Preauthorization For Laboratory Testing Now Mandatory With Some Payers

By Infinx
October 19, 2017

If you don’t know about this and aren’t ready to comply, it’s going to cost you money. More and more third-party payers across the country are requiring preauthorization for genetic and molecular testing. Some of the largest insurers in the nation, like United Healthcare, implemented the change on November 1 of this year. It’s a move toward lab utilization management but it’s a costly two-sided coin. On the one hand, insurance companies say it is an effort to reduce costs, overutilization and the ordering of wrong lab tests. On the other hand, laboratories and clinicians see it as an effort to place unduly strict controls on the ordering and reimbursement of clinically important and insightful genetic and molecular testing and to drive all testing in-network.

The truth always lies somewhere in the middle, but in this case it doesn’t matter. The reality for physicians is that this places heavy new regulations that must be adhered to when ordering certain lab tests in order to justify and protect revenue. When it comes to genetic and molecular testing, including that for breast cancer markers, the onus of supporting documentation and justification for these lab tests lies squarely on the shoulders of physicians.

Preauthorization requirements change by payer

Right now, preauthorization is required only for genetic and molecular testing but that doesn’t mean it’s a simple matter. The details aren’t consistent: they change by payer. Here is a sampling of the inconsistencies:

  • In South Carolina, Blue Cross Blue Shield requires the submission of two 835 files. Pathologists have been forced to adjust their billing software to comply but that doesn’t happen quickly or consistently. As a result, some labs have had to make adjustments manually, increasing workload and slowing workflow.
  • For members of EviCore Healthcare, preauthorization is required for pathology labs. Although BCBS, Aetna, Cigna and several other plans are participating, each plan has a different policy. EviCore says that prior authorization guidelines have been put in place “…to improve quality care and reduce genetic-testing costs. In addition, the solution achieves significant reduction of inappropriate cost by leveraging thousands of lab-specific claims rules.”

There’s more to tell about this story, but the bottom line is this; if your laboratory information system (LIS) isn’t ready to comply, and you can’t provide supporting documentation about your lab orders, a sizeable piece of your revenue could be significantly, and adversely, affected. As the provider ordering the lab tests, the onus is on you to document and justify the test. Now is the time to make sure you have an automated preauthorization solution that is versatile and agile, one that can adapt to these changes to protect the reimbursement you are owed.

We think a solution that integrates with each lab’s LIS and automates the preauthorizaton process for the lab is the way to go. When you have preauthorization specialists on your side, you leave nothing to chance.

Molecular lab tests are on the rise

Although the benefits of appropriate lab testing cannot be denied, statistics do show that their frequency is on the rise. A report in Managed Care found that physicians do not always order the proper tests for their patients and the “…growing number and complexity of tests available today contribute to the problem.”

For some health plans, laboratory costs are rising at twice the rate of overall medical costs. Managed Care quotes “one of the nation’s largest health plans” (not named specifically) that found that in 2016:

  • While overall medical costs were rising at 4% to 5% annually, spending for outpatient clinical lab services was climbing by 8% to 10% annually.
  • Two thirds of the increase in laboratory spending came from increases in utilization. Lab test costs were only about 5% of the plan’s total medical spending.
  • Use of molecular diagnostic testing was rising at about 20% to 30% every year and testing to support therapeutic drug decisions was rising at 50% annually and at 200% in a recent three-year span.

Controlling the costs of genetic testing

On the other hand, those who are skeptical of insurer motivations in this regard say that requiring preauthorization for genetic and molecular testing is simply an effort to control utilization, reimbursement and competition. Dark Daily, an online media outlet for clinical labs and pathology groups, says “For many clinical laboratories and pathology groups, genetic tests and molecular diagnostic assays are the fastest-growing part of the test menu. This is true both in the increased volume of specimens for genetic tests and the growing number of such medical laboratory tests that are accepted for clinical use. It is all too common that private payers grant exclusive contracts to national laboratory companies and exclude local pathology groups and medical laboratories from performing these tests.”

Other executives in the industry agree. Managed Care quoted one Advanced Diagnostic Management executive as saying “Health insurance companies want to control the rapid cost of genetic testing while balancing the associated impact they have on therapies, surgeries and admissions. One way they can do this is to require notification or preauthorization before that genetic test is ordered and performed. That is why we see payers beginning to implement utilization management requirements like preauthorization and notifications.”

How can you protect your revenue?

 There are several things you can do. First, make sure that your preauthorization solution is automated and that preauthorization specialists can immediately integrate the new requirements into your system. Properly done, this will prevent a lot of headaches and raise any red flags before revenue is lost, not after.

Secondly, work with your lab to make sure the test you order is appropriate for the patient. The lab can use integrated informatics for clinical decision support.

Next, make sure your preauthorization software can put a fine point on CPT codes. You will need an accurate description for genetic and molecular testing that usually need multiple codes. Currently there is no one code for either.

It seems there is no way to control the onslaught of regulations and the resulting documentation burdens that physicians must bear. There is only the ability to control the in-house processing of these requirements. A sharp, agile, automated preauthorization solution is the best revenue protection you can have.

About the Author



Infinx provides innovative and scalable payment lifecycle solutions for healthcare practices. Combining an intelligent, cloud-based platform driven by AI with our trained and certified coding and billing specialists, we help clients realize revenue, enabling them to shift focus from administrative details to billable patient care.

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