Genetic Test Medical Necessity: The Patient Must Meet the Test’s Intended Use

Genetic test medical necessity under Medicare depends on the patient’s condition, the treating clinician’s order and what the particular test is meant to do for that patient. A laboratory can have a specimen, an order and a billing code while the clinical reason for the test is missing. If you work in a laboratory or physician’s office, you may see the gap between what the requisition says and what the treating clinician actually requested.

The distinction runs through healthcare fraud cases involving genetic tests. An oncology assay allegedly ordered for the wrong patient group, a prenatal test allegedly billed under a misleading code and a cancer panel ordered by a doctor who never treated the patient raise different questions.

Screening, Prognosis and Treatment Guidance

Medicare’s ordinary laboratory benefit covers diagnosis and treatment of illness or injury. Screening people without signs, symptoms, complaints or personal history of disease requires a specific screening benefit. A general offer to learn about future cancer risk does not supply the clinical reason for a diagnostic claim.

Screening, prognosis and treatment guidance therefore belong to different conversations. For a prognostic or treatment-guidance assay, we examine the patient group for whom the test is intended and the decision the result is meant to inform. A patient already being treated for cancer presents a different question from someone recruited for a risk test through a marketing call. Even among patients with the same cancer, treatment history and risk factors can determine whether a particular assay fits.

Screening coverage is specific to the service. Colorectal stool-DNA screening, including Cologuard, appears in Medicare’s paid laboratory tests in the HHS Office of Inspector General’s spending analysis. The Centers for Medicare & Medicaid Services says the word screening in a billing-code description does not by itself determine whether the service was screening or diagnostic.

PGx Test With No Medication Decision in the Treating Physician Chart

A PGx test with no medication decision in the treating physician chart leaves its claimed treatment purpose unexplained. When that is the reason given for the claim, we examine the medication question, the clinician’s reason for ordering the test and the intended use of the result.

Medicare’s diagnostic-test ordering rule ties the order to a clinician treating the patient’s specific medical problem and using the result in its management. For a laboratory insider, the useful comparison is the treatment purpose represented on the requisition against the physician’s chart. A sales description of what a panel could do cannot supply the missing patient-specific decision.

Medicare Coverage for Cancer Genetic Testing

The Centers for Medicare & Medicaid Services’ national coverage determination for next generation sequencing sets separate paths for acquired and inherited cancer testing. It applies to diagnostic tests using that sequencing technique for those cancer purposes.

The distinction between the technique and the clinical purpose matters. The national rule then asks which cancer the patient has, why the test is being ordered, whether the same genetic content was tested before and how the result will reach the treating physician.

Acquired Cancer and Further Treatment

The national path for somatic, or acquired, cancer testing took effect March 16, 2018. It requires a treating physician’s order, testing in a CLIA-certified laboratory and a patient with recurrent, relapsed, refractory, metastatic or advanced stage III or IV cancer who has decided to seek further treatment.

The patient must not previously have received the same next generation sequencing test for the same cancer genetic content. The test must have Food and Drug Administration approval or clearance as a companion diagnostic and an approved or cleared indication for that patient’s cancer. Results must go to the treating physician in a report that specifies treatment options.

Those conditions connect the laboratory result to a treatment decision. A physician’s signature cannot supply facts absent from the patient’s history.

Inherited Cancer Has Its Own Criteria

A Medicare order for a cancer genetic test in someone with no personal cancer history does not fit these national pathways merely because it records family history. The national germline, or inherited, cancer path took effect January 27, 2020. It requires breast or ovarian cancer, a clinical indication for hereditary testing, a relevant inherited-cancer risk factor and no previous use of the same germline next generation sequencing test for the same genetic content.

This path also requires a treating order, a CLIA-certified laboratory, FDA approval or clearance and results sent to the treating physician in a report specifying treatment options.

What Local Contractors Decide

Medicare’s local contractors can cover additional cancer sequencing tests within the national rule’s patient requirements. Their inherited-cancer pathway allows any cancer diagnosis, with the required hereditary indication, risk factor and prior-test history.

Clinical Gene Panel Medical Necessity Versus Molecular Coverage Code

Clinical gene panel medical necessity versus molecular coverage code is a distinction between why the patient needed the test and how the laboratory described it for payment. The code, actual assay and clinical record have to be considered together. A national fee for a code can coexist with different coverage decisions among contractor jurisdictions.

Local coverage determinations set contractor policies. In jurisdictions that use MolDX, Palmetto GBA’s program and the DEX Diagnostics Exchange registry add molecular-test coverage review and unique test identification. The relevant comparison is the specific assay, patient indication, jurisdiction and policy in force for the claim.

