COVID‑19 testing is no longer a crisis-only activity. It has become routine in many ambulatory practices, hospital outpatient labs, and reference laboratories. Yet, the billing and coding rules around COVID‑19 molecular testing remain a source of denials, payment delays, and compliance exposure.
CPT 87635 is the core code for nucleic acid amplification tests (NAAT) that detect SARS‑CoV‑2 using an amplified probe technique. Getting this single code wrong can ripple through your revenue cycle. It can trigger repeated payer rejections, inaccurate pricing, and audit risk for both labs and ordering providers.
This guide is written for medical practice leaders, lab directors, and revenue cycle executives who need operational clarity, not just code definitions. You will learn when to use CPT 87635, how to differentiate it from other COVID‑19 HCPCS and CPT codes, what documentation payers expect, and how to structure workflows so your team can bill accurately at scale.
What CPT 87635 Actually Covers and Why That Distinction Matters
CPT 87635 describes infectious agent detection by nucleic acid (DNA or RNA) for severe acute respiratory syndrome coronavirus 2 (SARS‑CoV‑2) using an amplified probe technique. Practically, that means a molecular diagnostic test, such as RT‑PCR, run on a respiratory specimen to identify the presence of COVID‑19.
This distinction matters because many organizations still confuse molecular codes, antigen codes, and panel codes. When CPT 87635 is submitted for the wrong methodology or context, payers treat it as a coding error and deny the claim, often with vague explanations like “incorrect procedure code for service rendered.”
From a revenue cycle perspective, you should anchor on three questions every time a COVID‑19 test is ordered and resulted:
- What methodology was used (molecular NAAT vs antigen vs antibody)?
- What specimen type was collected (respiratory specimen for diagnosis vs blood for serology)?
- Is the test specific to SARS‑CoV‑2 or part of a broader respiratory panel?
Use CPT 87635 only when:
- The test is a molecular amplification assay (e.g., RT‑PCR) targeting SARS‑CoV‑2.
- The specimen is typically nasopharyngeal, oropharyngeal, nasal swab, or other respiratory sample.
- The test is ordered for diagnosis or rule out of active infection, not for antibody status.
Why it matters financially: each incorrect CPT choice can mean a complete write‑off if not corrected within timely filing deadlines. For high-volume practices and laboratories, even a 5 percent error rate on COVID‑19 test coding can translate into hundreds of thousands of dollars in lost revenue annually.
Key Coding Distinctions: 87635 vs Other COVID‑19 CPT and HCPCS Codes
One of the most common denial patterns in payer analytics is “alternate code required” on COVID‑19 testing claims. This almost always traces back to confusion between CPT and HCPCS code families.
At a minimum, your coding and billing teams should be fluent in the operational differences among:
- CPT 87635 (molecular SARS‑CoV‑2 NAAT, amplified probe technique).
- Other SARS‑CoV‑2 molecular CPT codes that may exist for combined pathogen panels or different methodologies in your current CPT release year.
- HCPCS codes such as U0003/U0004 or successor codes, which certain payers still use to describe high-throughput COVID‑19 NAATs in specific settings.
- CPT and HCPCS codes for antigen and antibody testing, which do not involve nucleic acid amplification.
From an RCM operations standpoint, you should build a simple but enforceable framework:
COVID‑19 Testing Code Selection Framework
Step 1: Map each instrument and assay to a single “default” code.
Maintain an internal mapping table that lists each analyzer, assay name, and LOINC code, tied to the correct CPT or HCPCS billing code. Lock this table so only coding leadership or lab administrators can change it.
Step 2: Embed mapping into your LIS or EHR.
Whenever possible, configure your laboratory information system so that once an assay is selected, the appropriate billing code (such as 87635) is assigned automatically. Manual code entry should be the exception, not the rule.
Step 3: Align mapping with payer contracts.
Some payers require HCPCS codes even when CPT equivalents exist. Others prefer CPT codes across the board. Contract management and reimbursement staff should review payer bulletins and contracts at least quarterly to ensure your mapping remains compliant.
Real‑world impact: practices that have invested in a tight mapping framework see significantly lower COVID‑19 testing denial rates. They also spend less staff time fixing “wrong code” rejections and rebilling payers. Conversely, organizations that leave code selection to individual staff judgment repeatedly experience revenue leakage and unpredictable cash flow.
