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Pathology Denial and Appeal Trends: Comprehensive Strategies for RCM Success
December 2, 2024The XiFin team conducted an analysis of recent denial and appeal trends based on aggregated data from claims processed on the XiFin platform representing hospital outreach and clinical laboratories, molecular diagnostic laboratories, and pathology practices. The dataset analyzed includes more than twenty million claims with 2023 dates of service. In this blog, the last in our three-part series, we will explore pathology denial trends, appeal strategies, and other important considerations for diagnostic providers. Part 1 focused on hospital and clinical laboratory denial trends and Part 2 explored molecular denial trends. Download the 2024 Payor Denial Impact Report for the complete analysis.
Pathology denials have steadily decreased over the last several years, averaging 20.3% in 2018, 12.5% in 2021, and 10.8% in 2023. Nonetheless, pathology practices face unique challenges in revenue cycle management (RCM), and denials still pose significant financial risks. Understanding pathology-specific denial trends and adopting comprehensive strategies to address them is essential for maximizing revenue capture.
Pathology Denial Trends
The complexity of pathology testing often results in requests for additional documentation. For example, CO252 denials indicate that more information is needed to support a test’s medical necessity. Automating the retrieval and submission of these documents can streamline the appeals process.
The chart by denial type below shows that the pathology segment has experienced some relief in Duplicate Denials (CO/OA18). However, it continues to be the top reason for denial. Prior Authorization (CO197) denials saw a spike in 2021, but have since decreased to just under 8% of denials. However, there has been a substantive increase in Procedure Not Paid Separately (CO97) denials that largely offsets improvements in duplicate and prior authorization denials. While payors have started to gravitate to a less heavy-handed prior authorization policy, we have seen an increase in policy-related denials across all segments.
Robust Front-End Edits and Automating Appeals Improve Revenue Recovery
Pathology practices must ensure that front-end edits are in place to capture potential denial issues before claims are submitted. Automated workflows can help identify coding discrepancies or missing prior authorizations, preventing denials from occurring in the first place. By configuring RCM systems to flag potential issues, practices can reduce denial volumes and optimize payment cycles. Pathology practices must ensure that front-end edits are in place to capture potential denial issues before claims are submitted. Automated workflows can help identify coding discrepancies or missing prior authorizations, preventing denials from occurring in the first place. By configuring RCM systems to flag potential issues, practices can reduce denial volumes and optimize payment cycles.
Additionally, automating repetitive appeal tasks can significantly reduce administrative costs. The most common appeals in pathology are in response to “Additional Information Required” to adjudicate the claim denial codes. For example, appeal responses for denial code CO252 could include submitting the pathology report for review, providing additional detail on the utilization of unspecified codes for services rendered, and providing medical records or prior authorization codes.
Additional information requests are consistent and predictable, determined by the denial code received. Where there is consistency, there is the opportunity for automation. Automating the packaging and submission of appeals saves time and cost and improves follow-up and payment timeliness.
Using CO252 as an example, the response process is the same every time, which makes this process well-suited for automation. XiFin RPM can be set to automatically pull the pathology report, generate a CO252-specific appeal letter, complete a payor-specific form (if required), package the documentation, and submit via paper through the print vendor. When automated, CO252 denials are bundled and sent for print within a day of receiving the denial—without a user’s need to touch the claim. If the payor requires a portal submission, documentation is still stored on the claim in XiFin RPM. This saves considerable time in the small percentage of instances when manual intervention is required.
Medical necessity denials, however, can be more tedious, depending on the test and payor mixes. While certain medical necessity denials can be automated with nuanced rules, others need staff oversight to determine the best next actions. For example, human intervention can be required for new molecular tests where payor policies are still evolving. In these cases, a coder may want to review the case criteria to draft a strategic, case-specific letter for the response.
To stay ahead in a challenging RCM environment, pathology providers should consider the following strategies:
- Understanding Payor Guidelines and Edits: It is crucial to stay updated on changes in payor policies, such as NCCI edits and Medically Unlikely Edits (MUEs). RCM systems should be routinely updated with these edits to ensure compliance.
- Strategic Use of Appeal Levels: Knowing when to escalate appeals can significantly impact the likelihood of success. A robust process that includes multiple appeal attempts is critical in revenue recovery if the first appeal is not overturned. For high-value claims, pursuing higher levels of review may be warranted.
- Customizing Patient Communication: Tailoring patient engagement strategies to the specific needs of each segment can help drive quicker payments and improve overall satisfaction.
Pathology practices can achieve greater success in revenue recovery by adopting a proactive approach to denials, configuring robust front-end edits, and automating appeals. While denial rates have improved in the pathology segment, continued vigilance is necessary to navigate the complexities of maximizing RCM.
Proactively preventing denials and avoiding the time and energy spent submitting corrected claims or filing appeals profoundly impact profitability. Denials must be appropriately addressed; manual workflows should be eliminated at every opportunity. Understanding and actively adapting to the latest denials and appeals management trends is crucial to every provider’s battle to overcome persistent revenue compression.
By implementing these strategies, pathology practices and other healthcare providers can reduce denials, accelerate payments, and ensure financial stability. Read the 2024 Payor Denial Impact Report for all the data-driven insights needed to navigate today’s complex payor landscapes and advocate for change.