Health insurers want to control the rapid growth in expensive genetic and molecular assays

For many clinical laboratories and pathology groups, genetic tests and molecular diagnostic assays are the fastest-growing part of the test menu. This is true both in the increased volume of specimens for genetic tests and the growing number of such medical laboratory tests that are accepted for clinical use.

This is a bright spot for the nation’s clinical pathology laboratories. That’s because many genetic tests and molecular assays deliver significant clinical value to the physician and his or her patient—while generating ample reimbursement for the medical laboratory that performs these tests.

However, as many clinical laboratory managers are learning, many of the nation’s biggest private payers want to place strict controls on the utilization and reimbursement for genetic and molecular tests. For community hospital-based pathology groups, and hospital laboratory outreach programs, this is an unwelcome development. It is all too common that private payers grant exclusive contracts to national laboratory companies and exclude local pathology groups and medical laboratories from performing these tests.

Payers Want Pre-Authorization of Expensive Genetic Pathology Tests

“Health insurance companies want to control the rapid cost of genetic testing while balancing the associated impact they have on therapies, surgeries and admissions,” stated Matthew Zubiller, Vice President and General Manager of Advanced Diagnostic Management, a business unit of McKesson Corporation. “One way they can do this is to require notification or pre-authorization before that genetic test is ordered and performed.

Getting Paid for Molecular Tests: How Clinical Laboratories and Pathology Groups Should Respond to Pre-Authorization Requirements by Payers

“That is why we see payers beginning to implement utilization management requirements like pre-authorization and notifications,” he said. “This makes it imperative that community hospital-based pathology groups, and independent clinical laboratories, develop a strategy to add value for the genetic tests and molecular assays they offer to clinicians.”

Zubiller recommends that pathologists and clinical laboratory managers respond to the pre-authorization trend by offering value in three distinct ways.

“First, payers want appropriate utilization for expensive genetic and molecular assays,” observed Zubiller. “Labs are perfectly positioned to work with clinicians at the time of a test order to determine if that genetic test is appropriate for that patient. Doing so could have a dramatic impact on the follow-on care decisions. This will require labs to be more interactive with their client physicians, and integrated informatics for clinical decision support is one way to deliver this added value service.

“Second, payers will want to see claims that include an accurate description and appropriate CPT (Current Procedural Terminology) code for these genetic and molecular tests,” he continued. “Pathologists and clinical laboratory managers are challenged to improve their ability to accurately code for these genetic tests. Given the small subset of current codes, it is very difficult to articulate what test is being performed in what quantities. AMA is beginning to address that, but a single code for a single test standard does not exist. Better use of electronic ordering systems with clear coding and financial decision support is one way to reduce some of the complexity.

“Third, payers will choose the pathology groups and medical laboratories in their provider networks based on a combination of quality and price,” observed Zubiller. “That means that clinical labs will need to be able to document their level of quality, while delivering a competitive price for these complex genetic and molecular tests.

“In partnering with health plans, labs can create a more collaborative relationship by proactively managing utilization with clear clinical and financial decision support for their providers. By doing so, labs can offer an alternative way to be paid—based on value not just volume,” Zubiller concluded.

Helping Clinical Laboratories Get Paid for Molecular Diagnostics Tests

To help pathologists and laboratory administrators get an insider understanding of the increasingly complex world of payer pre-authorization and notification, Dark Daily just published a White Paper that is free to download. Authored by Zubiller, it is titled “Getting Paid for Molecular Tests: How Clinical Laboratories and Pathology Groups Should Respond to Pre-Authorization Requirements by Payers,” and is available on our website

This detailed White Paper describes how laboratories they can help physicians to order the appropriate molecular tests by placing an automated evidence-based decision support tool at the point of care. This system:

  • Determines a patient’s insurance eligibility,
  • Performs all medical appropriateness, ABN and specimen management, and,
  • Ensures adherence to benefits policies for each patient before an order is processed so that laboratories can get paid for tests performed.

This White Paper also includes a case study on how California-based MuirLab—a full-service clinical laboratory—provides comprehensive clinical and anatomic pathology testing to its surrounding medical community.

MuirLab Increased Revenue and Reduced Denials of Test Claims

MuirLab is the core laboratory and outreach laboratory service of the John Muir Health System. It has implemented an evidence-based automated diagnostic platform that enables it to collaborate in real-time with providers and payers and ensure that the most appropriate tests were being ordered by physicians at the point of care. This resulted in improved utilization of clinical tests and increased revenues, thanks to a marked decrease in claims denials.

Because the trend of payer pre-authorization is an important development, Matt Zubiller will be speaking at the Executive War College at the New Orleans Sheraton Hotel on May 4-5. His presentation is titled “Is Your Lab Prepared for Payer Pre-Authorization of Molecular and Genetic Tests? How to Be a Value-Added Payer Partner with Prospective and Collaborative Utilization Management.”

Pathologists and clinical laboratory managers have time to get ahead of the pre-authorization trend. A good first step is to download the White Paper at and use this information to develop a proactive strategy for your pathology group or medical laboratory.

Related Information:

Getting Paid for Molecular Tests: How Clinical Laboratories and Pathology Groups Should Respond to Pre-Authorization Requirements by Payers (FREE Special Edition White Paper)

DNA Direct Announces New Health Plan Clients Managing Molecular Diagnostic and Genetic Test

New Genetic Laboratory Tests Face Complicated Hurdles to Win Reimbursement