What Is A Lab Billing System? Which CPT & ICD-10 Codes Are Used For Labs?

What Is A Lab Billing System? Which CPT & ICD-10 Codes Are Used For Labs?

Running a busy medical lab will definitely engage you in multiple tasks all at once. Unlike physician’s practice, urgent care units, or any other healthcare facility, a medical lab faces a huge volume of patients coming through the doors every day. These patients require critical lab tests because they’ll help the doctors make suitable decisions. 

The comparatively increased patient base also makes the lab staff stand on their toes and collect reimbursements from manifold insurance payers. So, the staffing needs of healthcare labs are quite different from their fellow healthcare facilities. For example, if a medical lab is managing phlebotomists and other professionals to take samples and conduct analysis (unless you have some of this work done off-site) instead of doctors, nurses, and physicians’ assistants. The employee who’s going to schedule the appointment has more work to do every day than the receptionists. 

Since the foot traffic is greater, therefore, it becomes more complicated for laboratories to keep everything organized and stay hunky-dory during patient visits. Handling patients’ tests, lab healthcare revenue cycle management and claim submission deadlines perfectly is only possible if your team works efficiently and accurately. 

For those who aren’t familiar with a laboratory billing system, let’s probe into the definition of a laboratory billing system; 

What Is A Laboratory Billing System?

A well-structured way to collect patient charges, prepare bills, appeal payers, and insurance companies to pay for the medical care services delivered to patients. It helps healthcare labs to improve their finances and create a profound relationship with potential insurance payers. 

With an empowering financial strength, medical labs can boost their business productivity, hire best-in-class staff, deliver better quality patient care services, and expand their horizon of services. 

In this age of AI and robotics, definitely, reliable medical billing software has a critical job in a lab billing system. Laboratory owners and managers already have their plates full of job responsibilities, from ensuring a faster flow of revenue through the organization to seeing that scheduling maximizes the number of patients being seen and tested.  When we talk about a well-functioning laboratory medical billing system, then we definitely mean that labs have the best billing solutions working to grow their revenue. 

If you have a reliable team of laboratory billing specialists along with reliable medical billing software in place, here’s how a well-organized laboratory medical billing system works. 

How Does A Laboratory Billing System Works?/ What Are The Steps Of Lab Billing Services? 

If you’re a new medical graduate or want to start a career as a laboratory billing specialist, here is a quick overview of how to proceed with laboratory billing services

Step 1: Scheduling and Eligibility Verification

Lab healthcare revenue cycle management starts as soon as the patient walks into your office to take a service. However, if you have scheduled patients’ appointments then your lab healthcare RCM has already started. 

It is the responsibility of the front desk staff to document patients’ appointment scheduling times and mention their appointment times in the medical claims as well. 

Moreover, lab billing specialists should pre-test the patient’s insurance plan eligibility criteria to determine your real payer i.e. if the patient’s coverage plan doesn’t cover the prescribed lab test then the patient will be your payer otherwise his/her insurance company will be responsible for your finances. 

It’ll expedite your lab healthcare RCM and avoid payment surprises at the end. 

Step 2: Prior Authorization

Some insurance companies require a proper justification for the following lab test, medical procedure, medication, and any other service prescribed by the doctor. Documenting the medical necessity of your healthcare services is called prior authorization/ pre-certification. 

Therefore, the lab staff should proceed with prior authorization and mention the medical necessity of the lab tests. It’ll help you justify your services to insurance companies and help you get paid for hard-earned services. 

Step 3: Medical Coding

Medical codes are alpha-numeric codes that translate your documents into a standard language that helps you prepare medical claims. Healthcare insurance companies review your medical codes and proceed with your payments after complete verification. 

There are 2 types of medical codes; 

  • CPT (Current Procedure Terminology): CPT codes are the standard nomenclature that defines your medical procedures and other healthcare services uniformly. There are 3 categories of CPT codes i.e.

