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Making Sense of Molecular Coding


In this article:

  • Getting paid for your services
  • Challenging denials
  • Maintaining a compliance program


The theme for reimbursement and coding in the molecular lab is Do it Right. Use the right code, fill out the claim correctly, and get paid the right amount — we hope. This is often a complicated process that can lead to everything from mild irritation to full-blown frustration.

In an industry that is still evolving, molecular diagnostics is facing big changes in coding and policies. But, if you and your staff stay informed, you can navigate through this complex process with confidence.

Know the Codes

Of course it is essential that you get paid for your services. You do not want to be underpaid and lose income, nor do you want to be overpaid and face a liability headache. Most labs now have software for billing that can deal with new codes and apply them, as well as notify you if a service is not covered. The key is to make sure you have accurate coding entered in your system and know the policy coverage for payment. This will save time and help you avoid unnecessary claim denials.

Current Procedural Terminology (CPT) coding is notoriously complex, but things are changing for the better. By 2012 there will be a new system of molecular coding that is completely different than what we have today. The new coding system will be able to keep up with the quickly advancing technology of molecular testing.

With the current system, payers can’t connect CPT codes to a coverage policy if they don’t know why a claim is being submitted. A cancer diagnosis, for instance, can use a group of codes for components of the test depending on the technique used — enzyme treatments, how many probes, how many amplifications, etc. Each lab can have a separate set of codes since they may choose a different technology to run the test, or they may run more probes, or look at more or less genes than another lab.

“The problem is that payers are looking at stacks of method codes that provide no information as to why the test is being performed. Also, different labs may utilize different methods for the same test. The result is that the same test is reported and paid based on various stacks of codes,” said Charles Root, Ph.D., Chief Executive Officer of CodeMap, a leading source of Medicare compliance and reimbursement solutions. “The new coding system is a good change for the lab and the payers, who can then identify what you did. This should cut back on denials and requests for more information.”

According to Root, Tier 1 codes are for specific genes like cystic fibrosis. These analyte-specific codes will cover about 96 percent of tests being submitted. The low volume, unusual tests will be reported using a second set of codes (Tier 2) with nine levels of complexity. A rare test will be assigned on one of the nine levels.

“Remember that there are already very specific codes for DNA-based tests for infectious agents. If you’re doing a flu test by DNA, there is a specific code for influenza, so you have to use it. If you’re doing E. coli, there isn’t a code. Then you go down to the more general code for, ‘Infectious Agents by DNA Not Otherwise Specified.’

“There are currently a lot of different opinions on exactly how the new molecular codes should be reimbursed, but in the long run the new codes will be better for patient care and reduce reimbursement issues,” said Root.  

Challenge Denials

When you do receive denied claims, you can and should challenge them. If you have followed protocol and filled out the claim correctly, go through an appeals process with the payer. Government payers are required by law to review your appeal and respond according to a detailed appeals process.

“The best-run systems will challenge any denial — Medicare, Medicaid or private — because they know what the rules are,” said Root. “If your claim appears to be correct and there is no reason that it should be denied, you can appeal the decision all the way up to federal court if you want to.”

The best way to avoid denied claims is to know your codes, know your coverage, and have everything entered correctly into a computerized billing system. Your system should notify you of anything that won’t be covered.

According to Root, it is best to find out why a certain claim is being denied so that it doesn’t keep happening time and time again. “If it is something that absolutely can’t be paid, you can take it off the books,” said Root. “Then you can fix your billing system so it doesn’t happen again.

“The problem is people let denials accumulate until they have a half million dollars to recoup. That’s a big problem to turn over to a bill collection agency that might get 25 percent of it back. Don’t let that situation develop. Stay on top of it,” said Root.


All molecular labs should have a compliance program in place to protect them against employees’ possible illegal behavior or simply making an error that results in excessive payment from the federal government. It is imperative that all lab employees be educated so that they are aware of the regulations and laws that govern any monies paid to a laboratory by the federal government.

“If you have an effective compliance program, billing problems are usually detected in a timely manner and a repayment made with no significant penalties. If there is a mistake, typically it is worked out as a simple error,” said Root. “If you have no compliance process in place and no evidence of telling your employees the rules, then improper payments may be considered a false claim and can cost you $11,000 per occurrence under the Civil False Claims Act.”

A lab should have a compliance manual that states rules to follow, and a way for employees to anonymously disclose problems or complaints. According to Root, part of the health care reform law requires all labs to have a written and documented compliance program. The regulation hasn’t been officially issued yet, but eventually it will be enforced. For more information, go to the Office of the Inspector General website.