Genetic tests make up just 5% of volume but now drive 43% of Medicare Part B lab spending, according to OIG’s latest report.
Medicare Part B spending on clinical laboratory testing rose to $8.4 billion in 2024, a 5% increase over the previous year, according to the Department of Health and Human Services’ Office of Inspector General (OIG). For laboratory professionals, the headline is not just rising spending—it’s where the money is flowing.
Although genetic tests accounted for only 5% of all Part B tests performed in 2024, they represented 43% of total lab spending—$3.6 billion. In contrast, the far larger volume of routine chemistry, hematology, and other non-genetic tests generated $4.8 billion. Spending on non-genetic testing has generally declined since 2021, while genetic testing expenditures climbed 20% between 2023 and 2024 alone.
Utilization trends help explain the shift. The number of genetic tests paid under Part B increased 160% between 2018 and 2024, reaching 18 million tests last year. Meanwhile, non-genetic testing volume declined 12% over the same period. More enrollees are receiving at least one genetic test per year, and per-enrollee payments for those services are rising sharply.
Genetic Testing Drives Revenue Growth
In 2024, Medicare paid an average of $794 per enrollee for genetic testing—a 26% jump from 2023. By comparison, per-enrollee spending for non-genetic testing remained relatively stable at just over $200 annually. Even as overall Part B enrollment receiving clinical lab services declined 15% since 2018, spending per genetic-testing patient increased, amplifying the financial impact of molecular diagnostics on lab revenue.
OIG suggests the decline in Part B enrollees receiving lab tests may reflect migration to Medicare Advantage plans. For independent labs heavily dependent on traditional fee-for-service Part B volume, this shift adds another layer of financial pressure and underscores the need to monitor payer mix closely.
Attorney Alissa D. Fleming, a shareholder at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, told The Dark Report that federal audit risks have increased because of the OIG’s genetic test findings. The Dark Report is a sibling brand to Dark Daily.
High-Dollar Molecular Codes Dominate the Top 25
The concentration of revenue in high-priced molecular assays is intensifying. In 2024, 346 laboratories received more than $1 million in Medicare payments for genetic tests; 55 labs exceeded $10 million. The top 25 laboratory procedure codes accounted for nearly half of all Part B lab spending—more than $4.1 billion.
Genetic tests dominated the fastest-growing segments. CPT code 87798—used for infectious agent detection by nucleic acid when no organism-specific code exists—generated $443 million in 2024, a 51% increase over 2023, making it the highest-paid lab test under Part B. An epilepsy genomic panel (CPT 81419) posted a fivefold spending increase year over year. Several oncology liquid biopsy assays remain among the highest-reimbursed tests, with median payments reaching into the thousands of dollars.
Routine Testing Holds Volume—but Not Spending Power
In contrast, routine tests familiar to every clinical laboratory—comprehensive metabolic panels (80053), CBCs (85025), lipid panels (80061), thyroid testing (84443), and A1C (83036)—either declined or remained flat in spending. Comprehensive metabolic panel spending has dropped 25% since 2018 and fell from the top spending position in 2023 to second place in 2024. These high-volume, low-margin tests continue to anchor daily lab operations but represent a shrinking share of total Medicare dollars.
Importantly, OIG notes that these shifts are not driven by changes in the Clinical Laboratory Fee Schedule, which has remained largely frozen since 2020 under provisions from the Protecting Access to Medicare Act. Instead, spending growth reflects changes in utilization, test mix, and per-enrollee costs.
For clinical laboratory leaders, the message is clear: Medicare’s lab dollars are increasingly concentrated in molecular diagnostics. That shift brings opportunity—but also heightened regulatory scrutiny. OIG’s history of fraud alerts and audits in genetic testing suggests that compliance, documentation, and medical necessity controls will remain critical as high-complexity testing continues to expand within the Medicare population.
This article was created with the assistance of generative AI and has undergone editorial review before publishing.
