Genetic Testing Under the Microscope: OIG Reports Surge in Medicare Lab Spending

A new January 2026 report from the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) shows that Medicare Part B spending on clinical diagnostic laboratory tests rose 5% from 2023 to $8.4 billion in 2024 — despite a decline in the number of enrollees receiving lab tests. The increase was driven primarily by genetic testing, which in 2024 accounted for 43% ($3.6 billion) of total lab spending while representing only 5% of tests paid under the program. The findings underscore OIG’s continued focus on high-cost genetic testing and signal potential enforcement and compliance scrutiny in this area.

Background: PAMA and OIG’s Mandate

The 2014 Protecting Access to Medicare Act (PAMA) reformed how Medicare sets payment rates for clinical diagnostic laboratory tests and requires OIG to publish an annual analysis of the top 25 lab tests by expenditures. The 2024 snapshot used Medicare Part B claims paid under the Clinical Laboratory Fee Schedule to identify spending trends and the 25 highest-cost tests. OIG’s annual report not only fulfills a statutory mandate but also provides policymakers and enforcement agencies with a roadmap of high-expenditure tests that may warrant further scrutiny.

Key Findings on 2024 Medicare Part B Spending

• Concentrated spending in the top 25 procedure codes. The top 25 procedure codes accounted for nearly half of Medicare Part B lab spending in 2024, totaling over $4.1 billion. The single highest-spending code — used when no organism-specific code exists for an infectious disease genetic test — accounted for $442.5 million in 2024, a 51% increase from 2023, with a median payment of $447 per claim.
• Genetic tests are the primary spending driver. Ten of the top 25 procedure codes are genetic tests. Genetic test spending rose from $1.4 billion in 2018 to $3.6 billion in 2024. Tests tied to oncology, infectious disease, and epilepsy accounted for a substantial share of that growth.
• Non-genetic test spending has declined. Spending on traditional tests, such as metabolic panels, lipid panels, and complete blood cell counts, fell to $4.8 billion in 2024, continuing its general downward trend since 2021.
• Growing genetic-test utilization and concentrated lab payments. Both the number and cost per enrollee for genetic tests increased substantially, while the volume of non-genetic tests and the number of enrollees receiving them declined. The number of labs receiving more than $1 million in payments for genetic tests has also grown.

Looking Forward: Compliance and Enforcement Implications

The shift toward high-cost genetic testing carries significant program integrity and compliance implications. OIG’s report comes amid aggressive federal enforcement of laboratory and genetic testing fraud over the last decade,¹ including the U.S. Department of Justice’s (DOJ) record-setting 2025 National Health Care Fraud Takedown, in which 49 defendants were charged in connection with $1.17 billion in alleged Medicare fraud involving genetic testing and telemedicine arrangements.

Over the past few years, the DOJ has also entered into several settlements with manufacturers regarding their sponsored testing programs and relationships with laboratories performing genetic tests. Those programs are likely to remain an ongoing area of enforcement focus, particularly given that spending for these tests has increased exponentially.

Laboratories, ordering providers, and investors in the laboratory space should consider:

• Reviewing coding practices for high-cost genetic tests, particularly the use of nonspecific or panel codes
• Auditing medical necessity documentation for oncology and infectious disease genetic testing
• Evaluating financial relationships with manufacturers, marketing entities, telemedicine providers, and referring practitioners
• Assessing internal controls around billing under the Clinical Laboratory Fee Schedule

Where laboratory services are involved, companies should consider not only the federal Anti-Kickback Statute and potential False Claims Act exposure, but also the Eliminating Kickbacks in Recovery Act — which extends to private payor arrangements and can create liability even where no federal healthcare program business is implicated.

This OIG report highlights areas that may draw further oversight, including coding and billing for high-priced panels, lab reporting practices, and arrangements between ordering providers and testing laboratories. As genetic testing continues to command a disproportionate share of Medicare laboratory spending, OIG’s annual reports are likely to serve as a blueprint for future audits, data-driven investigations, and enforcement initiatives.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.