Molecular Laboratory Test Reimbursement: Why Molecular Tests Pay Differently

Molecular laboratory test reimbursement depends on how a test gets its code, whether the payer covers it and which method sets its price. A new test can borrow an existing test’s rate, receive a price built from contractor estimates or, for a qualifying advanced diagnostic laboratory test, begin at the seller’s own list charge. Those differences also create an incentive for laboratory fraud: billing a higher-paying molecular test in place of the service the physician ordered.

The physician’s order, the test performed and the service described to Medicare each tell part of that story. A higher-paying test becomes a whistleblower issue when the business substitutes it for the test the physician actually ordered, or changes the paperwork to obtain payment.

A Molecular Test Code Identifies the Service

A molecular test code describes the service billed. Coverage determines whether Medicare pays for that service in the circumstances, and the payment method determines the amount. A national fee can exist for a code even where a national or local coverage policy leaves the service uncovered.

A new code can give a test an identity before private-payer transactions exist to establish a Medicare rate.

Proprietary Laboratory Analyses codes, recognizable by their final U, identify proprietary services. A PLA code can cover a sole-source test or an analysis licensed or marketed to multiple laboratories. The Centers for Medicare & Medicaid Services has also crosswalked PLA codes to existing services.

A broad code creates a different problem. An infectious-agent code that does not specify the organism tells the payer less than the laboratory’s test report does. The identity of the test remains in the order and laboratory records even when the claim describes it only broadly.

Local coverage adds another layer. The MolDX program and its DEX Diagnostics Exchange registry provide molecular-test coverage review and unique test identifiers in participating Medicare contractor jurisdictions. A billing department needs to know which test the laboratory performed and which payer’s policy governs the claim.

When the Laboratory Changes the Ordered Test

The fraud incentive becomes concrete when a laboratory substitutes a more expensive molecular test for the service the treating clinician chose. A former Tomoka employee brought a whistleblower case, which the government joined. Its complaint concerning Tennessee Valley, Tomoka and Luminus alleged exactly that:

The complaint described an operations manager comparing a Medicaid claim with the actual requisition. The order called for basic urine testing. The claim sought payment for a molecular test and included a diagnosis the physician had not supplied. The government also alleged that software associated diagnoses with claims to support molecular tests the treating physicians had never ordered.

The alleged substitution changed the service billed, and the added diagnosis supplied a clinical explanation missing from the order. Someone looking only at the claim would see a different story from someone holding the original requisition. The government subsequently obtained more than $370 million in civil judgments after the defendants failed to defend the case.

Taxpayers fund the extra healthcare spending through Medicare and Medicaid, while honest laboratories compete on the tests physicians actually order. We examine the order, the performed test, the result and the claim together, including who authorized any change. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

How a New Molecular Test Gets Its First Medicare Price

Medicare uses crosswalking when a new test is comparable to an existing service and gapfilling when no comparable service exists. The Centers for Medicare & Medicaid Services laboratory payment rule allows a crosswalk to one existing test, several existing codes or part of an existing code.

Crosswalking makes the comparator consequential. The new service inherits a payment based on work Medicare already prices. The Medicare Payment Advisory Commission describes the comparison in terms of test methods and resources. A laboratory arguing for a different comparator is arguing about the work the payment should recognize: what the assay does and what it takes to perform it.

Gapfilling builds the initial price another way. In the first year, Medicare’s claims contractors establish amounts using available information about charges, routine discounts, resources needed to perform the test, other payers’ payments and relevant comparable services. In the second year, the national payment becomes the median of those contractor amounts.

A laboratory’s list price, the payments it accepts and the resources it uses all enter that calculation. The asking price is only one part of it.

Advanced Diagnostic Laboratory Test Pricing Starts With the Seller’s List Charge

A qualifying new advanced diagnostic laboratory test receives its actual list charge during an initial period of three calendar quarters. Afterward, payment moves to the weighted median of reported private-payer rates, with annual recalculation.

Advanced diagnostic laboratory test status has its own requirements. The test must be covered under Medicare Part B, offered and furnished only by a single laboratory, and not sold for use by another laboratory outside the developing laboratory or its successor owner. It must also satisfy the specified diagnostic criteria or have Food and Drug Administration clearance or approval.

The diagnostic route includes an analysis of multiple DNA, RNA or protein biomarkers combined with an algorithm that yields a patient-specific prediction and supplies new clinical diagnostic information unavailable from another test or combination of tests. A PLA code alone does not establish eligibility.

The actual list charge is the publicly available rate on the first day the test becomes obtainable by a privately insured patient or is marketed to the public as available. The initial payment period begins with the first full calendar quarter after the later of Medicare coverage or approval of advanced diagnostic laboratory test status.

The reconciliation matters as much as the opening price. If the actual list charge exceeds 130 percent of the later weighted median, the Centers for Medicare & Medicaid Services recoups the difference between the list charge and that threshold.

That makes the published launch price unusually consequential: it sets what Medicare initially pays for a qualifying test before private-payer payments provide a check.

Genetic Test Spending Includes Pathogen Testing

Genetic testing accounted for 5 percent of laboratory tests paid under Medicare Part B in 2024 but 43 percent of spending, according to the HHS Office of Inspector General’s January 2026 analysis. The category includes tests of genetic material from pathogens as well as humans.

The HHS Office of Inspector General reported $2.2 billion in human genetic testing and $1.4 billion in pathogen testing for that year.

The highest-spending code in the report was 87798, for infectious-agent detection by an amplified nucleic-acid probe where the organism is not otherwise specified. It accounted for $442.5 million. The code identifies a method and a broad category while leaving the organism unnamed.

The same fee schedule also pays for very different volumes of work. The comprehensive metabolic panel, code 80053, accounted for 38,648,917 tests at a median payment of about $10 in the report’s table. Code 0242U, a cell-free DNA cancer panel, accounted for 20,210 tests at a median payment of $4,900. That contrast helps explain why a laboratory’s test mix matters alongside the number of specimens it receives.

PAMA Cut Routine-Test Payments While Some Newer Tests Gained

The Medicare Payment Advisory Commission’s June 2021 analysis of the payment changes found that the first payment changes under the Protecting Access to Medicare Act cut routine, low-cost test payments more heavily than payments for newer, expensive tests. Some newer tests received increases.

The Result, the Patient and the Payment Must Connect

Medicare’s ordering rule connects payment to a treating practitioner’s order and use of the result in managing the patient’s medical problem.

The service date can also determine which business gets paid. In a January 2025 civil settlement, LabCorp and University Health System paid $388,667 over allegations that they delayed submitting physician orders for Caris testing to enable improper Medicare billing. The government alleged that staff held orders or canceled and resubmitted them until 14 days after hospital discharge, so the testing laboratory could bill Medicare directly instead of billing the hospital under the rule that applied then.

The settlement resolved part of a whistleblower’s case. The alleged change occurred in the handling of the order: the laboratory still performed a test, but the delayed submission changed whom it billed.

When You Know Why the Test Changed

If you work in molecular laboratory operations, billing or sales and know why the ordered service became a different paid claim, speak with our whistleblower experts about that change. We assess who changed the order, what the claim concealed and how your knowledge can support a whistleblower case. We bring in laboratory fraud whistleblower lawyers who understand molecular reimbursement and stay beside you throughout the case.