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The Lab Billing Compliance Checklist
Seven places diagnostic revenue quietly leaks — and what to verify before the next audit, not after.
Lab billing is not physician billing applied to specimens. It runs on a separate regulatory framework, and the failure modes are specific enough that a lab can be genuinely excellent at one part of it and exposed on another without knowing.
The pattern is consistent: labs rarely lose money because a claim was coded wrong. They lose it because a rule governing who may bill, when, and on what date was applied incorrectly at scale, quietly, for months — and nobody looks until an audit or a recoupment letter arrives.
This is a checklist of seven places that happens. It applies whether you run a small physician office lab or a multi-site molecular reference lab. The volume differs; the rules don't.
1. The date-of-service rule decides who gets paid — and it isn't intuitive
For most clinical diagnostic lab tests, Medicare's date of service is the date the specimen was collected, not the date the test was performed. When the specimen comes from a hospital outpatient, that ordinarily makes the test part of the hospital's claim, not the performing lab's.
The exception is where labs get into trouble. Since January 1, 2018, CMS has allowed the date of service to be the date the test was performed for Advanced Diagnostic Laboratory Tests and for molecular pathology tests excluded from OPPS packaging — meaning the performing laboratory bills Medicare directly. But only when all three conditions hold: it was medically appropriate to collect the sample during the hospital outpatient encounter; the results do not guide treatment provided during that encounter; and the test was reasonable and medically necessary for treatment of an illness.
The second condition is the one that fails in practice. If the result came back in time to influence care during that same encounter, the exception doesn't apply — and a lab that billed Medicare directly billed a claim it wasn't entitled to.
2. PAMA reporting is live again, and the window is specific
After several years of legislative delay, private payer rate reporting resumed this year. The Consolidated Appropriations Act of 2026, signed February 3, set the data reporting period as May 1 through July 31, 2026, based on private payer data collected January 1 through June 30, 2025.
That window has now closed. If you were an applicable laboratory for this cycle, the question is no longer whether you can gather the data in time — it is whether you reported, and whether what you reported was right. Labs frequently get the definition of the rate wrong: you report the allowed amount, meaning payment from the insurer plus any patient cost sharing, regardless of whether you were in network or out of network for that payer. Not your charge, and not your net receipt.
On the payment side, there is no phase-in reduction in 2026. Beginning in 2027 through 2029, payment for a test may not be reduced by more than 15% per year against the prior year's rate — so the rates reported this summer are what the next three years of reductions are calculated against.
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The remaining sections cover ABNs, MAC coverage variation, panel scope, genetic testing scrutiny, and order-entry validation — plus the full checklist and sources. Enter your email and the rest opens on this page.
Working through this and want a second pair of eyes? We handle billing, credentialing, call center, and back-office operations for labs and diagnostic centers of any size.