New guidelines also advise people to limit their vitamin D supplementation to recommended daily doses
Clinical laboratories may eventually receive fewer doctors’ orders for vitamin D testing thanks to new guidelines released by the Endocrine Society. The new Clinical Practice Guideline advises against “unnecessary testing for vitamin D levels.” It also urges healthy people, and those 75-years of age or younger, to avoid taking the vitamin at levels above the daily recommended amounts, according to a news release.
Even though the Endocrine Society does recommend vitamin D supplements for certain groups, it advises individuals to hold off on routine testing. That’s because there appears to be uncertainty among ordering clinicians about what to do for patients based on their vitamin D test results.
“When clinicians measure vitamin D, they’re forced to decide what to do about it. That’s where questions about the levels come in. And that’s a big problem. So, what this panel is saying is ‘Don’t screen,’” Clifford Rosen, MD, Director of Clinical and Translational Research and Senior Scientist, Maine Medical Center Research Institute at the University of Maine, told Medscape Medical News.
“We have no data that there’s anything about screening that allows us to improve quality of life. Screening is probably not worthwhile in any age group,” he added.
“This guideline refers to people who are otherwise healthy, and there’s no clear indication for vitamin D, such as people with already established osteoporosis. This guideline is not relevant to them,” the author of the Endocrine Society guideline, Anastassios G. Pittas, MD (above), Professor of Medicine at Tufts University School of Medicine in Boston, told Medscape Medical News. This new guideline could result in doctors ordering fewer vitamin D tests from clinical laboratories. (Photo copyright: Tufts University.)
Vitamin D Screening Not Recommended for Certain Groups
The Endocrine Society’s new clinical guidelines advise healthy adults under 75 years of age to refrain from taking vitamin D supplements that exceed US Institute of Medicine—now the National Academy of Medicine (NAM)—recommendations.
Additionally, these updated guidelines:
Recommend vitamin D supplements at levels above NAM recommendations to help lower risks faced by children 18 years and younger, adults 75 and older, pregnant women, and people with prediabetes.
Suggest daily, lower-dose vitamin D (instead of non-daily, higher-dose of the vitamin) for people 50 years and older who have “indications for vitamin D supplementation or treatment.”
Advise “against routine testing for 25-hydroxyvitamin D [aka, calcifediol] levels” in all the above groups “since outcome-specific benefits based on these levels have not been identified. This includes 25-hyrdoxyvitamin D screening in people with dark complexion or obesity.”
One exception to the guideline applies to people with already established osteoporosis, according to the guideline’s author endocrinologist Anastassios G. Pittas, MD, Chief of Endocrinology, Diabetes and Metabolism; Co-Director, Tuft’s Diabetes and Lipid Center; and Professor of Medicine at Tufts University School of Medicine in Boston.
Vitamin D’s Link to Disease Studied
During a panel discussion at the Endocrine Society’s annual meeting, members acknowledged that many studies have shown relationships between serum concentrations of 25-hydroxy vitamin D (25(OH)D) and physical disorders including those of musculoskeletal, metabolic, and cardiovascular systems. Still, they questioned the link of vitamin D supplementation and testing with disease prevention.
“There is paucity of data regarding definition of optimal levels and optimal intake of vitamin D for preventing specific diseases. … What we really need are large-scale clinical trials and biomarkers so we can predict disease outcome before it happens,” said Panel Chair Marie Demay, MD, Endocrinologist, Massachusetts General Hospital, and Professor of Medicine, Harvard Medical School, Boston, Medscape Medical News reported.
Meanwhile, in their Journal of Clinical Endocrinology and Metabolism paper, the researchers note that use of supplements (1,000 IU or more per day) increased from 0.3% to 18.2%, according to the National Health and Nutrition Examination Survey (NHANES) conducted by the National Center for Health Statistics (NCHS), CDC, for the years 1999-2000 and 2013-2014.
