2024 Laboratory Reimbursement Trends and What to Expect in 2025

As 2024 ends and labs look ahead to a new year, it would be a mistake to ignore the top challenges the industry faced, especially when it comes to billing and reimbursement. Revenue cycle management experts weigh in on what they think impacted their lab clients the most in 2024, whether those trends will continue in 2025, and how labs can best prepare for the future.

Cybersecurity

Among the experts consulted, cybersecurity breaches made the top of the list of things negatively influencing reimbursement and billing for clinical labs. In late February, a far-reaching cyberattack on UnitedHealth Group’s subsidiary Change Healthcare crippled billing, eligibility checks, prior authorization requests, and prescription drug fulfillment.¹ And in May, a ransomware attack on St. Louis-based Ascension—a Catholic healthcare system with 118 hospitals in 17 states and DC—caused disruptions to their operations, forcing them to divert ambulances, close pharmacies, and shut down critical IT systems. It took roughly six weeks to restore normal operations and access to Ascension’s electronic medical records system.^2,3

While these attacks contributed to disruptions in patient services and financial losses for the healthcare systems impacted, Ann Lambrix, vice president of Payors and Revenues Management at GoPath Diagnostics, says they also brought awareness to the importance of cybersecurity for laboratories.

Tami Shaw, lab revenue cycle management consultant, adds that the Change Healthcare cyberattack, “taught us the vulnerability of having all our ‘eggs in one basket’ when it comes to clearinghouses and the importance of a backup plan that includes backup softwares.” She elaborates that, when labs pivoted to other clearinghouses while Change Healthcare worked to repair the damage, it became abundantly clear that too many of those other clearinghouse systems also relied heavily upon Change Healthcare. Payers were additionally found to be at least somewhat reliant on the Change Healthcare system and were forced to issue delayed reimbursements as a result. Shaw emphasizes, “The entire debacle shows us the dangers of one entity controlling the majority of the [billing] cycle’s process.”

Payer policy

In addition to cybersecurity’s impacts on laboratory reimbursement, Dyana Williams, director of revenue cycle management operations at Lighthouse Lab Services, believes that “payer policy is driving reimbursement changes and increasing audit risks.”

Shaw explains that “payer policy is starting to move away from coverage based on Current Procedural Terminology (CPT) codes and is becoming more focused on what testing will be used for,” which makes meeting the demands of medical necessity even more difficult. Payers now regularly require medical records and progress notes to authorize testing, Shaw says, adding that she’s seen reimbursement denied if the request did not include an explanation of why the test is necessary and how the result will be used in treating the patient.

Will these trends continue into 2025?

Predicting that cyberattacks will continue to increase, Lambrix hopes to see laboratories putting more of an emphasis on solid data security practices in 2025 and beyond.

In 2025, Shaw expects to see more medical information requests and more reimbursement denials for medical necessity, given more rigid payer guidelines. She also predicts more payer audits. Williams concurs that an increase in audits is on the horizon and that labs will need to ensure they have strong billing compliance programs.

Key implementations to prepare for the future

Lambrix says that conducting risk assessments and/or preventive audits are good ways to ensure a lab’s data is secure against potential breaches. She agrees with Shaw that using one clearinghouse for reimbursement is not the best practice. Alternatively, diversifying clearinghouse involvement and beefing up security practices may be the two best things that labs can do to prepare for 2025. While Lambrix notes that such steps may be costly and time-consuming, correcting a breach or cyberattack will certainly cost more, both in terms of finances and time, as well as the additional operational and patient impacts. She expects to see more laws proposed to safeguard protected health information (PHI), so keeping abreast of legislative efforts concerning PHI, and implementing best practices in accordance with such laws once they are passed, is an ongoing initiative lab leaders should prioritize.

The best advice Shaw says she can offer to labs preparing for 2025: add a field on requisition forms for prior authorization. Tests that require prior authorization often cannot be resubmitted after the claim has been processed. As a result, refining the front-end process so that these details are obtained beforehand and included in claim submission will make reimbursement processes smoother.

Shaw also advises lab leaders to develop relationships with ordering providers. The number of requests for medical records—used to meet the criteria for medical necessity so testing can be performed and reimbursement issued—is only going to increase, Shaw explains. Therefore, giving ordering providers feedback on denials related to their diagnosis codes and any lack of detail in their included medical records will help these providers adapt and adjust moving forward. Such adjustments will, in turn, help ensure reimbursement is not denied unnecessarily.

Williams reiterates that familiarity with payer policies, which can change, will do labs a favor in navigating reimbursement in 2025, especially when labs consider adding lines of testing to their in-house menu. To avoid denials and negative financial outcomes for the lab, leaders should be mindful of these payer policies and consider specific patient populations and geographic areas where the tests will be offered. Including this information in strategic planning conversations ahead of implementing these tests in-house is crucial to ensuring these new offerings will benefit the lab as well as patients.

References:

1. 1. https://www.hhs.gov/about/news/2024/03/05/hhs-statement-regarding-the-cyberattack-on-change-healthcare.html

1. 1. https://www.hipaajournal.com/ascension-cyberattack-2024/

1. 1. https://about.ascension.org/about-us

1. 1. https://www.g2intelligence.com/cybersecurity-what-your-lab-needs-to-know/

1. 1. https://www.g2intelligence.com/can-conducting-a-billing-audit-increase-my-labs-revenue-stream/

1. 1. https://www.labmanager.com/an-audit-readiness-guide-to-data-integrity-and-security-32930