Increase in Medicare Part B Spending on Genetic Testing Exposes Regulatory Challenges

A recent report by the Office of Inspector General (OIG) from the U.S. Department of Health and Human Services reveals an increase in Medicare Part B spending on clinical diagnostic laboratory tests, which climbed to $8.4 billion in 2024, a 5% rise from 2023. This growth occurred despite fewer beneficiaries undergoing these tests, with genetic testing accounting for 43% of the costs ($3.6 billion) while representing only 5% of the tests covered. This highlights the escalating focus on overseeing high-cost genetic testing to enhance regulatory compliance and manage healthcare expenditures.

The findings underscore compliance challenges, driven by regulatory requirements such as the 2014 Protecting Access to Medicare Act, mandating annual OIG analyses of the top 25 lab tests by spending. These assessments provide critical insights for policymakers to address high-cost tests needing regulatory attention. The trend towards costly genetic testing raises concerns about program integrity, as evidenced by significant Department of Justice actions in 2025 against individuals involved in alleged Medicare fraud schemes related to genetic testing and telemedicine.

Scrutiny and Enforcement Measures

Recent actions by the Department of Justice against manufacturers with sponsored testing programs linked to genetic testing laboratories underscore continued enforcement efforts amid rising expenditures. Laboratories, providers, and investors must remain cognizant of legal frameworks such as the federal Anti-Kickback Statute and the False Claims Act, especially concerning private payer dealings. The OIG report suggests increased scrutiny over billing practices for expensive test panels and lab reporting procedures. As genetic testing remains central to Medicare's lab spending, OIG's annual reports will guide future audits and enforcement actions.