Test identification matters because the genetic-testing category is broad. The HHS Office of Inspector General’s analysis counted tests of human and pathogen genetic material together. In 2024, they represented 5% of Part B laboratory tests but 43% of laboratory spending. Named oncology assays and broadly described molecular tests sit in that same spending category, despite serving different clinical purposes.

A panel also needs scrutiny at the ordering stage. The HHS Office of Inspector General’s laboratory compliance guidance calls for requisitions that let the physician make an independent medical-necessity decision for each test the laboratory will bill. Packaging tests together on a form does not supply that decision.

Genetic Testing Settlements Turn on the Patient and the Assay

The Decipher, Breast Cancer Index and Panorama cases show why a genetic-testing claim needs more than a product name. Each concerned a particular test and an alleged mismatch involving the patient, the documentation or the payer’s rules.

Decipher and the Pre-Signed Medical-Necessity Form

GenomeDX Biosciences reached a settlement announced in February 2019 over allegations of billing for its Decipher prostate cancer test without the patient risk factors supporting it. Whistleblowers brought the case, and the government joined it for settlement.

Separately, the whistleblower complaint alleged that the company supported Decipher Biopsy claims with documentation identifying the test as Decipher Post-op. It also described how the company allegedly produced medical-necessity certificates:

The alleged certificate-making process reversed the clinical order. The physician supplied the signature first. The laboratory supplied the patient afterward. Someone reviewing only the completed certificate would miss how it had been made.

Breast Cancer Index and the Patient’s Treatment History

Biotheranostics reached an April 2018 settlement to resolve allegations involving unnecessary Breast Cancer Index tests billed to Medicare. The government alleged that the company knowingly promoted and performed the test for breast cancer patients who had not been in remission for five years and who had not been taking tamoxifen.

According to the Justice Department, the test was not reasonable and necessary for those patients based on published clinical trial data and clinical practice guidelines. The alleged problem was more specific than whether the patient had breast cancer. Remission and treatment history mattered to the test’s use.

The cancer diagnosis on a requisition answers one question. The patient’s course of treatment answers another.

Panorama and the Payer Behind the Claim

Natera’s March 2018 civil settlement concerned its Panorama non-invasive prenatal test and optional microdeletion screening panels. The health care programs involved were TRICARE, the Federal Employees Health Benefits Program and Medicaid. Whistleblowers brought the False Claims Act case.

The government contended that Natera billed TRICARE during periods when the program did not reimburse the specified laboratory-developed testing or microdeletion screening. It also alleged that Natera used an improper code that misrepresented the services billed to the programs. A further allegation concerned testing in low-risk pregnancies, which Natera disputed.

The clinical indication and the billing description were both at issue. Prenatal screening adds a payer-specific example to the same inquiry: what test was performed, for which patient and under which coverage rule?

For the recruitment and remote physician orders behind these schemes, see our genetic testing fraud overview.

What the Medical Record Must Connect

The medical record must connect the patient’s condition, the treating order and the intended use of the test. The laboratory’s records must connect the order it received to the test and claim it submitted. Medicare places the clinical justification in the ordering practitioner’s record and requires the billing laboratory to retain the information it received and evidence that its claim accurately reflects it.

The requisition cannot tell the whole story. The Centers for Medicare & Medicaid Services requires the clinician’s intent to order the test to be clear in the medical record. The GenomeDX allegation shows why a signature’s origin can matter as much as its presence.

The industry has confronted that gap for decades. Model Plan Helps Laboratories Fight Fraud, published in Laboratory Medicine in 1997, described recommendations for requisitions that document medical necessity for each test and notices explaining a laboratory profile’s components and billing. Applied to a gene panel, that distinction directs attention to what the physician understood the order to include and what the laboratory billed.

Diagnosis information has its own trail. CMS requires the laboratory’s claim to use the physician-supplied diagnosis or diagnostic narrative. The HHS Office of Inspector General’s guidance specifically addresses software that inserts diagnosis codes without receiving diagnostic information from the ordering clinician. The original clinical information, the submitted claim and instructions explaining who changed it can expose that gap.

We examine those connections with the insider who knows the workflow. Requisitions, clinical notes, test reports, claim records and internal instructions can show how an apparent treatment decision became a bill. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

When the Clinical Story and the Claim Diverge

If you know how your laboratory’s orders become claims and where the patient’s actual history disappears, speak with our whistleblower experts about the tests your laboratory bills. We work beside you to build your strongest genetic testing whistleblower case around the clinical decisions, the claims and the people directing them, and bring in laboratory fraud whistleblower lawyers who understand genetic-test coverage. We stay with you through the whole process.