Insights › Diagnostics labs
Diagnostics labs
Appealing faster versus denying less
Most labs fund the appeal queue first because that is where the money is visibly waiting. For most lab segments the arithmetic points the other way, with one large exception.
By The CercaLabs team · Published October 7, 2026 · 6 minute read
Most labs that want to spend less on denials end up choosing between two proposals. One adds appeal capacity: another person, a faster turnaround target, an appeal letter tool. The other fixes something upstream: eligibility checks, the missing information chase, prior authorization status before the test runs.
Both reduce what denials cost. They are not equally good investments, and which one wins depends mostly on what kind of lab you are.
For most clinical and pathology labs, prevention wins. For molecular and genetic testing labs, appeals win, and it is not close.
Appeals are a rounding error for some labs and a tenth of revenue for others
The clearest public evidence comes from XiFin's 2026 Payor Denial Impact Report, which covers more than 30 million lab claims from 2025. It shows how much of each segment's insurance revenue actually arrived through successful appeals.
Across the clinical labs in that data, successful appeals amounted to about a third of one percent of insurance payments. For molecular labs, they amounted to close to a tenth. Those are different businesses, and they should not share a denial strategy.
An appeal recovers one claim. A fix stops the category.
Appeal work scales with headcount. Double the denials and you need roughly double the people, and none of that effort lowers next month's volume. A prevention fix costs more up front and then keeps paying without anyone touching it.
The cost of working a denial also eats most of a small recovery. Published figures come from hospitals rather than labs, so treat them as orientation rather than a benchmark. Change Healthcare put the cost of working a denial at $25.20 per claim in its 2020 Denials Index, and Premier's survey put the average cost to adjudicate a claim at $57.23 in 2023, up from $43.84 in 2022.
Against a $171 average successful clinical lab appeal, and a success rate well below 100%, the margin on each appeal filed is thin. Your own cost per touch is the number that matters, and most labs have never measured it.
Some denials do not come back at all. Change Healthcare's same 2020 report found 86% of hospital denials were potentially avoidable, and that once a claim was denied, 24% could not be recovered.
Most lab denials are the wrong kind to appeal
XiFin's report also lists the top denial reasons by segment for 2025.
Bundling ("procedure not paid separately") and duplicates are usually configuration and data problems on the lab's side. When they are, claim edits and front end checks catch them, and the fix is made once.
Prior authorization should be settled before the test runs, and the same report shows how poorly it appeals. Molecular prior authorization appeals succeeded 19% of the time in 2025, counting every appeal level. Getting the authorization is far cheaper than arguing about it afterward.
When appealing faster is the right call
There are four situations where speed in the appeal queue is the better investment.
You are a molecular or genetic testing lab. When nearly a tenth of insurance payments arrive through appeals, appeal capacity is revenue capacity. Cutting it to fund prevention would cost you money this quarter for a benefit that arrives later.
The deadline is the problem. XiFin noted in November 2024 that payer appeal deadlines can be as short as 90 days, while some complex tests take weeks to complete and document. If claims are aging out before anyone gets to them, faster is the fix.
The payer is wrong and keeps being wrong. Some denials are not your error. XiFin's 2025 data shows pathology bundling appeals succeeding 73% of the time across all appeal levels. When a denial reason overturns that often, the payer is misapplying something, and the right response is to appeal quickly and consistently while you escalate through the payer's provider relations channel.
Cash is tight right now. A prevention project takes months to show up in collections. An appeal pays this quarter. If the next ninety days matter more than the next year, appeals first is a reasonable decision, as long as you make it knowingly.
Decide one denial reason at a time
Ask two questions of every denial reason that shows up more than occasionally. Is the cause inside our own process? Is the expected recovery from appealing worth the cost of working it?
Expected recovery is simple arithmetic: the allowed amount times your own overturn rate for that denial reason, minus your cost to work it. Industry averages are useful for orientation. Your own overturn rates by payer and reason are the only numbers that should set policy.
Where the line falls between worth appealing and write it off is a finance decision, not just a billing one, because it is effectively a write-off policy. It should be written down, set by payer and reason, and revisited when rates or denial patterns change.
What each investment actually buys
Appeal capacity buys recovery on denials you already have. It shows up quickly, it is easy to measure, and it never reduces next month's volume.
Prevention buys a smaller denial queue. The usual targets for a lab are eligibility checks before billing, the missing information chase before a claim goes out, prior authorization status before the test runs, and claim edits for bundling and duplicates. Most of that is defined, rule-based work, which also makes it the most reliable kind to automate.
Both can be automated. The difference is that automating appeals makes a recurring cost cheaper, while automating prevention removes the cost.
Where none of this applies to you
If you run a molecular or genetic testing lab, fund appeals first. Close to a tenth of molecular insurance payments arrived through successful appeals in 2025, according to XiFin's 2026 report, so the averages that make prevention win elsewhere do not describe your revenue.
If your denial volume is small, neither project is worth funding. Work the denials and revisit in a year.
We also want to be honest about the evidence. The best lab-specific data available comes from a single billing vendor's client base, and the cost figures come from hospitals. Both are directionally useful and neither is your lab. Pull your own denials for a closed quarter, group them by reason and payer, and the right answer for you is usually obvious within an afternoon.
*If you want help sorting your own denials by cause and running the numbers, that is a good use of a teardown.*