“The use of 25(OH)D testing in clinical practice has also been increasing; however, the cost effectiveness of widespread testing has been questioned, especially given the uncertainty surrounding the optimal level of 25(OH)D required to prevent disease,” the authors wrote.
“Thus, the panel suggests against routine 25(OH)D testing in all populations considered,” the researchers stated at the Endocrine Society annual meeting.
Other Groups Weigh-in on Vitamin D Testing
Pathologists and medical laboratory leaders may recall the explosion in vitamin D testing starting about 20 years ago. Vitamin D testing reimbursed by Medicare Part B “increased 83-fold” during the years 2000 to 2010, according to data cited in an analysis by the American Academy of Family Physicians (AAFP).
Also, the US Preventive Services Task Force (USPSTF) said in a statement that there is not enough information to “recommend for or against” testing for vitamin D deficiency.
“No organization recommends population-based screening for vitamin D deficiency, and the American Society for Clinical Pathology recommends against it,” the USPSTF noted.
Clinical Laboratories Can Get the Word Out
The vitamin D debate has been going on for a while. And the latest guidance from the Endocrine Society may cause physicians and patients to stop ordering vitamin D tests as part of annual physicals or in routine screenings.
Medical laboratories can provide value by ensuring physicians and patients have the latest information about vitamin D test orders, reports, and interpretation.
Organizations representing clinical laboratories and other critical healthcare providers urged Congress to pass the Saving Access to Laboratory Services Act by January 1, 2023, to prevent deep cuts in reimbursements
Lessons about the essential role of clinical laboratories during a pandemic was the central theme in a significant publication released recently. The authors were the presidents of two of the nation’s largest healthcare companies and their goal was to connect the value clinical labs delivered during the COVID-19 pandemic to the financial threat labs face should the Protecting Access to Medicare Act of 2014 (PAMA) fee cuts coming to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) be implemented.
In an article for RealClearPolicy, healthcare executives William G. Morice II, MD, PhD (left), CEO/President, Mayo Clinic Laboratories, and Matt Sause (right), President of Roche Diagnostics North America wrote, “Without PAMA reform, labs could face drastically reduced reimbursement for commonly performed lab tests for a host of diseases.” (Photo copyrights: Mayo Clinic Laboratories/Roche Diagnostics.)
IVD Companies and Clinical Laboratories Sound Alarm
Morice and Sause warn that—without PAMA reform—the nation’s vital medical laboratories will face “drastically reduced reimbursement” for commonly performed lab tests for diseases, including diabetes, heart disease, and cancer. Reimbursement cuts may cause clinical labs serving “the most vulnerable and homebound” to reduce services or close, they noted.
“To emerge from nearly three years of a pandemic by sending the signal that austerity is our nation’s health policy when it comes to testing and diagnostics would be a significant mistake,” they wrote.
“If the proposed cuts to reimbursements for diagnostic tests are allowed to take effect, disparities caused by challenges with accessing diagnostic tests will likely grow even further,” the authors continued.
However, they added, “The Saving Access to Laboratory Services Act [SALSA] would reform PAMA to require accurate and representative data from all laboratory segments that serve Medicare beneficiaries to be collected to support a commonsense Medicare fee schedule that truly represents the market.”
How PAMA Affects Clinical Laboratory Reimbursements
PAMA, which became law in 2014, was aimed at marrying Medicare Part B Clinical Laboratory Fee Schedule (CLFS) reimbursement rates to rates medical laboratories receive from private payers, the National Independent Laboratory Association (NILA) explained in a news release.
But from the start, in its implementation of the PAMA statute, the methods used by the federal Centers for Medicare and Medicaid Services (CMS) to collect data on lab test prices paid by private payers—which were the basis for calculating new lab test prices for the Medicare program—were criticized by many laboratory professionals and other health experts.
