2025 Will Be the Year of Regulatory Pressure for Labs

The regulatory landscape for clinical laboratories is rapidly evolving. With CMS increasing improper payment audits, MACs tightening enforcement, and commercial payers revising medical necessity and frequency rules, 2025 is shaping up to be one of the most compliance-intensive years ever for lab billing.

Labs that don’t  pay attention to risk can see:

• Massive clawbacks  
• Payment delays
• Failing payer credentialing
• Loss of trust from referring providers

According to The Dark Report’s 2025 Forecast Issue, over $1.6 billion in improper lab payments were flagged by CMS in 2024. And the OIG has made clear its intent to audit high-volume pathology and molecular labs for “patterned overbilling.”

This blog outlines the top 2025 RCM compliance and regulatory trends labs need to know along with tactical steps to mitigate risk, improve audit readiness, and protect revenue.

Trend 1: CMS Improper Payment Audits Are Expanding

CMS improper payment rates are climbing again—especially in high-complexity lab services.

Key Targets in 2025:

• CPT panels like 80053, 80061, 83036
• G-codes in toxicology (G0480–G0483)
• High-volume genetic test claims
• Modifier 91 and 59 usage
• Test frequency vs documentation mismatch

 MAC Focus by Region:

• NGS (Northeast): High denial rates for 91 misuse
• Noridian (CA, TX): Emphasis on CLIA loop compliance
• Palmetto GBA (FL, GA): Tighter reviews on 83036, 80061 panels

In 2024, Noridian flagged over 420,000 lab claims for failing to meet documentation or frequency requirements.

Action Steps:

• Map your top 20 CPTs to audit risk
• Flag historical claims that received CARC 50 (med necessity) or 151 (frequency)
• Store signed orders and documentation by patient/test ID

Trend 2: Modifier Enforcement Will Get Stricter

Modifier 91 (repeat tests) and Modifier 59 (unbundling) are already on the OIG watchlist. Labs frequently misuse them to justify panel re-billing or split services—especially in toxicology and genetic testing.

What’s changing in 2025:

• More payers are auto-denying repeat modifiers without strong ICD-10 justification
• Audits now flag use of 59/91 with frequency edits within the same date of service
• CLIA numbers and NPI designations are being cross-checked more aggressively

Real-World Example:
A mid-size toxicology lab in Florida used Modifier 91 on nearly 100% of drug screen claims. After an audit by UHC, $218,000 was recouped due to lack of sufficient medical necessity documentation for repeats.

Action Steps:

• Build payer-specific modifier logic into your RCM platform
• Use AI to check ICD-10-to-modifier pairing before submission
• Train coders on panel vs individual billing rules (especially in pathology)

Trend 3: CLIA Numbers and NPI Combinations Are Now Auditable Fields

Too many labs are still submitting claims with:

• Incorrect CLIA numbers
• Missing rendering lab NPIs
• Conflicting billing and performing provider details

This is especially common in:

• Reference labs working across state lines
• Mobile phlebotomy labs
• Hospital-affiliated outreach labs

Example: a Texas-based reference lab failed to designate a separate CLIA for its performing location. Noridian denied over 7,500 claims due to improper loop 2310 CLIA mapping.

Action Steps:

• Confirm CLIA numbers by physical test site
• Map rendering vs billing provider NPIs in EDI setup
• Build automated 837P logic in your billing system for MAC-specific loop rules

Trend 4: Prior Authorization and Medical Necessity Will Tighten

Payers are increasing denials for lack of prior auth or missing justification—particularly for:

• Genomics
• Molecular diagnostics
• High-cost pathology interpretations (e.g., IHC panels)

New York labs under NGS now report a surge in CARC 197 denials (“authorization missing”). In 2024, a dermatopathology lab was denied $136K across 3 months due to failing to attach referring documentation for CPT 88342.

Action Steps:

• Automate prior auth checks during order intake
• Store all referrals and pre-auth approvals tied to test ID
• Implement lab-specific medical necessity checklists by payer

Trend 5: CLIA Compliance and Cross-State Testing Complications

The rise of centralized lab testing has exposed many labs to CLIA complexity they’re unprepared for. Billing from a central site while performing testing at multiple locations can create mismatches in payer policies.

Top issues:

• Billing under the wrong lab NPI
• Failing to list the correct performing CLIA site
• Performing tests not authorized under current CLIA scope

Illinois-based molecular lab expanded test volume to six states. Palmetto GBA denied $420K worth of claims due to mismatch in CLIA certificates and test complexity.

Action Steps:

• Review CLIA scope per test and per site
• List performing CLIA site in loop 2310E on ANSI 837
• Update payer credentialing forms to reflect accurate lab network

Trend 6: ERA & EOB Reconciliation Now a Compliance Concern

CMS and commercial payers are flagging labs that:

• Mispost secondary payments
• Don’t reconcile overpayments correctly
• Ignore payer refund requests

Credit balance compliance is becoming an OIG audit target—especially when labs accept direct-to-lab payments.

A lab in California was fined $78,000 for failing to return duplicate payments from three payers within the required 60-day window.

Action Steps:

• Use ERA automation to reconcile payments within 24–48 hours
• Set up credit balance alerts in your billing software
• Document refund logs with transaction-level notes

Labs Most at Risk in 2025

What Labs Can Do in 30 Days to Prepare

WEEK 1:
☐ Pull last 12 months of denials by CARC
☐ Identify denials with medical necessity or modifier causes

WEEK 2:
☐ Audit top 20 CPTs for documentation, prior auth, and CLIA mapping
☐ Cross-reference performing vs billing provider NPIs

WEEK 3:
☐ Build automated rules for modifiers, CLIA loops, and payer routing
☐ Update staff training on 2025 payer policy updates

WEEK 4:
☐ Reconcile ERA/EOB history and credit balances
☐ Review payer-specific audit notices and OIG alerts

GEO Audit Trends to Watch

Case Study: a Pathology Lab in NJ

Volume: 20K claims/month
Risk: High denial rate on repeat stains and IHC panels
Problem: Modifier 91 used without ICD-10 specificity, missing prior auth
Solution:

• Modifier logic automated per CPT
• Prior auth portal integrated into ordering
• Updated compliance policy based on MAC NGS audits

Results (120 Days):

• Denial rate fell from 18.3% → 10.7%
• Audit success rate: 93% (down from 60%)
• Net revenue recovery: $521,000

Final Thought: Compliance Is a Revenue Strategy

Too often, labs treat compliance as a back-end headache. In 2025,  must be a frontline strategy. Smart compliance not only protects you from audit and clawbacks—it actively improves claim acceptance and collection velocity.

Get Your Free ADSRCM Lab Compliance & Billing Analysis

Our team will:
✔ Review your top CPT/modifier compliance risks
✔ Audit your CLIA and NPI configuration
✔ Identify red flags in payer behavior
✔ Create a 90-day roadmap to mitigate audit exposure

It's free. It's private. It's proactive.

And if you prefer to use in-lab automation, the MedicsPremier platform is available from ADS. MedicsPremier is also used by ADSRCM.

Disclaimer: coding and compliance information is presented according to our best understanding of them. Please visit www.cms.gov if clarifications are needed.