Along with the significant growth of genetic testing over the past two decades has come a rise in test fraud schemes targeting Medicare beneficiaries.
Now, the Trump administration is requesting public input on potential regulatory changes to stop fraud in laboratory testing, including genetic and molecular diagnostics. New approaches to regulating the tests could become part of a proposed rule to expand the Centers for Medicare and Medicaid Services’ efforts to combat fraud across federal healthcare programs.
The CMS issued the request for information late last month in a package of actions that included a six-month moratorium on enrollment of new durable medical equipment, prosthetics and orthotics companies in the Medicare program and a pause on $259.5 million in federal Medicaid funds to Minnesota to prevent payment of “questionable” claims under investigation.
In the RFI, the CMS asked stakeholders for input on new statutory or regulatory authorities that could empower the agency to be more effective in preventing and addressing lab test fraud. The request also seeks suggestions for potential tools, data analytics and methods to boost program integrity related to lab tests.
The CMS said it will accept comments on the RFI through March 30.
“Fraudulent actors harm patients, waste taxpayer dollars, and undermine trust in legitimate health care services.”
Susan Van Meter
president, American Clinical Laboratory Association
Fraudulent genetic testing has been an ongoing focus of federal law enforcement efforts. In 2019, an investigation by the Department of Justice, Department of Health and Human Services‘ Office of Inspector General and the FBI resulted in charges against 35 people for allegedly billing Medicare more than $2.1 billion for fraudulent testing. Medicare beneficiaries were lured into signing up for genetic tests that were medically unnecessary.
“There have been a number of cases where people were getting little old ladies to let them do a cheek swab at a health fair or at a nursing home and running genetic tests and never even necessarily giving them the results,” said attorney Danielle Sloane of the law firm Bass, Berry and Sims.
Genetic testing played a key role in another big crackdown last year, when 49 defendants were charged with submitting more than $1.17 billion in alleged fraudulent claims to Medicare from telemedicine and test fraud schemes.
“Those cases, in combination with the increase in spending, explains the focus on genetic testing,” said Sloane.
Higher genetic test spending
The RFI pointed to an HHS-OIG report, issued in January, that showed genetic tests make up a rising share of Medicare Part B lab spending. Of the $8.4 billion paid for lab tests in 2024, genetic tests accounted for 43% of the spending but only 5% of the tests, the report found. The portion spent on genetic tests in 2024 more than doubled from 18% in 2018.
“What I take away from that is these are really expensive tests,” said Caroline Farrell, attorney at law firm Foley Hoag. Farrell said costs of fraud related to genetic testing, if prevalent, would add up quickly.
Still, payments for lab services remain a small share — less than 1% — of total Medicare spending, even as beneficiary access to genetic testing continues to grow, said Susan Van Meter, president of the American Clinical Laboratory Association.
The trade group supports the CMS’ anti-fraud initiative, including in diagnostic testing. “Fraudulent actors harm patients, waste taxpayer dollars, and undermine trust in legitimate health care services,” Van Meter wrote in an email to MedTech Dive.
The ACLA is reviewing the RFI and plans to provide detailed comments to the agency. Van Meter said the group would work with the CMS on an evidence-based approach that strengthens program integrity while continuing to support Medicare beneficiary access to lab services, from routine tests to advanced diagnostics.
“These precision diagnostics are the foundation of personalized medicine, providing clinicians with the critical information needed to ensure patients receive the right care at the right time by helping to guide treatment decisions, identify which therapies are most likely to benefit a patient, and avoid unnecessary procedures, ineffective treatments, or preventable complications,” Van Meter wrote.
Foley Hoag’s Farrell said ridding the industry of bad actors is good for legitimate testing companies, but government enforcement efforts that are too broad could create issues for those businesses. While the Trump administration has touted an aggressive deregulatory agenda to support innovation, increasing anti-fraud regulations could have a chilling effect.
“Companies may not want to expand into new areas, test types, because they’re concerned about being a target,” said Farrell.
Whether that happens ultimately depends on the government’s ability to come up with precise detection and prevention strategies that can thwart fraudsters.
“At the end of the day,” said Farrell, “the devil’s going to be in the details.”
MolDX as a prototype?
Of specific interest to the CMS is the Molecular Diagnostic Services program, or MolDX, administered by Medicare contractor Palmetto GBA.
MolDX sets Medicare coverage policies for molecular diagnostic tests across 28 states. The CMS, in its RFI, asked for feedback about the program’s impact on fraud risk in testing and what prompted payers and Medicare Advantage organizations that are not located in a MolDX state to require labs to register in the program.
Farrell said the CMS could be looking to propose a mandatory version of MolDX registration.
“The request for comments will help steer what any proposal like that might look like,” said Farrell.
Bass, Berry and Sims’ Sloane said labs in the MolDX program face a higher administrative cost burden. With many labs operating on tight margins, there is a delicate balance between ensuring accurate testing that is serving the practitioner caring for patients and not stifling innovation.
“If there’s going to be expanded use of the MolDX program by Medicare, the government should provide consistency and oversight to make sure it is applied uniformly,” said Sloane.
