Prior Authorization – The Lab’s Dilemma

July 10, 2018 By: Quadax

Are payers’ Prior Authorization programs impacting your laboratory’s bottom line?

Increasingly, retroactive authorization after performing lab tests is becoming a less viable option; as is fighting denials for lack of prior authorization during the appeal process. While some payers still allow retroactive authorization, in general, laboratories who test specimens without prior authorization run the risk of performing uncompensated testing.

Quadax, a long-standing provider of revenue cycle services for the laboratory market, explored Anthem’s and United Healthcare’s prior authorization management programs’ real impact on claims processing timelines, receipts, payment timeliness, denial trends, and more. Our data driven analysis focused on the variance before and after implementation revealed the following:

  • Overall, denials have increased since program implementation — UHC denials increased 49% and Anthem 22%.  Testing for inheritable genetic disorders is being hit the hardest by these programs. Perhaps due to increased scrutiny, these tests are experiencing the highest increase in denials. For some CPT codes, denials have increased by over 70%.
  • When a lab test required a prior auth by the payer, denials increased substantially when claims were filed without one. Since program implementation, 85% of claims submitted to UHC without the required prior auth have been denied. The chance of being paid by Anthem is slightly better, as 66% of claims submitted without PA have been denied. Even when prior authorization is filed appropriately, the claim may still be denied (45% of the time by UHC and 29% by Anthem).
  • When labs successfully navigated payer requirements and the payer program processing, overall payment turnaround time was faster (UHC 26%; Anthem 13%).
  • Attempting to overturn a denial using an appeal process has been less successful since program implementation and resulted in fewer dollars. The appeal allowable contribution after initial denial for no PA was substantially decreased by 40% at Anthem (UHC - too soon to tell). Regardless of how robust a lab’s appeals process might be, the numbers are showing diminishing returns since program implementation. Labs may no longer be able to “make it up” in the appeal process after having missed payer prior authorization requirements.

Quadax continues to investigate these trends on behalf of our laboratory clients. Our findings suggest that laboratories need to re-evaluate their prior authorization strategy. As recent as early last year, retroactive authorization was a normal operating procedure – a lab would accession the specimen and go right to testing. At that time, the lab would begin their revenue cycle starting with benefit investigation. In today’s environment, this process exposes the lab to the full cost of acquiring the specimen, transporting the specimen, all of the consumables, and the cost of the lab kit while offering no guarantee of payment. If the payer’s Date of Service (DOS) rules dictate using the specimen collected date, similar to Medicare and Medicaid, any attempt by the lab’s staff to obtain PA is considered a “retro” authorization. When a payer no longer allows retro authorization and prior authorization was not done by the ordering physician, data shows that the lab stands to have a diminished chance of getting any reimbursement.

In response, some labs have moved prior authorization discovery to earlier in the process, some handling it at the same time as accessioning. The lab’s staff starts to work with the referring physician earlier, prior to testing, to acquire the necessary authorization. At this point the lab still has the physician’s attention. Wanting and waiting for the test results, physicians may be more attentive to lab requests for medical necessity documentation. By not immediately performing the test, the lab can avoid the cost of processing the specimen until they have acquired payer authorization.

However, this does not resolve the fact that the lab is still forced to request the authorization in a “retro” state if date of service is collection date and the physician has not started PA. More importantly, current Anthem and UHC policies require the ordering provider to initiate Prior Authorization. If testing is delayed specimen stability may become a concern and, from the stand point of personalize medicine, delays can have a negative impact on the patient’s clinical care. This is an unintended consequence of these burdensome programs that payers have put into place.

It is ideal to perform the prior authorization at the time of, or before ordering the test (during the patient’s visit with the physician)—before the patient goes for specimen collection. However, this process increases the administrative burden for the ordering physician. Many laboratories lack the necessary patient access management (PAM) tools on the front end to help ease the ordering physician’s burden and navigate the payer prior authorization programs successfully, or even be aware that prior authorization is required. 

One of the greatest challenges standing in the way of PA is that physicians are used to ordering procedures for their patients through their respective EMR systems. However, many EMR systems lack the ability to manage the constantly evolving lab requirements and/or accommodate the lab’s needed data. Physicians are inundated with a variety of online portals already and having them log into one more portal just adds to the growing “portal fatigue” physicians already experience. This creates another burden for the lab to manage.

In the wake of these reimbursement complexities, the new programs originally intended to promote appropriate, cost-effective healthcare may be preventing access to critical laboratory services used in the prevention, diagnosis, and monitoring of disease.

By developing a set of prior authorization tenets, the American Clinical Laboratory Association (ACLA) seeks to improve the payer processes that have begun to pose serious risk to patient care, and minimize the delays in laboratory testing and negative impacts created from such processes. The traction these tenets do or do not get with payers, will be something to watch for.

What can your lab do to navigate changing prior authorization requirements? Download Mitigate Prior Authorization Challenges: A Guide to Best Practices.New call-to-action


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