- The Centers for Medicare and Medicaid Services has called for public feedback on strategies to combat genetic test billing fraud, as the Trump administration expands its healthcare fraud enforcement to include the rapidly growing laboratory testing sector
- Fraudulent genetic testing — including unnecessary pharmacogenomics, cancer screening, and hereditary disease tests marketed directly to Medicare beneficiaries — has cost the federal government billions of dollars and has been a target of DOJ enforcement actions in recent years
- Experts warn that a blunt regulatory response risks stifling legitimate innovation in genomics and precision medicine, where genetic testing is increasingly central to clinical decision-making in oncology, cardiology, and rare disease diagnosis
- A tailored strategy — distinguishing between predatory direct-to-consumer marketing schemes and clinically ordered tests with clear medical necessity — will be critical to curbing fraud without deterring the legitimate genomic medicine market
What Happened?
The Trump administration’s healthcare fraud enforcement push has turned its attention to genetic testing, with CMS opening a public comment period on strategies to combat lab test fraud. Genetic testing has been a persistent target of federal fraud investigators: schemes typically involve marketing companies that pay for Medicare beneficiaries’ contact information, offer free or low-cost cheek swab tests, and then bill Medicare for expensive genetic panels — often without a physician referral or clinical justification. DOJ and HHS have brought multiple enforcement actions against these schemes in recent years, recovering hundreds of millions of dollars. The CMS’s current call for feedback signals an intent to develop more systematic, prospective guardrails rather than relying purely on after-the-fact enforcement. The challenge is that genetic testing technology is also at the center of legitimate medical advances — in oncology, pharmacogenomics, and rare disease diagnosis — where the same types of panel tests that bad actors abuse are also providing genuine clinical value.
Why It Matters?
The genetic testing fraud problem is both financially significant and structurally difficult to solve. Medicare spending on genetic tests has grown dramatically as testing costs have fallen and the number of available panels has exploded — creating a large and opaque billing environment that bad actors have exploited systematically. The core challenge for regulators is that genetic testing exists on a spectrum: at one end are clearly predatory schemes with no clinical basis; at the other end are clinically ordered, physician-supervised tests with robust evidence of medical utility. Much of the market falls somewhere in between, in a gray zone where the test may be legitimate but the marketing, billing, and patient selection practices are not. A blunt coverage restriction or prior authorization requirement that applies uniformly across the board risks blocking access to genuinely valuable tests for patients who need them — particularly in oncology, where tumor genomic profiling has become standard of care — while sophisticated fraud operators find workarounds.
What’s Next?
CMS’s public comment process will shape what regulatory tools the agency deploys: options include tightening coverage determination criteria, expanding prior authorization requirements for high-cost panels, requiring stronger physician ordering documentation, or pursuing more aggressive provider enrollment screening to identify marketing intermediaries. Experts in genomic medicine are urging a tailored approach that targets the predatory consumer-marketing model specifically — rather than applying broad restrictions that would affect clinically appropriate testing. For labs, genomic medicine companies, and health systems with genetic counseling programs, the policy outcome will have significant revenue implications. For investors in the genomics sector, the regulatory direction will determine whether CMS coverage remains broadly accessible or becomes a more restrictive, utilization-managed benefit. The outcome of the comment process is expected to inform CMS guidance and potentially new coverage determination policies before the end of 2026.
Source: Healthcare Dive