Critics frequently pointed out that several types of clinical laboratories were excluded from reporting their private payer lab test prices. Thus, the data collected and used by CMS did not accurately represent the true range of prices paid for clinical lab tests by private health insurance plans, said lab industry groups.
CMS regulations “exclude most hospital outreach laboratories and physician office laboratories from data collection. This approach depresses median prices and has led to deep cuts to lab reimbursement. Many tests were cut up to 30% in 2018 when the new system went into effect,” the America Association for Clinical Chemistry (AACC) noted in a statement.
On September 8, just weeks after publication of the article authored by Morice and Sause, 26 organizations representing clinical laboratories and diagnostics manufacturers sent a letter to Congressional leaders. In it they described the financial impact on labs due to the current law’s omission of some outreach and physician office lab testing, and they urged the passage of the SALSA legislation.
“The significant under-sampling led to nearly $4 billion in cuts to those labs providing the most commonly ordered test services for Medicare beneficiaries,” the organizations wrote in their letter. “For context, the total CLFS spend for 2020 was only $8 billion.”
Reimbursement Cuts to Lab Tests are Coming if SASLA Not Passed
“Without Congressional action, beginning on Jan. 1, 2023, laboratories will face additional cuts of as much as 15% to some of the most commonly ordered laboratory tests,” the NILA said.
“Enactment of the Saving Access to Laboratory Services Act (SALSA/H.R. 8188/S.4449) is urgently needed this year, to allow laboratories to focus on providing timely, high quality clinical laboratory services for patients, continuing to innovate, and building the infrastructure necessary to protect the public health,” NILA added.
In an editorial she wrote for Clinical Lab Products, titled, “Be a Labvocate: Help Pass SALSA Legislation,” Kristina Martin, Clinical Pathology Operations Director, Department of Pathology, University of Michigan Medicine said, “The SALSA legislation provides a permanent, pragmatic approach to evaluating the CLFS, eliminating huge swings, either positive or negative as it pertains to Medicare reimbursement. It also allows for a more comprehensive evaluation of data to be collected from a broader sampling of laboratory sectors.”
Uses statistical sampling for widely available tests performed by a “representative pool of all clinical laboratory market segments.”
Introduces annual “guardrails” aimed at creating limits for reductions as well as increases in CLFS rates.
Excludes Medicaid managed care rates since they are not true “market rates.”
Gives labs the option to exclude mailed remittances from reporting if less than 10% of claims.
Eases clinical labs’ reporting requirements by changing data collection from three years to four.
Make Your Views Known
Proponents urge Congress to act on SALSA before the end of the year. Clinical laboratory leaders and pathologists who want to express their views on SALSA, test reimbursement, and the importance of access to medical laboratory testing can do so through Stop Lab Cuts.org. The website is sponsored by the ACLA.
Either way, if Medicare is allowed to run dry, millions of patients (most among the elderly) may be unable to receive critical care, including clinical laboratory testing and pathology.
“The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted,” the 2022 Medicare Trustees Report states, which draws its data from a US Treasury Department fact sheet.
“The progressively worse imbalance of expenditures versus revenues will exhaust the trust funds in 2028,” Weems wrote, adding that one of two payment scenarios will likely happen:
Medicare may pay bills on a “discounted basis,” which means if expected revenues are 85% of expenditures, then Medicare would pay bills at 85% of the amount, or
Medicare may put bills aside until it has the money from tax dollars.
“And then (Medicare would) pay them on a first-in-first-out basis,” Weems wrote, adding, “At the time of insolvency, that current Administration would have to pick its poison.”
For hospital clinical laboratory leaders and pathologists who provide care to Medicare beneficiaries, neither approach would be satisfactory. And a solution for funding Medicare Part A beyond 2028 needs to be crafted to ensure hospitals are paid on a timely basis.
But what should it be?
