I've worked for a pathology provider for a number of years and I have seen this denial too many times. The first question I have is this a Medicare replacement policy - if so you might need to be splitting the charges to the TC/26 Components. If you are not splitting them they will deny the 88305 in full. If they were split you might see a denial for the TC component and the 26-Professional charge will process. This denial will indicate that an outpatient facility, surgical facility or inpatient stay is being billed on the same date of your pathology service.
Another scenario would be what we use to encounter, The dermatologist completed two biopsies, he processed one within his office, billing the appropriate codes - let's say 88305. He then sent the second biopsy to us for prepping and analysis due to the complexity. We then billed the patients commercial insurance (Humana). We held our claims for 4 weeks, so we always seen the CO97 denial in this case. They will have already processed the claim for the dermatologist and our claim would get denied. We then had to file a reconsideration / claim dispute to explain the dermatologist completed two separate biopsies on two separate anatomical sites. Sometimes we were successful - sometimes not.
Usually insurance carriers will not indicate that another claim for that code has been processed. If you get a seasoned representative, you might ask them to verify if a facility claim or another provider is billing on the same day. They might confirm this for you.