Mid-Year 2025 Laboratory Revenue Health Check: Are You on Track?

As we hit the midpoint of 2025, laboratories across the country are facing a critical question: 

Are we meeting our revenue goals, or are we falling behind?

With evolving payer requirements, increasing regulatory oversight, and growing operational complexity, many labs are experiencing a revenue reality check. And the truth is clear—sticking to the status quo is no longer sustainable.

At Advanced Data Systems Corporation (ADS) and ADRSCM, we’re seeing firsthand how laboratories that fail to reevaluate their revenue cycle processes by mid-year are left scrambling by Q4. This blog breaks down the biggest billing roadblocks of 2025—and how your lab can pivot in time to finish strong.

The 2025 Lab Billing Environment: A Perfect Storm

According to data from the Medical Group Management Association (MGMA) and The Dark Intelligence Group, the first half of 2025 has confirmed what many lab leaders feared:

Claim denials are rising.

Over 60% of medical groups reported an increase in denials year-over-year (MGMA, 2025).
Laboratories are particularly impacted by automated rejections tied to frequency caps, missing prior authorizations, and inadequate documentation.

Test frequency audits are more aggressive.

Labs face tighter enforcement of limits for high-volume tests like lipid, TSH, and hormone panels, with most capped at 2x/year unless detailed justification is documented.

Insurers are using algorithms to flag repeat tests that lack evidence of medical necessity. Modifier 91, intended for repeat clinical diagnostic tests, is under scrutiny when used without corresponding progress notes or treatment changes.

Reimbursement rates are under pressure.

Pathology groups have already seen a net 6% reduction in Medicare revenues in early 2025, largely due to rate cuts and cost increases.

Meanwhile, PAMA continues to suppress lab test payments, and while proposed reforms like SALSA offer hope, they haven’t yet stabilized the market.

Key Mid-Year Revenue Pitfalls for Labs

Here are five areas where we’re seeing labs lose revenue mid-2025:

1. Documentation Gaps

Without strong documentation—including test requisitions, physician orders, and diagnostic rationale—claims are frequently denied or flagged for audit. CMS has doubled down on this in its 2024 and 2025 oversight plans.

2. Coding Missteps

Incorrect or outdated CPT codes, overuse of modifiers, and lack of linkage to ICD codes result in denials and missed reimbursement. Complex lab services require nuanced coding that evolves with payer guidelines.

3. System Fragmentation

Many labs still rely on siloed LIS and billing platforms. When lab, billing, and EHR systems don’t communicate, errors multiply. Claims are submitted with incomplete information, denials increase, and A/R days balloon.

Labs that integrated billing with LIS and EHR systems saw:
✅ Clean claims rise by 7%
✅ A/R days cut by half
✅ Patient collections increase by 154%
(Source: The Dark Intelligence Group, 2025)

4. Cybersecurity Disruptions

In the wake of high-profile healthcare cyberattacks  many labs faced billing shutdowns. Without secure, redundant billing systems, labs risk serious interruptions in revenue.

5. Regulatory Changes and Payer Rules

From March 2026, CLIA fee coupons and certificates will transition to digital-only formats, part of a broader shift to modernization. Labs that aren’t updating their billing workflows now may fall behind on compliance later.

Top KPIs for a Mid-Year Lab Billing Health Check

Now’s the time to audit your key performance indicators. Are your numbers where they should be?

If you're off track in even one of these categories, it could indicate systemic issues—and lost revenue.

Proactive Solutions for Lab Revenue Recovery

It’s not too late to turn things around. Many labs are achieving measurable improvements in as little as 90 days by focusing on:

✅ AI-Driven Pre-Submission Checks

With our AI Rules Engine, ADS and ADSRCM lab clients can automate modifier use, flag missing documentation, and tailor submissions by payer—all before the claim is submitted.

✅ Streamlined System Integration

We offer end-to-end integration with LIS and EHR systems—ensuring real-time data sharing and reducing manual entry errors.

✅ Staff Training on Documentation and Coding

Labs that provide ongoing coding education to both billing staff and ordering providers reduce denials by up to 40%. Everyone plays a role in getting paid.

✅ Automated Denial Management and Reconciliation

By using our AI-powered tools to identify root causes of denials, labs can implement real-time fixes—and avoid recurring revenue losses.

Don't Wait Until Q4 to Fix Q2 Mistakes

Clinical and pathology labs can’t afford to operate reactively anymore. The current environment demands:

• Proactive monitoring
• Technology adoption
• Staff education
• And constant adaptation to payer policies

A mid-year lab billing checkup is the most effective way to course-correct before Q4 closes the window on annual revenue goals.

Ready to Evaluate Your Lab’s Revenue Health?

Let your data speak. Run the metrics. Spot the gaps. Then act. ADS and ADSRCM can support labs with full-service billing software, AI-powered tools, outsourced services, and expert guidance to get you back on track.

Explore ADS Laboratory Billing Software (MedicsPremier) or ADSRCM’s Lab Revenue Cycle Management Services to learn how we help labs improve financial performance, stay compliant, and optimize billing workflows—365 days a year.