“Medicare’s two-part insurance and trust fund design may have made sense in the mid-1960s, but it no longer does. Modern coverage is not bifurcated in this way and imposing stricter financial control over facility spending than clinician and outpatient services can distort the policy-making process, and thus also patient care,” wrote James Capretta (above), Senior Fellow at the American Enterprise Institute, in his analysis of the 2022 Medicare trustees report, published in Health Affairs. If Medicare truly does run out of money, millions of elderly people may lose access to critical healthcare services, including clinical laboratory testing. (Photo copyright: American Enterprise Institute.)
Medicare Funding Scheme is ‘Flawed’
According to the Kaiser Family Foundation (KFF), the amount of money Medicare needs to cover the deficit between 2028 through 2031 (the period studied in the trustees’ projections), is estimated at $247.4 billion.
Medicare is supported by employers and employees, who each pay a 1.45% tax on earnings, KFF explained. Balancing the fund supporting Medicare Part A requires either an increase of .70% of taxable payroll or a 15% reduction in benefits, KFF estimated.
“Medicare will not cease to operate if assets are fully depleted, because revenue will continue flowing into the fund from payroll taxes and other sources,” KFF noted.
However, the current set-up of Medicare trust funds (one for Part A and another funded differently for Medicare Part B, which includes outpatient coverage such as medical laboratory tests), is “flawed” and needs updating to enable reform.
Furthermore, Medicare faces challenges brought on by an aging population and increasing enrollees.
Baby Boomers (born between 1946 and 1964) will qualify for Medicare by 2030 and potentially leave the workforce, depleting their payroll tax contributions to the program, KFF pointed out.
Also, Medicare reform needs to reflect the impact of the COVID-19 pandemic. An analysis of 114,000 COVID-19-associated deaths from May to August 2020 showed 78% of the people were age 65 and older, according to the federal Centers for Disease Control and Prevention (CDC).
“Medicare beneficiaries whose deaths were identified as related to COVID-19 had costs that were much higher than the average Medicare beneficiary prior to the onset of the pandemic,” the 2022 Medicare Trustees report noted.
“The surviving Medicare population had lower morbidity, on average, reducing costs by an estimated 1.5% in 2020 and 2.9% in 2021. This morbidity effect is expected to continue over the next few years but is assumed to decrease over time before ending in 2028.”
In his 4Sight Health article, Weems suggested that the Medicare reform deadline was bumped to 2028 from 2026 due to fewer people living and able to access Medicare in coming years.
“Let’s honor those seniors by using the time for real Medicare reform,” Weems wrote.
Hospital laboratory managers and pathologists will want to keep a watchful eye on Congress’ handling of the 2022 Medicare Trustees Report. Though it is unlikely the nation’s decision-makers will act on the report during an election year, pressure to develop a solution to meet the funding needs of Medicare Part A hospital care beyond 2028 will start to build in 2023.
Medical laboratories and anatomic pathologists may need to squeeze into narrow networks to be paid under value-based schemes, especially where Medicare Advantage is concerned
Pathologists have likely heard the arguments in favor of value-based payment versus fee-for-service (FFS) reimbursement models: FFS encourages providers to order medically unnecessary procedures and lab tests. FFS removes incentives for providers to order patient services more carefully. Fraudsters can generate huge volumes of FFS claims that take payers months/years to recognize and stop.
Studies that favor value-based payment schemes support these claims. But do hospitals and other healthcare providers also accept them? And how is value-based reimbursement really doing?
To find out, Chicago-based thought leadership and advisory company 4Sight Health culled data from various organizations’ reports that suggest value-based reimbursement shows signs of growth as well as signs of stagnation.
Value-Based Payment Has Its Ups and Downs
Healthcare journalist David Burda is News Editor and Columnist at 4Sight Health. In his article, “Is Value-Based Reimbursement Mostly Dead or Slightly Alive?” Burda commented on data from various industry reports that indicated value-based reimbursement shows “signs of life.” For example:
More doctors are accepting pay-for-performance payments: 44.5% in 2020, up from 42.3% in 2018, according to an American Medical Association (AMA) biennial report on physician participation in value-based reimbursement, titled, “Policy Research Perspectives: Payment and Delivery in 2020.”
