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Industry Insights

Case Study: Payer Denying Lab Outreach Work Due to Policy Error

By: Beth Madden, Client Manager, Lighthouse RCM Solutions

The Issue

Our RCM Solutions Team often digs into denials that continually stem from the same payer in order to help our clients better understand what is creating a payment logjam while ensuring future claims are submitted successfully. In a recent case, Molina Healthcare was denying all outreach work for CPTs 88304, 88305, 88341, and 88342 when billed with a location code 11. The claims were denied with very generic remark codes (“consult plan for information about restrictions of service”). This made it difficult to tell what was causing these rejections, which added up to several hundred thousand dollars in total.

That’s when our client manager, Beth Madden, decided to see what she could learn by speaking with Molina representatives.


Digging into the Claim Denials

We called provider services and questioned the denials. On all the lab outreach claims we inquired about, we were told they were denied in error and would be reprocessed for payment. However, the impacted claims were then denied again when reprocessed, each with the same generic remark code. We needed someone at Molina to really look at the situation and explain the denials so the billing vendor would know how to proceed.

We then emailed the carrier’s CEO and, much to our surprise, received a prompt reply introducing us to the director of provider services. We scheduled a call with the director of provider services to review the problems we were having with these generic denials.


Elevating the Concern and Defining the Policy

The director of provider services had another provider representative join the call. She said she had already gone through these outreach claims with the billing vendor and told them the denials were related to a specific clinical policy they had. We asked if she could define the policy, and she could not. Our review of the policy showed it was geared toward clinical pathology, not anatomic pathology, yet anatomic pathology claims that were being denied.

After some back and forth with the Molina representatives, it was quite clear that there was not a clear understanding of this policy within their own organization, and they could not see why this policy should not apply to anatomic pathology. It was time to speak to someone who would understand, so we told them we wanted to speak with the medical director. They implied that the policy would stand, but we were determined to have the medical director tell our client why they were not going to be paid.


Meeting with the Medical Director

During this meeting with the medical director, we reviewed the background of the denials and the medical director asked why I was referencing this specific policy. He stated that this policy had nothing to do with anatomic pathology and he could not understand how it could be applied to our client’s services. He indicated Molina should be able to place an edit that would exclude my client from this policy as the services were appropriate and billable. Incidentally, we also informed him that this policy, which was developed in 2018, included CPTs that were deleted in 2002.

In only a matter of a few days, the medical director contacted me with some preliminary good news. He had addressed this matter with departments that could make this change, but there were a few details that still needed to be worked out.



A week later, the medical director followed up to inform us they made the necessary changes allowing our client’s claims to be processed going forward, and they would be able to arrange for the previously denied claims to be reprocessed for payment. Two years of aged claims, totaling several hundred thousand dollars, have finally been processed!

The client was thrilled that this medical director took a real interest in this matter. The medical director also, specifically, asked us to let him know if there were any problems with the reprocessing of these claims so he could intervene.

The moral of this story? If you know what you are talking about and the insurance representatives are unsure of their position, escalate the matter to someone you can appeal your case to. As someone who has worked in coding and billing, primarily with surgeons, for the last 30 years before joining the team at Lighthouse, Mrs. Madden has learned pathology is unlike any other specialty.

What works for everything else, does not necessarily always work for pathology. It is difficult for people who do not work in the field to grasp, but do not give up! You can win these battles, and we can help you do that.

Contact us for a free consultation to learn more!


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