How to Choose A True Pathology Billing Company

Independent pathology labs face growing financial and operational challenges. Reimbursement rates are falling, payer rules are shifting, and billing requirements are more complex than ever. As a result, many labs look for a pathology billing company to help manage claims, ensure compliance, and actually get paid for the work they are doing.

The problem is that most medical billing companies say they offer pathology lab billing, but it is not their core focus. They serve many specialties and treat pathology like just another service line while focusing on higher-dollar medical claims. This often leads to coding errors, claim denials, delayed payments, and lost revenue. Independent pathology laboratories cannot afford the resources, time, and revenue leakage from even just a handful of claims every month.

Phytest exemplifies the difference between traditional medical billing vendors and a true pathology billing company as our company’s focus is exclusively generating laboratory revenue. Our mission, technology, and expertise are crafted from the sole service of laboratory billing and laboratory revenue cycle management.

The Challenges Facing Independent Pathology Labs

Declining Reimbursement Rates

Over the past few years, pathology labs have experienced significant cuts in reimbursement rates. The 2025 Medicare Physician Fee Schedule (MPFS) projects a 2.4% reduction in payments for pathology services compared to 2024, culminating in a cumulative 7% decrease since 2021. These reductions strain the financial viability of many practices, especially smaller labs operating on tight margins.

Increasing Payer Scrutiny and Changing Policies

Payer policies are becoming more stringent, with a heightened focus on medical necessity and detailed documentation. For instance, starting September 19, 2024, providers must incorporate complete medical records with their claims submissions to comply with new documentation requirements. Non-compliance can lead to claim denials, delayed reimbursements, and increased administrative burdens.

Complex Coding and Compliance Requirements

The introduction of new CPT codes and adjustments to existing ones adds another layer of complexity to pathology billing. For example, the global rate for CPT® 88305 is set to fall to $70.40, with the professional rate decreasing by 3% and the technical component by 1%. Staying abreast of these changes is crucial to ensure accurate billing and optimal reimbursement.

The Costly Consequences of Choosing the Wrong Pathology Billing Company

While many medical billing companies claim to offer “pathology billing services,” not all of them truly specialize in the unique complexities of pathology lab billing. Choosing the wrong partner—especially one that is a traditional medical billing company lacking deep pathology experience—can have serious financial and operational repercussions for your laboratory.

1. Revenue Leakage from Inaccurate Coding: Unlike standard medical claims, pathology medical billing involves nuanced CPT codes, bundled services, molecular and genetic tests, and specific modifiers that must be applied correctly. A generic billing company without pathology-specific expertise may:

• Use incorrect CPT codes or omit required modifiers
• Misunderstand split billing between technical and professional components
• Submit incomplete documentation for high-complexity tests

2. Delayed Reimbursements Due to Denials: A company not truly versed in pathology lab billing will struggle with:

• Changing payer policies specific to pathology
• Documentation requirements for specialized tests (e.g., IHC, NGS, FISH)
• Appeals for denied claims and lab audit responses

When denials increase and appeals aren’t handled correctly or promptly, labs face cash flow issues, which can jeopardize staffing, supplies, and patient service continuity.

3. Compliance and Audit Risk: Billing errors don’t just cost money—they can raise red flags with payers and CMS. A poorly managed pathology billing process may result in:

• Non-compliance with Medicare’s National Correct Coding Initiative (NCCI)
• Incorrect use of add-on codes (e.g., 88341 billed inappropriately with 88342)
• Lack of documentation for medical necessity or test order linkage

4. Generic Reporting That Hides Problems: Traditional billing companies often provide reporting dashboards that lump pathology in with other specialties, failing to show the line-item detail and trends specific to pathology billing companies. Without this level of transparency, labs can’t:

• Track per-test reimbursement
• Spot coding trends or underpayments
• Make informed decisions about services or payers

5. Wasted Time & Resources Training a Non-Specialist: Labs that hire a general medical billing company often find themselves educating the vendor on pathology billing requirements, which:

• Takes valuable time away from lab operations
• Creates inconsistent workflows and errors
• Results in frustration when performance doesn’t improve

Instead of onboarding a true partner, your team ends up doing double work to clean up someone else’s mistakes.

