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As Molecular Testing Expands, Labs Find Reimbursement Process Becoming a Herculean Task


NEW YORK – While laboratories have long characterized getting reimbursed for services that they provide as being arduous, more recently they contend the process has become akin to one of Hercules' labors.

"We just spend copious amounts of time on the phone," said Suzette Tidmore, revenue cycle director for pathology lab Pathology Consultants of New Mexico. "I actually have one employee who spends 40 hours a week calling insurance companies to tell them to reprocess claims after we've submitted everything."

In some instances, it may take as much as six months to resolve claims that start with vague denials and spiral into multiple appeals despite documentation of the medical need for the tests.

Tidmore, who is also the co-owner of the revenue cycle management consulting firm T&T Provider Solutions, is not alone in charging payors with making it increasingly difficult to get paid for tests and other services they have performed. Laboratories and lab consultants said they have seen in recent years the emergence of a more adversarial and uncertain reimbursement process that often requires more extensive documentation of the medical necessity of tests.

Tidmore and others have said that labs are dedicating more staff hours to challenging denials through appeals and calls to payors, adding that they are working with staff who handle claims to better understand payor policies and implement automated tools to prioritize certain claims or take preventive actions to reduce their risk that they will have to eat the cost of a test.

The payment bottlenecks, those in the lab industry said, are particularly egregious when it comes to getting reimbursed for multiplex molecular panels, a category of tests that is becoming more commonly used as new molecular technologies gain a foothold as diagnostic tools.

Six of the largest health insurers in the US — UnitedHealthcare, BlueCross BlueShield, Elevance Health, Aetna, Kaiser Permanente, and Humana — declined to comment for this article or did not respond to inquiries. However, Robert Traynham, executive VP of public affairs for the trade association AHIP (formerly America's Health Insurance Plans), said in a statement that genetic testing has already been integrated into care delivery, demonstrated by the widespread coverage of genetic tests for BRCA 1/2 gene mutations, as well as genetic testing for colon cancer. However, a wide range of genetic tests has entered the market with little to no evidence of any benefits to patients, he noted.

He said that any criticisms of the reimbursement process should be considered within the context of the price of the tests, the evidence of clear value to patients, and whether providers have submitted their claims with complete and accurate information.

In the meantime, healthcare providers continue to prescribe molecular tests, even if insurers balk at paying for them, and laboratories are caught in the middle between having to run them at the request of providers with the possibility that they may not get reimbursed by insurers.

Documentation demands, claims scrutiny up

According to Ann Lambrix, VP of RCM solutions for Lighthouse Lab Services, the volume of molecular testing has risen as many laboratories invested heavily into PCR-based testing in response to the COVID-19 pandemic then subsequently expanded the use of molecular testing technologies to other infectious diseases such as respiratory and urinary tract infections.

But from the perspective of payors, an uptick in molecular testing may be driven by overuse, she said. In response, some payors created and implemented policies to halt payments until they saw better evidence of the clinical utility of those tests.

Case in point: A policy implemented in 2022 by the US Centers for Medicare and Medicaid Services allows Medicare contractors to limit their coverage of syndromic infectious disease panels with six or more targets. According to the policy, such panels should be used only when certain conditions are met. For example, a respiratory panel with six or more targets should be covered only for patients who are at elevated risk of severe disease, including those who have underlying pathologies or immune suppressed status. Similarly, a meningoencephalitis panel should be performed only for an immune-competent patient with multiple indicators of central nervous system infection or an immune compromised patient with at least one indicator.

Getting a molecular test reimbursed will often require prior authorization from an insurer. While having to get the OK first from a payor is nothing new for many procedures, Jeffrey Jones, managing partner of the diagnostics consulting firm The Deerborne Group, said that payors have been increasing their requirements for prior authorization as more molecular tests have entered the market, especially for the most expensive tests.

Jones has also found that some payors have delayed or reduced payments to his laboratory clients by reimbursing at the lower rates of less expensive types of tests. In one extreme example, his firm recently found in an audit that a contractor administering a Medicare Advantage plan was reimbursing for a molecular assay at $2 to $3 per test instead of the required $1,569. The contractor paid the required rate only after Deerborne issued a strongly worded letter citing applicable laws and regulations.

"It can be three, four, or five times that you're going back and forth," he said, adding that "billing departments quite often are one of the largest departments … at a laboratory."

Tidmore said that she has seen inconsistency in the coverage of molecular tests for infectious diseases, and some clients have found that their patients have become ineligible for coverage under their health plans for tests that could inform treatment. In the past, laboratories that work in women's health rarely saw denials of claims for gonorrhea and chlamydia screening tests. More recently, however, insurers are deeming these tests medically unnecessary, she said.

A BlueCross BlueShield Federal Employee Program, for example, implemented a policy against coverage for a multiplex Hologic Aptima BV assay that uses transcription-mediated amplification for the detection and quantitation of bacteria associated with bacterial vaginosis. Tidmore said that test is useful for helping to identify the right antibiotic treatment for recurring infections, yet the payor told her single-target alternatives were sufficient.

