The Reckoning Is Here — And Why Labs Must Act Now

Michael Lu, MBA/HCM, ALM, FACHE

The reckoning is here. As one of the largest billing companies in the country told me last week, “they’re literally coming after everyone.”

Across the healthcare ecosystem, laboratories are facing an increasingly difficult reimbursement environment. Payers—both government and commercial—are expanding audits, increasing documentation requirements, and tightening prior authorization rules. The result is a growing number of claim denials, payment clawbacks, and administrative burdens for laboratories.

The evidence is clear: payer scrutiny is accelerating. For laboratories that do not modernize their documentation processes, the financial consequences will continue to grow.

Federal Oversight Is Expanding

Recent federal policy changes illustrate the scale of the issue.

In 2025, the Centers for Medicare & Medicaid Services (CMS) announced an aggressive strategy to expand Medicare Advantage Risk Adjustment Data Validation (RADV) audits. CMS stated that it plans to audit all eligible Medicare Advantage contracts for each payment year in newly initiated audits while accelerating the completion of older audit cycles. CMS has already published an audit schedule extending through 2026, signaling sustained expansion of payment oversight.

While RADV audits are directed at health plans, the documentation supporting those claims originates with providers and laboratories. As a result, plans increasingly scrutinize the providers and laboratories submitting claims that support those payments.

Federal oversight is not limited to Medicare Advantage. The Office of Inspector General (OIG) has expanded its work plan to include new projects examining Medicare and Medicaid payments for clinical diagnostic laboratory tests.

Genetic tests represent roughly 5 percent of test volume but account for approximately 43 percent of Medicare Part B laboratory spending, placing these services under increasing scrutiny from federal oversight bodies.

These high-cost and complex tests are precisely the services most likely to trigger additional review, documentation requests, and payment audits. Whether laboratory owners recognize it or not, the environment has shifted, and payer attention is increasingly focused on the documentation supporting laboratory claims.

Private Payers Are Moving in the Same Direction

Commercial insurers are following a similar path.

Industry benchmarking data shows that payer audits are increasing in both frequency and financial impact. The MDaudit 2025 Benchmark Report found that the total value of claims at risk during payer audits increased by approximately 30 percent, with both the number of claims reviewed and the average amount per claim rising significantly.

The same report found that Medicare Advantage request-for-information demands and medical necessity denials increased nearly fivefold. Coverage by Fierce Healthcare confirmed the trend, reporting rising denial volumes and growing audit activity across both inpatient and outpatient claims.

Commercial payers are also expanding laboratory-specific oversight programs. Several Blue Cross and Blue Shield plans announced that their laboratory claims review and laboratory benefit management programs will expand beginning January 1, 2026. These programs review outpatient and clinical laboratory claims to ensure compliance with coding, medical necessity, and documentation requirements before payment is approved.

At the same time, major insurers are increasing front-end utilization controls. UnitedHealthcare announced that beginning April 1, 2026, new genetic and molecular testing procedure codes will require prior authorization. Policies like these are becoming increasingly common as payers seek to control utilization and ensure that documentation supports every claim.

The Prior Authorization Reality

The broader utilization management environment further illustrates the scale of the challenge.

Insurers made nearly 53 million prior authorization determinations in 2024 alone.

When prior authorization is missing or incomplete, claims are frequently denied before payment occurs. Referring physicians and clinics typically focus on clinical care rather than ensuring laboratories receive the documentation required for reimbursement.

Even when claims are paid, insufficient documentation—or evolving payer recoupment strategies—can trigger pre-payment reviews, post-payment audits, and clawbacks months or even years later.

Operational Pressure Inside Laboratories

For laboratories, the operational implications are significant.

Front-office or client-facing staff must collect complete patient information and secure prior authorization before testing occurs. Billing managers must ensure that physician orders and supporting documentation meet payer requirements. Revenue cycle teams must prepare for documentation requests, appeals, and audits.

When these workflows are fragmented across multiple systems, gaps and errors become more likely.

Why Documentation Infrastructure Matters

This is where documentation infrastructure becomes critical.

Cellarian is designed specifically to help laboratories generate, organize, and maintain the documentation required in today’s payer environment. The platform connects laboratory operations, accessioning, collections, and revenue cycle management—whether performed internally or by outsourced billing partners—into a single workflow that supports complete documentation from the moment a test is ordered.

Cellarian enables laboratory teams to capture all necessary information at the front end, including physician orders, AOE inputs, clinical indications, coding information, and prior authorization details. By structuring these inputs systematically, the platform reduces the likelihood that claims will be denied due to missing or incomplete documentation.

Like any LIS or EMR system, Cellarian maintains a comprehensive documentation record that can be produced quickly in response to payer audits or requests for additional information.

In today’s audit- and compliance-intensive environment, this capability is increasingly important. Laboratories that rely on manual documentation processes or disconnected systems face revenue risk both before and after claims are submitted.

Missing prior authorizations can lead to immediate denials, while incomplete records can result in post-payment clawbacks during payer audits.

The Message for Laboratories

The message for laboratories is straightforward.

The longer organizations wait to modernize their documentation infrastructure, the more claims will continue to be denied—either on the front end due to missing prior authorization or on the back end through audits and repayment demands.

Payer scrutiny is increasing, and there is little indication that the trend will reverse.

Cellarian provides laboratories with infrastructure designed to address this challenge through automation based on payer guidelines. Nothing is fabricated or generated through speculative means.

By ensuring that every claim is supported by complete, payer-ready documentation, the platform helps laboratories protect revenue, reduce administrative burden, and maintain compliance in an era of expanding payer oversight.

Works Cited

Blue Cross and Blue Shield. “Expanding Our Laboratory Benefit Management Program.”
https://www.bcbsmt.com/provider/education-and-reference/education/news-and-updates/2025/10-30-2025-expanding-our-laboratory-benefit-management-program

Centers for Medicare & Medicaid Services. “CMS Rolls Out Aggressive Strategy to Enhance and Accelerate Medicare Advantage Audits.”
https://www.cms.gov/newsroom/press-releases/cms-rolls-out-aggressive-strategy-enhance-accelerate-medicare-advantage-audits

Fierce Healthcare. “Payer Audits and Denial Amounts Rise Again.”
https://www.fiercehealthcare.com/finance/payer-audits-denial-amounts-rise-again-2025-vendor-data-show

KFF. “Medicare Advantage Insurers Made Nearly 53 Million Prior Authorization Determinations in 2024.”
https://www.kff.org/medicare/medicare-advantage-insurers-made-nearly-53-million-prior-authorization-determinations-in-2024/

MDaudit. “2025 Benchmark Report Reveals Acceleration of Payer Audits.”
https://natlawreview.com/press-releases/mdaudits-2025-benchmark-report-reveals-ongoing-acceleration-payer-audits

Office of Inspector General, U.S. Department of Health and Human Services. “Work Plan: Laboratories.”
https://oig.hhs.gov/reports/work-plan/browse-work-plan-projects/?issue-area=laboratories

UnitedHealthcare. “AMA Codes Requiring Prior Authorization in 2026.”
https://www.uhcprovider.com/en/resource-library/news/2026/ama-codes-requiring-pa.html