How to Choose the Right Pathology Billing Company

For independent pathology labs, choosing the right billing partner isn’t just a back-office decision—it’s a strategic one that directly impacts your revenue, compliance, and long-term viability. But not all pathology billing companies are created equal.

Many general medical billing services offer pathology billing as a checkbox service, but they lack the depth and infrastructure needed to handle the complexities of lab reimbursement. A truly effective pathology billing company must be purpose-built for the unique demands of the laboratory environment.

Here’s how Phytest stands apart:

1. Laboratory-Only Focus: The most important distinction? Phytest only bills for laboratory services. We aren’t a generalist medical billing company. Our team, technology, and processes are fully dedicated to pathology and lab billing, which means:

• We know pathology CPT codes inside and out
• We stay on top of payer policy updates specific to lab testing
• We understand the nuances of split billing, molecular testing, IHC, flow cytometry, and more

2. Expert Coding for Pathology-Specific Procedures: From surgical pathology (88305) to complex molecular diagnostics (81220), accurate coding is critical. Our certified coders specialize in pathology and routinely audit claims for:

• Correct CPT, modifier, and ICD-10 code alignment
• Compliance with local coverage determinations (LCDs)
• Appropriate documentation and medical necessity support

3. Advanced, Transparent Reporting: Many billing companies provide basic dashboards with little insight into how your lab is really performing. At Phytest, we give you:

• Custom reporting built for labs, not general medicine
• Test-level insights to see which procedures drive the most revenue
• Reimbursement tracking by payer and CPT code
• Denial trend analysis to prevent revenue loss

4. Proactive Denial Management and Appeals: We don’t wait for problems to pile up. Our team tracks every denial and proactively follows up with payers to resolve issues fast. We also:

• Write and submit customized appeals
• Track payer behavior patterns
• Implement process changes to prevent recurring denials

5. Compliance-Driven Workflow: Pathology labs are increasingly targeted for audits and policy reviews. With Phytest, you’re protected. We:

• Ensure all claims follow CMS, commercial payer, and state-specific rules
• Maintain airtight documentation protocols
• Monitor for coding updates and rule changes on your behalf

In short, the right pathology billing company doesn’t just process claims—they drive revenue, compliance, and long-term growth.

That’s what Phytest does differently. If your current billing company doesn’t meet these standards, it may be time to make a change.

Know What You’re Worth: Key Pathology CPT Codes and Reimbursement Rates

One of the biggest challenges in pathology lab billing is knowing which tests drive revenue and how to ensure you’re capturing every dollar. Too often, general billing companies lack the expertise to optimize coding and miss opportunities for higher reimbursement.

At Phytest, we build pathology billing solutions around accurate coding, complete documentation, and payer-specific rules. Our knowledge of high-impact CPT codes helps labs avoid underbilling and accelerate payments.

Here is a sample of commonly billed pathology procedures along with their CPT codes and average Medicare reimbursement rates. These figures vary by region and payer but highlight why expert coding and billing make such a difference:

These figures represent estimates based on national averages and may vary based on region, payer contracts, patient coverage, and specific lab agreements.

Switch to a Trusted Pathology Billing Company Today

Not all billing partners are created equal. Many medical billing companies may claim to handle pathology, but in reality, they lack the specialized knowledge, tools, and focus required to maximize revenue for independent pathology labs.

At Phytest, we offer a true pathology billing solutions that are built from the ground up for labs. Our sole focus is on laboratory revenue, and our team is trained exclusively in pathology medical billing services. We don’t just manage claims—we help you unlock the full revenue potential of your lab with compliant, optimized billing.

If you’re ready to move on from a generic billing company and work with a partner that truly understands pathology lab billing, we’re ready to help.