Lab Claim Denials Surge 40% in 2025, XiFin Report Reveals
Event summary
- Diagnostic lab claim denials rose to 11.2% in 2025 from 8.0% in 2024, a 40% increase.
- Prior authorization denials for genetic and molecular tests more than doubled to 27.6%.
- Procedure Not Paid Separately (bundling edits) became the top reason for clinical lab claim denials, accounting for 59% of denials.
- Patients' share of the bill increased to 30% in 2025 from 26% in 2023, while collection rates fell to 9% from 12%.
- XiFin's Empower AI Appeals aims to automate the appeals process, reducing preparation time from over 20 minutes to under three.
The big picture
The surge in claim denials highlights the growing asymmetry between insurers' AI-powered claim review systems and providers' often manual processes. This trend is exacerbating financial pressures on labs and pathology groups, who are absorbing costs while patients face higher out-of-pocket expenses. XiFin's report suggests that the shift to automated denials is creating new operational inefficiencies that could be mitigated through targeted AI applications in the appeals process.
What we're watching
- AI Adoption
- How insurers' AI-driven claim denials will shape providers' adoption of similar technologies to combat the trend.
- Regulatory Impact
- Whether CMS's push to reduce prior authorization requirements will actually lower denial rates or just shift them to other categories.
- Operational Efficiency
- The pace at which providers can automate denial appeals to offset the rising administrative burden.