The BCBS plan did not respond to a request for comment, but in a policy that took effect in 2022, the plan found a lack of direct evidence for the clinical utility of PCR testing for BV and that most symptomatic women could be diagnosed without multitarget testing. Hologic spokesperson Bridget Perry also said in a statement that most of the 33 BCBS plans provide coverage of the Aptima BV panel, and all national payors provide coverage for the Aptima BV's CPT code.

Others who work in the lab industry have said labs are also facing greater difficulties with the limits of out-of-network coverage.

David Shiembob, manager of healthcare advisory services for ARUP Laboratories, said its hospital clients are facing some of their biggest challenges with outreach testing in their communities. Some insurers are cutting deals with preferred laboratories to be the exclusive providers in a geographical area or requiring negotiated agreements before they will consider continued reimbursement for testing of patients who are outside the hospital system. Often, the payors are asking hospitals to accept lower fees that are in line with payments to commercial labs.

"It's a continuation of a trend where payors are looking to minimize their expenditures for laboratory testing," he said.

XiFin Chief Commercial Officer Harley Ross said that he has noticed an increased use of automation by payors for claims processing and denials at the same time that they have expanded prior authorization requirements and slowed down payments to labs. As the volume of denials rises, labs often decide that many of those claims are not worth fighting for.

"The deck is stacked against the laboratory industry," he said.

The two biggest players in the clinical lab arena, Laboratory Corporation of America and Quest Diagnostics, declined to comment for this article. However, Quest President and CEO Jim Davis said during the company's Q4 2023 earnings call that the company's strong relationships with health plans were a key driver of growth in 2023, and its revenues from health plans rose in the high-single digits compared to fiscal year 2022. More than half of revenues from health plans come from value-based contracts that have faster growth rates than traditional health plan contracts, and the company is working with health plans to redirect testing volumes from high-cost out-of-network labs to Quest.

Jim Almas, VP and national medical director of clinical effectiveness for Labcorp, said during a panel discussion at last month's Precision Med Tri-Con 2024 that most big payors are willing to discuss evidence thresholds for test coverage, but his firm has had some issues with a few laboratory benefit managers, including new ones that have established local health plans and have taken to denying coverage for both common and uncommon tests and justifying those denials with hidden exemptions to their coverage policies.

Almas also said that certain Medicare administrative contractors have been unreachable, even to Labcorp, to resolve conflicts. The only recourse is often to register complaints with a MAC's contract officer, he said.

Negotiating with payors and using AI

Joshua Rivera, pathology operations director for Moffitt Cancer Center, said that major payors have pushed back on reimbursing for highly complex panels such as the 500-gene Moffitt STAR (Solid Tumor Actionable Result) 2.0 next-generation sequencing-based assay that the center launched this year to guide the treatment of at least 30 tumor types. Insurers, he said, are balking at coverage of any panels of greater than 51 genes, but a narrower panel may not include all the mutations that are key to finding the right treatments, thereby avoiding wasted time and money on less effective chemotherapies.

"Doing broader panels will allow us to truly find the adequate treatment options available for this patient," he said.

Rivera said Moffitt is negotiating with payors and trying to explain the need for advanced treatment centers to use large panel tests to guide the treatment of rare diseases. The center also continuously analyzes its revenue data and claims results to rapidly identify what types of claims were denied and what conversations to have with payors.

"That's where the big data comes into play, where you're matching clinical diagnosis and revenue cycle data all in a single template and having those conversations with scientific advisers as well as payor strategy leadership," he said.

Moffitt has also been working with five other hospital systems in the Tampa Bay area in Florida to identify revenue cycle trends and remittance patterns among major payors, he said. Those findings are used to support lobbying efforts at the state and federal levels to influence laws and regulations that are related to tests and reimbursements as well as in negotiations with insurers.

Similarly, labs can use the newest technologies to try to even the reimbursement playing field.

ARUP Laboratories Director of Healthcare Advisory Services Sandy Richman said payors are using AI and other algorithm-driven analysis of claims, and labs also can implement automated systems that recognize payor habits, identify what information labs need to provide with their claims, and provide updates on claims status.

"There are also tools on the front end that can check to see if that payor requires a preauthorization," he said. "There are also a number of rules from the payors that you can build into the system on the front end to check, 'Does the diagnosis code support the CPT for the testing that you're going to order?'"

Seth Maheu, CEO of Birdrock Labs in San Diego, said his lab uses software from E5 Workflow to prioritize claims by factors such as deadlines, claim amounts, and the likelihood of securing payment from a particular payor, as well as Experian Health's Wave software for eligibility verification. Those tools together have helped reduce the number of staff needed for those tasks and helped the company process claims more quickly.

"If you're saving two minutes, three minutes, four minutes per claim, it really significantly improves your efficiency," he said.

Ross said laboratories need to ensure they have staff or consultants who are well versed in payor behavior and can stay up to date on changes from one year to the next. Responding effectively to payor policy changes requires partnerships across sales, client services, revenue cycle, and finance teams.

XiFin began adding AI-based tools into its revenue cycle software in 2023 to help clients keep up with payors by prioritizing the claims that have a high chance of reimbursement and identifying claims that are more likely to be denied without further information, among other tasks. No lab is going to recover every dollar owed for testing, Ross said, but they can focus their use of labor and use automation tools to avoid falling too far behind.

"On the lab side, they're never going to be able to keep up with the deep pockets of the insurance company," he said.