Select Page

Industry Insights

Lab prior-authorization programs continuing to evolve

With United Healthcare set to unveil a national prior-authorization process for genetic and molecular testing for fully insured members on Oct. 1, most major health plans are now utilizing some form of a laboratory benefits management (LBM) program in various parts of the country. But what’s driving this trend? For starters, many of these insurers are finally admitting they lack the necessary expertise in the laboratory field to determine medical necessity and properly rein in potential fraud and abuse within the industry. That, coupled with the potential cost savings these plans will realize by driving business to preferred, in-network providers, has led to a relative explosion of these programs in recent years.

Currently, there are only a handful major LBM programs throughout the country, with more likely to be introduced in the coming years. Below is a quick overview of each.

Beacon Laboratory Benefit Solutions (LBS)

  • First implemented as a Florida pilot in Oct. 2014.
  • Under the program, physicians serving UHC’s commercial patients in Florida must notify UHC when ordering any of 81 clinical laboratory tests, including ANA, C. difficile toxins, Pap test (with or without HPV), biopsies, and thyroid panel, among others. Pre-authorization is also required for some, but not all of these tests.
  • The program does not allow use of out-of-network laboratories.
  • Allows providers to be either “participating” or “preferred”. Preferred providers are contracted at a lower rate than the UHC contracted rate.
  • Front-end physicians must order and pre-authorize the test within 10 days of the DOS and the pathologist must verify the pre-authorization.
  • Payments are denied for any lab tests that don’t meet the Beacon requirements, however, there is no penalty to referring physicians who do not comply with the program.
  • Originally slated to be implemented in Texas on March 1, 2017, however, pushback from various physician groups has delayed that implementation indefinitely. No new date for installing the program has been established, but groups have been informed they will be informed 90 days in advance before it goes into effect.

UHC’s pre-authorization program

  • Prior-authorization program for genetic and molecular tests for fully insured commercial members went into effect on June 30.
  • On Oct. 1, UHC will install a national, online prior-authorization program in the outpatient setting.
  • Will require lab name, name of test, name of gene and clinical info.
  • Participants in the Florida Beacon LBS program will be exempt from participating.
  • Aiming to ensure appropriate testing and medical necessity.

Avalon Healthcare

  • Currently affects entire lab network for Blue Cross Blue Shield of South Carolina, including hospitals, physician offices and independent labs.
  • Also in effect for BCBS of North Carolina, but only for independent labs.
  • Requires labs who wish to become in-network to contract with Avalon and agree to meet certain quality and data reporting conditions.
  • Avalon assumes financial risk in order to manage all lab spending for the plan.
  • Has created administrative issues by requiring submission of two 835 files, one from the payer and one from Avalon. Many pathologists have had to adjust their billing software to accommodate two files. This has led to an increased manual workload for labs.
  • Full list of impacted codes

EviCore Healthcare

  • BCBS, Aetna, Cigna and some others currently participate.
  • Unfortunately, each plan has slightly different policies.
  • Operates both a medical oncology appropriate use and LBM program.
  • Given that EviCore started in radiology before progressing to path, they offer a broad brush of services when compared to others on this list.
  • Aims to ensure appropriate utilization of genetic testing and requires prior authorization for high-cost tests.
  • Has an auto-approval process, however, they recently settled a $54 million lawsuit over accusations this process violated the False Claims Act.
  • Full list of impacted codes

AIM Specialty Health

  • Subsidiary of Anthem.
  • Beginning July 1, AIM began reviewing all genetic testing for fully insured Anthem members (except in Virginia).
  • Does not apply to hospital-only plans or BCBS of Virginia.
  • Ordering physicians will be directed to use an in-network provider, if available.
  • Requires pre-authorization to be completed within two weeks of the DOS.
  • Ordering provider must request the authorization.

As these programs increase in prevalence, it’s important to keep in mind that this trend is designed to drive providers in-network in an effort to eliminate out-of-network payments. This means a significant portion of your revenue could be impacted if you choose not to participate. Although it’s likely we’re currently experiencing a relative explosion of these programs as competitors look to gain larger shares of the market, you should except one or two preferred programs will eventually win out and eliminate the others. In the meantime, it’s become clear that revenue cycle management is more important than ever. You must be prepared to defend decisions and provide supporting documentation in order to receive payment in this new environment!

Interested in learning more about the benefits of auditing or overall revenue cycle management? Contact us today for a free consultation.


Sharing is caring!