Private payers are having to think outside the box to prioritize cost-savings for laboratory services, especially with the delayed implementation of the Protecting Access to Medicare Act (PAMA) proposed payment rate cuts to 2026, jeopardizing the integrity and stability of laboratory services. With the increased scrutiny payers are placing on laboratory services, and the focus on cost-savings, the burden of evidence is likely to increase for laboratory test manufacturers and new diagnostic services that are entering this space.
On October 14, the College of American Pathologists (CAP) published a white paper examining the negative impact private health insurance is having on laboratory medicine. CAP calls out private health insurers for interfering with the patient-pathologist relationship and prioritizing cost-savings over patient care. The report also details the role the No Surprises Act has played in private payer tactics to cut rates, such as narrowing networks and increasing the administrative burden on providers through prior authorizations. CAP narrowed in on four (4) distinct areas to highlight how health insurers are interfering in patient care: (1) network manipulation, (2) reduced reimbursement, (3) nonstandard coding requirements, and (4) increase in utilization management measures.
Network Manipulation
Private health insurers are increasingly placing stipulations and requirements on laboratories and pathologists, resulting in an uptick in patient out-of-pocket costs if institutions are not able to comply. An example of this is the introduction of UnitedHealthcare’s Designated Diagnostic Provider (DPP) and Horizon’s (BCBS NJ) ‘preferred’ laboratory network, which can limit provider and patient access to adequate care.
Reduced Reimbursement
While the pause on PAMA Medicare payment cuts has been extended to 2026, the devaluation of pathology and laboratory services has continued among private payers through implementation of ‘take-it-or-leave it’ contracting and blanket price cuts, emphasizing financial profit over quality patient care. The prioritization of cost-savings has severely impacted the ability to adequately staff many laboratories, increasing turn-around time, and causing a discontinuation of on-site pathology services.
Nonstandard Coding Requirements
While the CAP report does not detail the coverage barriers associated with Proprietary Laboratory Analysis (PLA) codes, which are often systematically non-covered by private insurers, recommended use of DEX Z-codes (Palmetto GBA) for molecular tests poses an inherent threat to the complexity of processing claims. The recent requirement issued by UnitedHealthcare that all molecular pathology claims must include DEX Z-codes moves institutions further away from established standardized coding practices (i.e., CPT coding) and introduces a high administrative burden that will likely impact patient access to reasonable and necessary care.
Utilization Management Measures
Laboratory diagnostics play a pivotal role in the appropriate and timely intervention of patients; however, prior authorizations can cause a significant delay in the delivery of medically appropriate care. With the emergence of Laboratory Benefit Managers (LBMs), providers are limited in their ability to select the most appropriate diagnostic test for their patients based on accuracy and performance but are instead restricted in their decision making based on existing contracts (analogous to how pharmacy benefit managers affect routine access to approved pharmaceutical treatments to incentivize financial outcomes versus clinical or quality outcomes).
Source: Examining the State of Health Care’s Private Payers and the Adverse Impact of Insurance Interference, 2024
BeaconOne is actively tracking and engaging in the evolving US reimbursement landscape for laboratory services, including state and federal legislation and proposed payer policies that impact reimbursement to better understand the implications for providers and manufacturers alike.
Contact us to learn more about how to optimize your evidence portfolio to support market success with your global market access and reimbursement strategy within this evolving landscape.