I recently had the privilege of presenting an in-person workshop in conjunction with The Dark Report Executive War College on Laboratory and Pathology Management. The workshop was on the topic of “Latest Trends and Denials Involving Lab Test Claims.” In this session, I shared XIFIN insights into payor behavior changes and shifting claims processing protocols and highlighted the importance of a strategic appeals process.
Our data is based on an analysis of 25 million claims with 2021 dates of service. Key trends analyzed include:
- The propensity for denial by top XIFIN payor groups for pathology and molecular
- The propensity for successful appeals by those payor groups
- Top appeal reasons and success rates
- Revenue per appeal for pathology and molecular segments
It is important to understand top denial reasons by segment because these create the biggest bottlenecks in the payment process, dragging out AR days and requiring your team’s time and attention.
Based on our analysis, the top denial reasons included:
CO151 — Payment adjusted because the payor deemed the information submitted does not support this many/frequency of services
CO252 — Claim will be reconsidered when additional claim information is received
CO96 — Non-covered charges
CO50 — Non-covered services because this is not deemed a 'medical necessity' by the payor
CO55 — Experimental/Investigational; when a procedure code is billed with an incompatible diagnosis for payment purposes, and the ICD-10 code(s) submitted is/are not covered under an LCD or NCD
Your response and appeal strategy will vary by denial reason. Some of these denials can be addressed through a corrected claim, but some will require appeals. While your top priority should be correcting the front-end of the billing processes to avoid the denials, not all denials can be avoided, in which case having strategies in place to recover that revenue quickly without burdening your teams is paramount.
It’s also important to understand your organization’s denial rates compared to the average. The following chart shows the average risk of claim denial by payor group.
On average, 15% of the claims XIFIN processes (approximately $40 billion each year) for our clients are denied. Molecular tests have a much higher propensity for denial because of medical necessity and prior authorization requirements, whereas for routine pathology, it is closer to a 10% denial rate. While it’s unreasonable to expect to ever get to zero, we want to help you take care of as much of this on the front end to minimize the delays and additional expenses involved in appealing denials.
To help our clients minimize denials, we employ front-end payor edits and verify patient eligibility along with offering insurance discovery and prior authorization capabilities. All that upfront work is reflected in the 15% average denial rate outlined above. If you don’t have these front-end work processes implemented in your workflow, you may see denial rates upwards of 17% - 20%, potentially higher.
Appeal process automation
The most prevalent denial that we see in pathology is for additional information (CO-252). Typically, all that needs to happen here is to resubmit the claim with the pathology report attached. This presents an opportunity to automate the process. Here’s how we handle this at XIFIN. Every time a CO-252 comes back from a payor, we want the billing system to automatically go grab the pathology report, with the corresponding appeal letter, package it, and submit it by fax or send it to our print house to be mailed out the same day. Nobody ever has to touch it, which is very valuable.
Medical necessity denials require more thought -- what's the best appeal message for this particular medical necessity denial? For medical necessity appeals, our average reimbursement is $354, so it's worth the extra thought that goes into the process, but we still don't want our teams getting hung up on manually printing and combining. So, every time we get a medical necessity denial, we have someone review it and then flag which letter needs to go out with that particular denial type; the rest of the process once again is automated and we track it to resolution.
We also see payment amount disputes in about 6% - 7% of appeals that are filed for pathology. That’s why it's important to constantly evaluate your contract allowable versus what the payor is actually allowing on these claims to ensure that they're paying you what they're supposed to. We also have automated tools that do this as part of our payment posting protocols. The system automatically flags claims so the user can immediately send out appeals for underpayments in batches or in bulk. On average we collect an additional $53 every time one of those discrepancies is discovered.
On average, approximately 20% of our appeals are successful. That said, this is a snapshot in time, so some of these appeals are still in process and in some cases, we have to file a second or a third appeal before it gets paid. As such, we expect the success rates will average between 30% and 40% because additional time will allow for adjudication on those claims that may have been pending appeal status.
The following chart shows the average appeal success rate by payor group.
Percent of Submitted Appeals Paid
To help ensure appeals success, report documentation should clearly outline the services provided and the medical necessity of those services.
Watch out for our upcoming white paper on this topic, which will provide information on:
- The latest analysis of laboratory test claims, denials, and appeals
- Key challenges in molecular and genomic billing that impact denials and appeal success
- Recent changes in genomic testing and infectious disease testing billing that impact denials and appeal success
Watch the Dark Daily-hosted webinar, "Breaking News on Trends and Denials Involving Lab Test Claims," featuring XIFIN experts, to learn the latest trends in denials and appeals, review best practice tactics for achieving successful appeals, and find out what payor policies to keep in mind to maximize the success of your appeals.
Note: You will be re-directed to the Dark Daily website to watch the webinar on-demand.Watch Now