CPT Codes Category I: It comprises the largest body of CPT codes that are commonly used by providers to report their medical services and procedures. 

According to AAPC, the 6 main sections of CPT® Category I codes are:

Evaluation & Management (99202–99499)

Anesthesia (00100–01999)

Surgery (10021–69990) — further broken into smaller groups by body area or system within this code range

Radiology Procedures (70010–79999)

Pathology and Laboratory Procedures (80047–89398)

Medicine Services and Procedures (90281–99607)


CPT Codes Category II: It comprises supplemental tracking codes that are used for performance management. 

Following are the CPT codes that are used for Categories of Category II CPT codes; 

Composite Measures (0001F–0015F)

Patient Management (0500F–0584F)

Patient History (1000F–1505F)

Physical Examination (2000F–2060F)

Diagnostic/Screening Processes or Results (3006F–3776F)

Therapeutic, Preventive, or Other Interventions (4000F–4563F)

Follow-up or Other Outcomes (5005F–5250F)

Patient Safety (6005F–6150F)

Structural Measures (7010F–7025F)

Nonmeasure Code Listing (9001F–9007F)

CPT Codes Category III: These are temporary codes that are used to report emerging and experimental services and procedures.  The American Medical Association (AMA) releases new or revised Category II codes after every 6 months via its website. However, they publish the Category III deletions annually with the full set of temporary codes. 

  • ICD (International Classification of Diseases) Codes: 

ICDs are the standard codes that are legally mandated by WHO. ICD codes are used to classify diseases, causes, and treatments. The World Health Organization publishes the standards of ICD, methods of recording and tracking diagnosed diseases all over the world. The latest version of ICD codes is ICD-10, ICD-10-CM & ICD-11 codes. 

After documenting all the information, it is the responsibility of medical coding specialists to transcript your documented information into standard medical codes. Laboratory coding specialists should understand the nature of lab tests and imply bundling for the same procedures and unbundling for a distinct procedure.  

Step 4: Preparation & Submission Of Medical Claims

Standard transaction claims are registered under HIPAA that must be submitted electronically. Laboratory billing professionals should leverage digital medical billing software solutions to avoid the drawbacks of a manual billing system. 

However, if both options seem a bit overwhelming for your practice then outsourcing laboratory medical billing services could be a go-to choice for your lab. In this way, a professional lab billing company will assist you with medical bill preparation and submission tasks from a remote location. 

They can reduce your work stress and efficiently manage your workload to help you proceed with medical claims efficiently and accurately. 

Also, it is one of the most essential criteria of lab revenue cycle management (RCM) to submit medical claims to meet the deadlines of each insurance company. Especially, if you decide to outsource lab billing services then you should check out the service track record of that medical billing company. So you can get insightful performance information before making any decision. 

A reliable medical billing company always prepares a log of deadlines of each insurance company to submit medical claims before the given deadline. It helps reduce claim denials that often occur due to delayed submission of medical claims. 

Step 5: Regular Follow-Up With Claim Adjudication

The journey with medical claims doesn’t end up with a submission. Instead, medical billing professionals should follow up with clearing houses during adjudication. So medical billing and coding professionals can review the claims and rectify mistakes and errors reported by clearinghouses and insurance companies. 

It helps you identify and eliminate errors from your medical billing system and streamline your healthcare RCM. 

Step 6: Post Payments

Payment posting is the process of examining payments and the financial status of medical practice. It helps lab technicians to record their payments and track the performance of the medical billing system. It provides a perspective on patient payments, insurance checks from ERAs, and insurance payments in EOBIs. 

If you’re feeling overwhelmed with the billing responsibilities then get connected with a professional lab medical biller. CureCloudMD is a well-experienced medical billing company that has been serving several healthcare labs for more than a decade. We provide a complete range of laboratory medical billing and healthcare revenue cycle management (RCM) outsourcing services in compliance with HIPAA policies. Get a free demo of our medical billing services for your healthcare lab.