Labs Grapple with Growing Prior Authorization Hurdles Amidst Surge in Molecular Testing

For clinical laboratories, prior authorization has emerged as a formidable challenge. Insurers, keen on managing ballooning costs, have increasingly wielded this tool to regulate spending, particularly concerning newer genetic and molecular tests. For labs, navigating this complex terrain involves balancing provider and patient needs while grappling with limited insight and control over the prior authorization process.

The Rise of Prior Authorization

Prior authorization, a process requiring providers to seek insurer approval before performing specific services or procedures, has long been a staple in other areas of medicine. However, it has only recently become a regular feature in the clinical lab business, closely tracking the ascent of genetic and molecular testing. Heather Agostinelli, VP and head of strategic revenue operations at lab consulting firm Xifin, notes that BRCA testing was the initial lab and pathology service requiring prior authorization. Since then, the requirement has expanded as advanced testing occupies an increasingly significant share of the lab industry.

Acceleration Post-COVID-19

The pandemic accelerated the adoption of prior authorization in the lab space. As PCR testing became a household term, labs leveraged this methodology to develop additional tests. Payors responded by scrutinizing molecular and genetic testing more closely. In 2022, CPT code 81479, covering unspecified molecular pathology procedures, ranked second in total CMS payments at a staggering $470.2 million—a three-and-a-half-fold increase from 2018. Spending on molecular infectious disease testing surged even more dramatically. CPT code 87798, used for unspecified infectious disease detection by nucleic acid, ballooned from $49.2 million in 2018 to $221.6 million in 2022. Large genetic testing panels, such as CPT code 81455 for cancer genetic testing of 51 or more genes, also witnessed exponential growth, rising from $21.3 million in 2018 to $73.6 million in 2022.

Lab Dilemmas: Caught Between Patients and Payors

Laboratories now find themselves caught in a delicate dance. On one side, they strive to meet patient needs by providing timely and accurate testing. On the other, they grapple with payors’ stringent requirements, often leading to delays, denials, and added administrative burden. Stan Schofield, managing principal of lab trade federation The Compass Group, emphasizes that discussions around prior authorization and denials have become a recurring theme in industry circles. Labs must tread carefully, ensuring quality care while adhering to payor guidelines.

The Role of Lab Consultants

Lab consultants play a pivotal role in this landscape. Ann Lambrix, VP of RCM solutions at Lighthouse Lab Services, underscores the adversarial and uncertain reimbursement process. Labs increasingly rely on consultants to navigate the complexities of prior authorization, appeals, and payment disputes. These experts bridge the gap between labs, payors, and patients, advocating for fair compensation while maintaining compliance.

As molecular and genetic testing continues to grow, labs must adapt. Collaborative efforts among labs, consultants, and payors are essential to strike a balance. Transparency, streamlined processes, and evidence-based decision-making will shape the future. Labs should proactively engage with payors, advocating for reasonable prior authorization requirements that prioritize patient care without compromising financial viability.

Labs face challenges, but they also hold the keys to innovation. By embracing change and fostering partnerships, they can reduce prior authorization hurdles and advance precision medicine for patients worldwide.