PLA Codes Demystified: How to Avoid Denials and Maximize Lab Reimbursement

In today’s complex billing landscape, accuracy is everything. With up to 80% of U.S. medical bills reportedly containing errors, even small missteps in coding can snowball into denied claims, delayed reimbursements, or regulatory audits. For healthcare practices, especially those involved in lab testing, understanding and effectively using Proprietary Laboratory Analyses (PLA) codes is essential to safeguarding your revenue cycle.

What Are PLA Codes?

PLA codes are specialized billing codes developed by the Centers for Medicare & Medicaid Services (CMS) and the American Medical Association (AMA). These codes are used to bill for proprietary lab tests—highly specialized diagnostics such as genetic panels, next-generation sequencing, and custom cancer screenings.

Each PLA code is unique to a specific test and laboratory, meaning it cannot be used by any other lab. This specificity ensures precise billing and reduces the likelihood of underpayments—but only if the codes are current and correctly applied.

Why PLA Codes Matter

While traditional CPT codes are used for general procedures and diagnostics, they don’t always account for the nuances of proprietary lab testing. PLA codes fill this gap, allowing for a more accurate and customized reimbursement process.

However, healthcare practices often face several challenges when dealing with PLA codes:

• Quarterly Updates: The AMA releases new PLA codes every quarter. Billing teams must actively track and integrate these updates to avoid using outdated codes that can trigger denials or audits.
• Awareness Issues: Many billing departments mistakenly use generic CPT codes simply because they’re unaware a PLA code exists for a test.
• Code Confusion: PLA codes can appear similar to CPT and HCPCS codes, but they serve different purposes. Misusing these codes can have costly consequences.
• Documentation Gaps: Incomplete or hard-to-find test documentation often leaves billing staff guessing which codes to apply.
• Payer Variability: Not all insurers treat PLA codes the same. Some require extra documentation or pre-authorization, while others may deny the claim outright if coding doesn’t match their guidelines.

Best Practices for Managing PLA Codes

To navigate these challenges and ensure accurate billing, healthcare practices should implement the following strategies:

1. Stay Updated

Assign a team member to track and disseminate AMA’s quarterly PLA code updates. Integrate these changes into your billing software or workflow immediately.

2. Centralize Code Management

Use a centralized tracking system—either specialized software or a well-maintained spreadsheet—to store all active PLA codes, test details, lab affiliations, and payer-specific notes. This helps ensure consistency and accuracy across the billing cycle.

3. Verify Payer Requirements

Before submitting any claim involving a PLA code, double-check the payer’s documentation and authorization requirements. This proactive step can save your practice from costly denials.

4. Train Your Billing Team

Regularly train your team on PLA code usage, payer differences, and compliance guidelines. Incorporate PLA code accuracy into your internal audit processes to catch issues early.

5. Foster Lab-Billing Communication

Ensure ongoing collaboration between the laboratory and billing teams. The lab holds critical information about which proprietary tests are performed and when. Frequent check-ins help keep documentation aligned and errors at bay.

The Bottom Line

PLA codes might seem like a small detail in the grand scheme of medical billing, but they play a major role in ensuring accurate reimbursement for specialized lab tests. By establishing strong internal procedures and staying informed, your healthcare practice can improve compliance, reduce claim denials, and protect its bottom line.

At Svast Healthcare Technologies, we specialize in helping healthcare practices like yours streamline their revenue cycle through accurate coding and expert billing services. Reach out to us to learn how we can support your team with RCM best practices tailored to your specialty.