Documentation and Diagnosis Coding: The Hidden Drivers of Payment Success
Submitting CPT 87635 by itself is never enough. Payers evaluate whether the clinical circumstances support the test based on diagnosis coding and chart documentation. If they conclude that the test was not medically necessary under their policy, they may deny or recoup payment, even when the CPT code is technically correct.
For most payers, especially Medicare and large commercial plans, you should expect the following requirements to appear in local coverage determinations, medical policies, or testing guidelines:
- Presence of COVID‑19 related signs, symptoms, or documented exposure.
- A diagnosis code from the appropriate COVID‑19 or symptom ICD‑10‑CM family, such as U07.1 plus relevant respiratory or systemic symptoms where applicable.
- Ordering provider documentation that the test result will influence clinical management decisions.
To operationalize this, set up a simple documentation and coding checklist for your clinicians and front‑end staff.
COVID‑19 Test Ordering Checklist for Clinicians
- Document specific symptoms or exposure risk rather than “rule out COVID.”
- Include onset date of symptoms or exposure where known.
- Specify why the test is being ordered (initial diagnosis, re‑test due to ongoing symptoms, pre‑procedure requirement, etc.).
- Ensure the problem list or encounter diagnoses reflect U07.1 when appropriate, as well as symptom codes when the patient is not yet confirmed positive.
- If testing is repeated, document the rationale clearly (for example, ongoing immunosuppression, high‑risk exposure, or pre‑transplant evaluation).
On the revenue side, coding staff should have diagnosis coding rules for pairing CPT 87635 with appropriate ICD‑10‑CM codes based on symptom status, exposure, and confirmed vs suspected disease. This is especially important for Medicare, as its national and local policies on COVID‑19 testing coverage have been explicit about symptomatic vs asymptomatic testing and pre‑operative screening.
Without this discipline, organizations see denials coded as “medical necessity not met” or “non‑covered screening” that could have been prevented by precise diagnosis documentation. Those denials are expensive to appeal and, if unchecked, distort both net collection rate and days in accounts receivable.
Pricing, Reimbursement, and Contract Alignment for CPT 87635
COVID‑19 molecular testing reimbursement has evolved significantly since the early public health emergency period. Medicare has periodically adjusted national payment rates, and commercial payers have followed with their own fee schedules and testing policies.
For RCM and finance leaders, the risk today is not just underpayment on individual claims. It is the structural mismatch between your organization’s charge master, negotiated payer rates, and the true cost of running a high‑quality molecular test.
Core actions for financial stability around CPT 87635 include:
- Confirm current Medicare payment rates for CPT 87635 under the Clinical Laboratory Fee Schedule in your jurisdiction. Use these as a baseline, but not a ceiling, for commercial negotiations.
- Model your actual cost per test, including reagents, consumables, analyzer depreciation, staffing, and overhead. A simple cost accounting model per instrument is better than assuming a generic lab cost.
- Audit your current payer‑specific reimbursement for 87635 over the last 6 to 12 months. Identify which payers are significantly below your cost, which are at parity, and where you may be entitled to increases under contract provisions.
- Evaluate price transparency obligations if you are a hospital or health system. Ensure posted cash prices and gross charges are logically related to contracted rates.
From a KPI standpoint, monitor:
- Net collection rate for CPT 87635 by payer.
- Average days to payment for COVID‑19 NAAT claims.
- Percentage of COVID‑19 testing claims paid at expected rate vs contract.
Organizations that actively manage these metrics can recalibrate pricing and contract strategy before losses accumulate. Those that treat COVID‑19 testing like any other routine lab code often discover margin erosion only after year‑end financial reviews.
Workflow Design: Preventing Denials Before the Claim Is Created
Most COVID‑19 testing denials related to CPT 87635 are not coding problems. They originate upstream in scheduling, registration, and order entry. If a patient’s eligibility, coverage, or testing indication is unclear before the specimen is collected, your team is essentially gambling that the payer will pay regardless.
A more sustainable approach is to design workflows that “bake in” revenue protection.
Front‑End Workflow Framework for COVID‑19 Testing
1. Eligibility and benefits verification at or before scheduling.
For scheduled testing, verify coverage and COVID‑19 testing benefits prior to the appointment. For walk‑in or urgent cases, verify eligibility at registration. Flag out‑of‑network or non‑covered plans in real time.
2. Policy‑driven indication capture.
Use scripts or smart forms that require front‑end staff to select the reason for testing (symptoms, exposure, required for surgery, return to work, surveillance program, etc.). The selected reason should map to payer coverage rules where possible.
