Genetic tests accounted for 43% of all Part B lab spending despite representing only 5% of tests performed, according to HHS OIG data.
Medicare Part B spending on clinical diagnostic laboratory tests totaled $8.4 billion in 2024, representing a 5% increase over the previous year, according to a new data snapshot from the HHS Office of Inspector General (OIG).
The spending increase was driven primarily by genetic tests, which accounted for 43% of all Part B lab spending ($3.6 billion) despite representing only 5% of lab tests performed. Genetic test spending rose 20% between 2023 and 2024, climbing from $3 billion to $3.6 billion.
“Part B spending on lab tests has been shifting increasingly toward genetic tests, including tests relating to cancer, fungal infections, and epilepsy,” according to the OIG report. In 2018, genetic tests accounted for only 18% of Medicare Part B’s total spending on lab tests.
Meanwhile, Medicare Part B spending for non-genetic tests, including metabolic panels, lipid panels, thyroid tests, and complete blood cell counts, has been generally declining since 2021, dropping to $4.8 billion in 2024.
Fewer Enrollees Getting More Expensive Tests
The data reveals a notable trend: While lab test spending is climbing, the number of Medicare enrollees who received lab tests has been steadily decreasing, dropping by 15% between 2018 and 2024. This may reflect a broader shift from enrollment in Medicare Part B to enrollment in Medicare managed care (Part C), according to the report.
In 2024, the average amount that Medicare Part B paid per enrollee for genetic tests approached $800, a 26% increase over 2023. Average per-enrollee costs for non-genetic tests, which are lower than per-enrollee costs for genetic tests, have remained relatively stable.
The number of laboratories receiving more than $1 million in Medicare Part B payments for genetic tests has been steadily increasing. In 2024, 346 laboratories were each paid more than $1 million for genetic tests, with 55 receiving more than $10 million in Part B payments for genetic tests.
Top 25 Tests Account for Nearly Half of Spending
The top 25 lab tests accounted for almost half of all Medicare Part B lab spending in 2024, with expenditures exceeding $4.1 billion. The test with the highest expenditures was a genetic test (procedure code 87798) with a median payment amount of $447 per claim and total spending of $442.5 million—a 51% increase from 2023.
This genetic test represents detection of an infectious organism when no other, more specific procedure code exists for the organism being tested.
Of the top 25 lab test procedure codes, 10 represent genetic tests, with Part B expenditures totaling $1.5 billion. These include tests for cancer, including colon, breast, and prostate cancer, as well as tests to detect infectious organisms such as Candida or influenza A.
The remaining 15 lab test procedure codes represent non-genetic tests, with spending totaling $2.6 billion. These include common lab tests such as metabolic panels, lipid panels, CBC counts, thyroid hormone tests, and A1C tests.
For most genetic tests in the top 25, Medicare Part B spending jumped by at least 30% compared to the previous year. In contrast, spending for most non-genetic tests in the top 25 declined or remained stable.
PAMA Oversight Requirements
This analysis is part of an ongoing effort to control Medicare Part B spending on lab tests. The Protecting Access to Medicare Act of 2014 changed the way Medicare Part B pays for lab tests, effective 2018, and mandated that OIG publicly release an annual analysis of the top 25 lab tests by expenditures.
The OIG analyzed Medicare Part B claims data for lab tests covered under the Medicare Clinical Laboratory Fee Schedule in 2024. The analysis included only lab tests reimbursed under the fee schedule, which sets reimbursement for 95% of all claim lines for lab tests covered under Medicare Part B.
Changes in spending have not been driven by changes in fee schedule rates, which have remained the same since 2020, according to the report.
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