Automation to Help Meet or Exceed Compliance Requirements?
The processing of hospital outreach and outpatient lab claims are particularly impacted by compliance requirements. These include the 72-hour and 14-day rules and anti-mark-up legislations. Concerning the 72-hour rule, all diagnostic or outpatient services rendered during the diagnosis-related groups (DRG) payment window (the day of and three calendar days before an inpatient admission) are required to be bundled with the inpatient services for Medicare billing purposes. Therefore, if a patient receives outpatient services three or more days before a hospital admission, the facility cannot bill Medicare for the outpatient services. This rule applies when the hospital where the patient is admitted ― or a facility that the hospital wholly owns or operates ― provides the preadmission services.
The basic provision of the 14-day rule according to CAP Today is:
“if you were seen in a hospital outpatient setting and you had a specimen collected, the hospital would bill Medicare for all the services provided during that outpatient stay. But if there was subsequent testing on that specimen that needed to go to a referral lab, within 14 days of the discharge date, then the hospital had to bill for the technical component of that test.”
Until 2018, the date of service requirements were:
- For any specimen stored for more than 30 days, the date of service was the date the specimen was recovered from storage, and
- For hospital outpatient specimens stored for 14 to 30 days post-discharge, the date of service was the date the test was performed.
Some tests are now exempt from those requirements. The revised rule, which has been in effect since early 2018, added exclusions to the Hospital Outpatient Prospective Payment System (OPPS) for tier one and tier two molecular pathology tests and advanced diagnostic laboratory tests (ADLTs).
The fact of the matter is that these rules are complex. To accurately automate the laboratory billing processes of these claims, the RCM system needs to be able to make distinctions. For example, the system needs to recognize that an outpatient was involved, determine when the discharge date was, and calculate what the timeframe was between the discharge and the date the hospital sent a request. In essence, the RCM system needs to determine if it needs to bill Medicare for the whole fee, or split out the technical component fee, or whether the charges should be bundled. In addition, labs have to change the date of service on some claims because, under the new rule, the date of service is not the date of specimen collection, but instead the date the lab performs the test. These examples are just a few of the complexities that an enterprise EMR/EHR system may not be able to handle.
A lab-specific RCM system can go a long way toward making a hospital laboratory a valuable, revenue-generating business. Leaders should consider cloud technology that is purpose-built for laboratories and designed to effectively interoperate with existing enterprise solutions in order to thrive in today’s environment of reimbursement compression and increased regulation. You will learn more about the benefits of lab-specific RCM in Part 3 of this series.
We invite you to watch our on-demand webinar entitled “How Pairing a Purpose-Built Lab RCM System with Your Enterprise System Improves Health System Economics.” Guest speaker Mutaz Shegewi, Research Director from IDC, discussed how a purpose-built RCM improves cash collections while enhancing enterprise system investments with bi-directional data exchange.