Overcoming Reimbursement Compression: The Latest Trends in Denials for Laboratories and Pathology Practices

  • Sr. Director, Pathology and Strategic Development   

This is the second article in a three-part series on denial and appeals trends. This article focuses on claim denial trends by payor group and by market segment, and denial trends for claims with a 2021 date of service differ from a similar analysis completed on claims with dates of service in 2018. If you missed the first article in this series on the importance of physician engagement in minimizing denials, you can find it here.

This article series is based on a new whitepaper, “Overcoming Reimbursement Compression: The Latest Trends in Denials and Appeals Management for Laboratories and Pathology Practices,” that provides an in-depth analysis of more than 25 million of XiFin customers’ claims to understand the latest trends and offers a strategic approach to automate key tasks that save time and improve appeal success.

Denials By Payor Group

Denial patterns vary among payors and over time, depending on payor policy updates, a provider attaining in-network status, and changes in payor mix and test mix. The percentage of claims denied also differs by segment, largely due to the type of testing performed.

Of the claims XiFin processes annually (approximately $80 billion in charges), 22.5% are denied. Molecular testing in particular has a higher propensity for denial, driven by non-covered, medical necessity, and prior authorization requirement challenges. The average percentage of billed claims that are denied, by segment are:

  • Clinical: 13.62%
  • Molecular: 27.19%
  • Pathology: 19.82%

When analyzed by payor group, as seen in the graph below, Medicare denial rates as well as some in-network commercial carriers are exceptionally low due to published payor policies and front-end edits. Non-contracted payors, however, have high denial rates. Contracted payors averaged 21.2% denial rate in 2021, whereas non-contracted payors averaged 32.7%.

Clinical Denial Trends

Clinical laboratory denial rates averaged 13.62% in 2021. Clinical laboratories experienced a significant decline in experimental/investigational denials between 2018 and 2021. As a percentage of total denials received, experimental and investigational denials dropped in contribution from 15.0% to 2.9%. There was an increase in prior authorization (+27.5%) and duplicate denials (+8.0%).

As seen in the chart below, duplicate denials, such as OA18, are the top denial in the clinical laboratory segment. These denial types can indicate one of several issues. The claim may conflict with the National Correct Coding Initiative (NCCI) edits and needs additional review. The patient may have a different accession on the same date of service with the same procedure codes billed. The updated claim may have been erroneously refiled instead of submitted as a corrected claim.

Top Clinical Laboratory Denials 2021, as compared to 2018.

Molecular Denial Trends

Molecular claims continue to have the highest denial rates of any laboratory segment. With an average rate of denial of 27%, molecular continues to be a revenue recovery workflow heavy at the back end. As a percentage of the total denial population, between 2018 and 2021 XiFin customers experienced increases in patient-coverage denials, such as coordination of benefits (298%), coverage terminated (103%), and experimental/investigational (2600%). As seen in the chart below, decreases in diagnosis not covered denials (-43.4%) and duplicate denials (-57.8%) were also seen. Prior authorization denials were unchanged from 2018 to 2021. 

Top Molecular Denials 2021, as compared to 2018.

Anatomic Pathology Denial Trends

Pathology denials have increased by approximately 5% from 2018 to 2021. As a percentage of the total denial population, prior authorization is the highest contributor to this increase, having grown 24.6%. There was an increase in procedure code inconsistent with modifier denials (120% increase) and a decrease in non-covered denials (-27.7%).

Top Anatomic Pathology Denials 2021, as compared to 2018.

Want to learn more? Download the whitepaper to see the complete analysis of denial and appeals trends, as well as to learn XiFin’s recommended practices to enhance productivity and optimize the efficiency of your appeals process through automation, improving both the speed and propensity of reimbursement.

Download Now

Published by XiFin
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