Dermatology clinics who send out to labs rely on accurate pathologic diagnoses to provide optimal patient care. With 44 percent of patient specimens being billed out of network in the United States, it’s also essential to ensure your dermatopathology lab is billing appropriately and in-network.

Your patients trust you to deliver a precise diagnosis and to ward off any surprise billing. By evaluating insurance coverage, looking at common overbilling issues, and defining necessary tests, you can be sure your lab is practicing proper and ethical billing.

Insurance Coverage

Aligning your dermatology practice with a lab contracted with a wide variety of insurance providers is paramount to serving your patients. With more than 900 health insurance companies offering coverage in the United States, it’s crucial to affiliate with a lab that meets the most common demands of the population in your area. 

While clinics can access diverse insurance relationships by working with multiple labs, breaking up samples can be inefficient and lead to confusion. Labs will accept all incoming samples regardless of whether their insurance network covers them. This results in some patients receiving surprise bills from out-of-network labs that could use up their entire deductible. Even though patients can contact their insurance companies or the laboratories directly to negotiate lower invoices, these frustrations impact patient satisfaction and reflect poorly on your clinic.


Safeguard your reputation by partnering with a dermatopathology lab that avoids overbilling or performing unnecessary tests. The costs of excessive medical testing and treatment in the United States is estimated to reach $200 billion annually. Different dermatopathologists and dermatopathology laboratories have different policies on ordering special stains and immunostains. Sometimes increased staining is unnecessary and results in increased bills to your patients. Laboratories that focus exclusively on dermatopathology typically optimize H&E staining for skin diseases, which decrease the utilization and need for immunostains and special stains. Hospital-based dermatopathology or laboratories that do not focus exclusively on dermatopathology sometimes do not optimize for this use case, which can result in increased staining and higher bills to your patients. 

Testing Criteria

In 2014, many Medicare providers responded to growing overbilling concerns by issuing the local coverage determinations (LCD). The rule was designed to boost transparency and raise accountability, indicating that providers can no longer order reflex testing. Labs that violate these standards can be subject to Medicare audits and expensive fines. 

It is up to the laboratory to determine which tests qualify as LCD-approved medical necessities. Dermatopathologists are expected to hold off on billing for costly stains unless documented and necessary. Because most diagnoses can be rendered without a special/immunostain, labs should no longer automatically order stains on cases, also known as reflex testing. 

“Most skin lesions are diagnosed with routine H&E slides,” Medicare reports. “That is the case for most melanomas and other pigmented lesions as well. A minority of skin lesions require immunostains (e.g., atypical fibroxanthomas, Merkel cell lesions, lymphomas). Most common skin lesions (e.g., seborrheic keratosis) do not require IHC stains.”

The LCD provides clear guidelines when it comes to pathologists ordering additional tests: 

  • Tests must be medically necessary to reach a complete and accurate diagnosis. 
  • Results must be shared with—and used by—the treating physician/practitioner.
  • Justification for tests must be documented in the pathologist’s report.

Partnering with a full-service dermpath lab like PathologyWatch that has a broad network of insurance coverage and doesn’t send surprise bills is a smart way to maintain your patients’ confidence and loyalty. Knowing what to look for when it comes to insurance coverage, understanding overbilling practices, and being aware of the LCD testing criteria can help you ensure your dermatopathology lab is billing appropriately.