Align routine and genetic lab testing with clinical guidelines
Today, 30% of all lab tests are unnecessary.1 The absence of industry standards and clinical efficacy data can lead to unnecessary utilization and misinterpretation of tests. This can result in unsupported interventions and potential safety risks for members.
Lab Benefit Management from Optum and Avalon Healthcare Solutions aligns lab testing with clinical, evidence-based guidelines that better meet member needs and support cost savings for health plans.
Routine Test Management
Our industry-leading automated Routine Test Management solution supports adherence of lab testing to scientific and evidence-based criteria, evaluating laboratory claims to facilitate accurate reimbursement for clinically relevant tests.
This process occurs in near real time. Routine Test Management employs extensive rules to review lab test consistency with clinical conditions and alignment with health plan policies.
Precision Genetic Test Management
Precision Genetic Test Management brings together specific genetic test policies and prior authorization services with a unique genetic test identification and technical assessment process.
With a strong emphasis on test quality, the solution helps health plans make coverage determinations based on clinical evidence, physicians have transparency on test quality and patients receive the most appropriate genetic test.
Key benefits
Our comprehensive approach optimizes quality while managing spend.
Scalable innovation
We help validate that routine and genetic lab testing follows guidelines in a scalable way, with automated lab policy adherence technology and prior authorization services.
Payment accuracy
By translating evidence-based policies into coding and coverage rules, we help plans shift from routine lab cost-containment to affordability.
Unique genetic test identification
Through our exclusive partnership with Palmetto GBA, we provide unique genetic test identification with DEX® Diagnostic Exchange codes (DEX Z-Codes).
Laboratory Benefit Management FAQ
It curbs inappropriate testing. Studies show approximately 20%-30% of lab tests are overused, driving avoidable spend and downstream care. Lab Benefit Management applies evidence-based policies to reduce waste without limiting necessary care.2
Not when prior authorization is electronic. Automation helps reduce manual touchpoints; the industry is moving from mostly manual prior authorization toward higher electric prior authorization adoption.
Often, yes. CMS MolDX requires Z-Codes in participating jurisdictions, and several commercial plans now require Z-Codes on molecular claims to ensure correct test identification and payment.
It integrates through a standard health data exchange. Lab Benefit Management programs typically support HL7 v2.x for orders/results and, increasingly, FHIR APIs for modern interoperability with EHRs/LIS and payer systems.
Policies align to evidence and CMS coverage (NCD/LCD) and are reviewed/updated on a defined cadence, commonly at least annually, to reflect new science and coding rules.
You need:
- Outpatient lab claims (CPT/HCPCS, diagnosis, NPI, place of service)
- Plan policies
- Provider rosters
Many programs run post-service claim reviews and prepayment edits to enforce coverage.
It respects Medicare CLFS rules. Under PAMA, Medicare lab rates are tied to private-payer medians, with the next reporting window and reduction caps scheduled per CMS guidance.
It supports compliance. The No Surprises Act limits balance billing in protected scenarios; accurate policy application and claims edits help align patient cost-sharing with in-network rules.
You can measure ROI by tracking:
- Reduced inappropriate testing
- Adherence to NCD/LCD
- Denial avoidance
- Trend in lab spend
Overuse baselines near 20% provide a measurable starting point for utilization improvement.3
Industry insights
Video
Learn how DME Navigator can help streamline durable medical equipment (DME) benefits management.
On-demand webinar
Optum and Palmetto experts partner in discussing how to solve genetic lab challenges in legacy solutions.
On-demand webinar
Understanding the challenges confronting Medicare Advantage plans and their Medical Loss Ratio.
Complementary solutions
Software
DME Navigator
Our integrated durable medical equipment (DME) solution helps health plans manage spend while improving the experience for members, DME suppliers and the ordering providers
Solution suite
Ancillary Benefits Management
Reduce the burden of managing ancillary benefits programs separately across the care continuum. Our solutions leverage an affordability framework to close gaps for better care with lower costs.
- Zhi M, Ding EL, Theisen-Toupal J, Whelan J, Arnaout R. The landscape of inappropriate laboratory testing: a 15-year meta-analysis. PLoS One. 2013 Nov 15;8(11):e78962. doi: 10.1371/journal.pone.0078962. MID: 24260139; PMCID: PMC3829815.
- It curbs inappropriate testing. Studies show approximately 20–30% of lab tests are overused, driving avoidable spend and downstream care (Müskens et al., BMJ Quality & Safety, 2022; Smart et al., 2024). LBM applies evidence‑based policies to reduce waste without limiting necessary care.
- Track reduced inappropriate testing, adherence to NCD/LCD, denial avoidance, and trend in lab spend. Overuse baselines near 20% provide a measurable starting point for utilization improvement (Zhi et al., 2013; Müskens et al., 2022).