On the other hand, Burda reported that value-based reimbursement also has these declining indicators:
39.3% of provider payments “flowed” through FFS plans in 2020 with no link to cost or quality. This was unchanged since 2019. (HCPLAN report)
19.8% of FFS payments to providers in 2020 were linked to cost or quality, down from 22.5% in 2019. (HCPLAN report)
88% of doctors reported accepting FFS payments in 2019, an increase from 87% in 2018. (AMA report)
Does Today’s Healthcare Industry Support Value-based Care?
A survey of 680 physicians conducted by the Deloitte Center for Health Solutions suggests the answer could be “not yet.” In “Equipping Physicians for Value-Based Care,” Deloitte reported:
“Physician compensation continues to emphasize volume more than value.
“Availability and use of data-driven tools to support physicians in practicing value-based care continue to lag.
“Existing care models do not support value-based care.”
Deloitte analysts wrote, “Physicians increasingly recognize their role in improving the affordability of care. We repeated a question we asked six years ago and saw a large increase in the proportion of physicians who say they have a prominent role in limiting the use of unnecessary treatments and tests: 76% in 2020 vs. 57% in 2014.
“Physicians also recognize that today’s care models are not geared toward value,” Deloitte continued. “They see many untapped opportunities for improving quality and efficiency. They estimate that even today, sizable portions of their work can be performed by nonphysicians (30%) in nontraditional settings (30%) and/or can be automated (18%), creating opportunities for multidisciplinary care teams and clinicians to work at the top of their license.”
Hospital CFOs Also See Opportunities for Value-based Care
This could be problematic for clinical laboratories, according to Robert Michel, Editor-in-Chief of Dark Daily and our sister publication The Dark Report. According to Guidehouse, “Nearly 60% of health systems plan to advance into risk-based Medicare Advantage models in 2022.”
Medicare Advantage (MA) enrollments have escalated over 10 years: 26.4 million people of the 62.7 million eligible for Medicare chose MA in 2021, noted a Kaiser Family Foundation brief that also noted MA enrollment in 2021 was up by 2.4 million beneficiaries or 10% over 2020.
The graph above is taken from the Kaiser Family Foundation report, “Medicare Advantage in 2021: Enrollment Update and Key Trends.” According to the KFF, “In 2021, more than four in 10 (42%) Medicare beneficiaries—26.4 million people out of 62.7 million Medicare beneficiaries overall—are enrolled in Medicare Advantage plans; this share has steadily increased over time since the early 2000s.” Since MA employs narrow networks for its healthcare providers, it’s likely this trend will continue to affect clinical laboratories that may find it difficult to access these providers. (Graphic copyright: Kaiser Family Foundation.)
“The shift from Medicare Part B—where any lab can bill Medicare on behalf of patients for doctor visits and outpatient care, including lab tests—to Medicare Advantage is a serious financial threat for smaller and regional labs that do a lot of Medicare Part B testing. The Medicare Advantage plans often have networks that exclude all but a handful of clinical laboratories as contracted providers,” Michel cautioned. “Moving into the future, it’s incumbent on regional and smaller clinical laboratories to develop value-added services that solve health plans’ pain points and encourage insurers to include local labs in their networks.”
Medical laboratories and anatomic pathology groups need to be aware of this trend. Michel says value-based care programs call on clinical laboratories to collaborate with healthcare partners toward goals of closing care gaps.
“Physicians and hospitals in a value-based environment need a different level of service and professional consultation from the lab and pathology group because they are being incented to detect disease earlier and be active in managing patients with chronic conditions to keep them healthy and out of the hospital,” he added.
Value-based reimbursement may eventually replace fee-for-service contracts. The change, however, is slow and clinical laboratories should monitor for opportunities and potential pitfalls the new payment arrangements might bring.