3. Automated coding of test orders.
As noted earlier, integrate CPT 87635 mapping into your LIS or EHR so staff are not guessing which COVID‑19 code to use. Limit manual overrides to coding specialists.
4. Real‑time edits and claim scrubbing.
Configure your claim scrubber or billing system with edits specific to CPT 87635, such as requiring an appropriate diagnosis code, validating the ordering provider, and checking that place of service is reasonable for a lab procedure.
When you hard‑wire this framework, you reduce the share of denials attributable to basic process errors: missing diagnoses, ineligible patients, or mismatched payer requirements. That directly reduces rework, write‑offs, and staff burnout.
Compliance, Audit Risk, and Post‑PHE Realities
During the height of the public health emergency, payers and regulators often relaxed some documentation and frequency requirements for COVID‑19 testing. Today, that environment has shifted. Both government and commercial payers are scrutinizing high‑volume COVID‑19 testing providers, particularly where testing seems unrelated to symptoms, exposure, or defined public health programs.
CPT 87635 is attractive to auditors because it has been billed millions of times, often at relatively high unit prices. Any pattern of overuse or non‑compliance can become a target for recoupments and penalties.
To mitigate risk, organizations should:
- Review payer policies that limit frequency of COVID‑19 NAATs per patient per time period, especially for asymptomatic individuals.
- Ensure ordering providers document clinical reasoning for repeat tests and non‑standard indications.
- Monitor outlier ordering patterns by provider, department, and site of service.
- Include CPT 87635 in internal or external coding audits, comparing billed codes to laboratory methods and clinical notes.
From a governance standpoint, RCM leaders should work with compliance and medical leadership to define a COVID‑19 testing policy that addresses:
- Acceptable indications for testing based on current clinical and payer guidance.
- Approved test types and corresponding CPT/HCPCS codes.
- Documentation expectations for providers and labs.
- Periodic retrospective review of high‑utilization patterns.
This is not simply a regulatory issue. Large post‑payment recoupments on COVID‑19 test claims can distort your financial statements, increase bad debt risk, and undermine trust with ordering providers who thought they were ordering a covered service.
Turning CPT 87635 Into a Stable Revenue Source Rather Than a Denial Factory
Correct use of CPT 87635 is now part of everyday RCM operations. The organizations that treat it as “just another lab code” are the ones dealing with chronic denials, underpayments, and audit headaches. Those that treat it as a discrete revenue stream, with its own policies, workflows, and metrics, tend to see fewer surprises and more predictable cash flow.
To strengthen your position around CPT 87635 and COVID‑19 testing more broadly, you can:
- Standardize laboratory‑billing code mapping, rather than letting staff select codes on the fly.
- Align documentation and ICD‑10‑CM coding with current payer medical necessity policies.
- Continuously reconcile reimbursement for CPT 87635 against both cost and contract terms.
- Embed prevention‑oriented edits and checklists into scheduling, registration, order entry, and billing.
- Integrate COVID‑19 testing into your compliance audit plan, focusing on frequency, indication, and coding accuracy.
If your internal team is stretched thin or you are seeing persistent denials and underpayments on COVID‑19 testing and other high‑volume lab codes, partnering with experienced RCM specialists can accelerate improvement. One of our trusted partners, Quest National Services Medical Billing, specializes in full‑service medical billing and revenue cycle support for organizations that are working through complex payer rules, including infectious disease testing.
Whether you handle everything in‑house or with outside support, the goal is the same. Every test that is clinically appropriate, correctly ordered, and accurately coded with CPT 87635 should translate into timely, predictable cash without unnecessary rework or audit risk.
If you would like to review how your organization is currently handling COVID‑19 testing codes, denial patterns, and payer policy changes, you can connect with us to discuss your environment and goals. Contact our team to start that conversation and explore practical options tailored to your lab or practice.
References
Centers for Medicare & Medicaid Services. (n.d.). Clinical Laboratory Fee Schedule. Retrieved from https://www.cms.gov/medicare/payment/fee-schedules/clinical-laboratory-fee-schedule-clfs
Centers for Medicare & Medicaid Services. (n.d.). Medicare coverage and payment of COVID‑19 testing. Retrieved from https://www.cms.gov
Current Procedural Terminology (CPT). (2024). CPT 2024 Professional Edition. American Medical Association.
