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Billing and Coding: The Value of Clinical Validation

by | Jan 23, 2024 | CMS-lca, Coding-lca, Essential, Lab Industry Advisor, Reimbursement-lca

What clinical validation really means—and why every member of the laboratory should understand it.

Clinical validation is a cornerstone of claim submission and reimbursement—yet it’s often poorly understood, especially as both testing technology and documentation requirements grow increasingly complex. Billing and coding professionals may conflate clinical with coding validation,1 whereas healthcare providers may struggle with the distinction between validation for medical decision-making and for coverage purposes.

Clinical validation asks not only the result of a given test, but also why that result is meaningful to a patient’s diagnosis2—but challenges can arise when reconciling clinical validation (and the clinical utility of a given test) with the Current Procedural Terminology (CPT) and diagnosis code payers use to manage medical necessity. “For many years, we’ve been accustomed to looking at medical necessity as defined by payers. Specific CPT codes must be associated with specific diagnosis codes to meet the payer’s determination of medical necessity,” explains Robin Zweifel, director of Coding and Billing Compliance at BioReference Laboratories and editor-in-chief of the American Pathology Foundation’s Pathology Services Coding Handbook. She highlights the importance of ensuring that referring physicians understand the difference between medical indication—which is determined by the physician—and medical necessity. “The physician’s reasoning for ordering a test may be different to the payer’s definition of medical necessity. Hopefully, based on the indications the physician documents for the patient, they can arrive at a diagnosis that meets the payer’s definition—but sometimes they can’t. That doesn’t mean the physician can’t order the test; it just means that it may not be covered and therefore becomes the financial responsibility of the patient.”

Validating molecular diagnostics

Since 2011, the MolDX® Program administered by Palmetto GBA has sought to “identify and establish coverage and reimbursement for molecular diagnostic tests,”3 including evaluating laboratories’ clinical validity and utility submissions to make coverage determinations. This involves a technical assessment in which the DEX clinical team looks at the clinical relevance of a test or gene to the diagnosis and treatment decisions for a patient. Each successful submission is entered into the DEX® Diagnostics Exchange Registry, receives a unique Z-code, and is then assigned a CPT code for billing and coding purposes. “Sometimes the MolDX program will evaluate a gene panel that a laboratory strongly believes meets one of the defined CPT codes—but if the DEX clinical team determines that the full definition of the CPT code is not met, they map it to 81479 (unlisted molecular pathology procedure), which payers then rely on as guidance regardless of how a laboratory bills for that procedure,” Zweifel explains. Recently, however, Z-code requirements have begun to extend beyond Medicare to commercial health insurance. UnitedHealthcare, for example, will require Z-codes to reimburse for specific services billed to its commercial plans starting April 1, 20244—a requirement in place since 2021 for those on its Medicare Advantage plans.5 “Anyone in the laboratory space who is performing gene-based testing will need to have a Z-code assignment to bill to a UnitedHealthcare plan,” says Zweifel. “That requires a technical assessment of the test, including details of its clinical utility and clinical validation, to be submitted through the DEX program, evaluated, and a Z-code assigned.”

Succeeding in the technical assessment

“It has been a real challenge to meet the detailed requirements of the technical assessments, especially as laboratories become more engaged with large gene panels,” says Zweifel. “We have CPT code 81455 (a panel of 51 or more genes), but the number of genes being evaluated is rapidly growing. Some panels now cover more than 600 genes! The data analysis that goes into evaluating such large panels, identifying the clinical utility, and validating what each gene means to a diagnostic outcome is highly complex, which means we need to summarize a lot of data for the technical assessment.” It’s no surprise, then, that laboratories previously unaccustomed to these requirements might struggle to successfully complete technical assessments. “There are no instructions to explain to laboratory personnel how to translate the information in a sufficiently detailed and meaningful way to achieve a coverage determination.”

Zweifel views the process as a trial-and-error exercise; because each technical assessment is so specific to the individual laboratory, there is no universal template to apply. “My advice is to use the questions and answers published on the MolDX website. They have kept a running list of well-defined questions and answers that I think address most questions a new provider would have.” The program publishes FAQs for both cancer genomics6 and infectious disease7 panel testing, as well as a submission checklist and questionnaire providers can use to ensure that they have included all of the required elements.8 Zweifel adds, “If you have an unsuccessful submission, there is an opportunity to reach out and schedule a meeting with the MolDX or DEX code staff to ask what is missing. In general, though, I think those on the business and coding side need to interact with the clinical scientists, geneticists, and others in the laboratory doing the research and data-gathering. There’s a lot of knowledge to be shared but, historically, we haven’t really brought the business and science sides together in the laboratory.”

A collaborative process

For Zweifel, whose career began in the laboratory, understanding the needs of clinical laboratorians comes naturally. “It’s easier to engage in conversations about validation if you can see both sides of the picture. The language we use in the laboratory is not always accessible to people with non-scientific backgrounds, so it’s important to be familiar with the minimum documentation needed to support the CPT code. It helps to have someone from the laboratory side who can translate the science into CPT codes—and the reverse is equally true.” Zweifel says that questions commonly arise when laboratorians don’t understand the level of detail needed in reports for billing and coding purposes or the potential consequences of inadequate documentation. “We need the clinical validity and utility to be documented each time because any report could be selected for an audit—and the auditor won’t make any assumptions. They’ll want to see all of the necessary information so that they can translate it into a CPT code description and coverage guidelines.” And, because auditors are rarely clinical laboratory professionals, increasing the clarity and accessibility of the information in the report can go a long way to making the audit process smoother—and reducing its frequency. By collaborating closely on clinical and coding validation, bench and business professionals can work together to achieve successful coverage for the services their patients need.


    1. Limjoco CM. Clinical vs Coding Validation of Diagnoses. The Clinical Truth. October 25, 2023. https://www.linkedin.com/pulse/clinical-vs-coding-validation-diagnoses-cesar-m-limjoco-m-d–6bnvc.

    1. Pinson & Tang. Clinical Validation. December 9, 2021. https://www.pinsonandtang.com/resources/clinical-validation-stand.

    1. MolDX® Program (Administered by Palmetto GBA). Palmetto GBA. https://www.palmettogba.com/moldx.

    1. UnitedHealthcare® Commercial Plan Registrations for Molecular Diagnostic Testing. Palmetto GBA. January 4, 2024. https://www.dexzcodes.com/palmetto/dex.nsf/DID/5PQ2G7SR9K.

    1. Z-codes™ requirements for Molecular Diagnostic Testing: Medicare Advantage. UnitedHealthcare. July 19, 2023. https://www.uhcprovider.com/content/dam/provider/docs/public/health-plans/medicare/2023/MedAdv-Z-Codes-Palmetto-FAQ.pdf.

    1. Technical Assessment FAQs. Palmetto GBA. July 13, 2023. https://www.palmettogba.com/palmetto/moldxv2.nsf/DIDC/BGDNRW6702~Technical%20Assessment.

    1. Frequently Asked Questions for Molecular Syndromic Panels for Infectious Disease Pathogen Identification Testing. Palmetto GBA. July 31, 2023. https://www.palmettogba.com/palmetto/moldxv2.nsf/DIDC/NKRO4NF9Z3~Technical%20Assessment.

    1. Technical Assessment Submission Checklist and Questionnaire (GEN-CQM-003-v1). Palmetto GBA. February 2023. https://www.palmettogba.com/palmetto/providers.nsf/files/Technical_Assessment_Checklist_(GEN-CQM-003).pdf/$FILE/Technical_Assessment_Checklist_(GEN-CQM-003).pdf.

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