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By JULIE EGGINGTON, EKATERINA CLEARY & LEEZA OSIPENKO

When CMS issued its Request for Information under the Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) initiative in February, it zeroed in on a long-festering problem: fraud, waste, and abuse in laboratory testing, especially in genetic and molecular diagnostics.

The laboratory industry will respond. And when it does, its arguments will sound polished, familiar, and deeply reassuring. They will also be either disingenuous or unproven.

If policymakers want this effort to succeed, they should be prepared to handle three claims that have long shielded problematic practices from meaningful oversight.

Claim 1: Fraud, waste and abuse is limited to a few bad actors

Expect labs to argue that fraud, waste, and abuse is rare, isolated, and already addressed through enforcement actions. The narrative will feature a handful of egregious cases, presented as outliers in an otherwise trustworthy ecosystem.

But the problem is not a few rotten apples. It is the orchard’s design.

Take “code stacking” for example, in which laboratories bill multiple individual genetic test codes rather than a single panel code, often inflating reimbursement. In one analysis, laboratories used between 1 and 12 billing codes for hereditary cancer panels with the same indications for testing, with estimated average charges ranging from $679 to $8,589 for ostensibly comparable tests. The repetition of these behaviors across companies suggests systemic incentives, not isolated misconduct.

Ample Medicare billing data, whistleblower cases, and Department of Justice settlements point to patterns, not anomalies: high-volume genetic panels ordered with little clinical justification, molecular pathology tests billed under grab bag and overly permissive billing codes, and aggressive marketing and patient harvesting practices targeting vulnerable populations.

A key driver is opacity. Many laboratory-developed tests (LDTs) are marketed under similar or identical names despite meaningful differences in design, accuracy, and intended use. To a clinician or payer, they appear interchangeable. In reality, they are not.

This naming ambiguity allows lower-quality tests to ride the coattails of better-validated ones, while still commanding reimbursement. Fraud, in this context, is not always a dramatic act. It is often embedded in routine billing.

Claim 2: Precision medicine advanced by genetics is worth the cost due to improved patient outcomes

The second argument will appeal to aspiration. Labs will emphasize that genetic testing is the backbone of precision medicine and therefore a worthwhile investment for CMS, despite the ballooning costs.

Laboratory lobbyists and industry groups will use the ‘age of precision medicine’ argument to justify the fact that genetic testing is now costing Medicare almost as much as all other outpatient laboratory testing combined. In the most recent analysis from 2024 Medicare data, genetic tests accounted for 43% ($3.6 billion) of total Medicare outpatient laboratory spending, despite representing only 5% of all Medicare outpatient laboratory tests performed.

There is some truth here to the value of genetic tests. Selected genetic tests have demonstrated clear clinical utility, improving diagnosis, or guiding treatment that has resulted in the extension of life.

But the leap from “some” tests leading to improved patient outcomes to “most” tests leading to improved patient outcomes is where the argument breaks down.

The evidence base for many marketed genetic and molecular tests remains thin, heterogeneous, or entirely absent. Clinical utility, in the rare instances where users or a test developer has demonstrated it, is often extended as a halo over other tests from different labs offering similarly marketed tests. While the me-too unproven tests share functional branding and billing codes with the proven test, they often differ in methodology or performance in nontransparent ways. In short, due to inherent differences in methodologies, the me-too tests may not improve patient outcomes at the same effectiveness as the proven test, and perhaps not at all.

This is not precision medicine. It is approximation at scale.

For policymakers, the distinction matters. Without evidence that a test informs clinical decisions in a way that improves health, its value to Medicare and Medicaid remains unproven.

If labs wish to claim that their tests save or improve lives, they must demonstrate it for each distinct test, whether it be market leader tests or the me-too tests.

Claim 3: Oversight on labs slows innovation at the expense of lives saved

Finally, expect labs to issue a warning: stricter oversight of labs’ patient recruitment and billing practices will slow innovation, delay access to cutting-edge diagnostics, and ultimately harm patients.

This argument rests on a critical assumption that has not been established, namely that the current volume and acceleration of precision medicine related laboratory testing is delivering life-saving benefit at scale.

In many cases, that evidence does not exist, or exists to the contrary.

Innovation in healthcare is not defined by the number of tests doctors order for patients, or the increasing complexity and expense of molecular pathology testing, but by their impact on patient outcomes. Requiring that the right patients receive the right tests (which have proven utility), at the right time, does not inherently suppress innovation; it helps distinguish between meaningful advances and the noise

Well documented efforts by some genetics labs to recruit as many patients as possible results in the dilution of the true value of genetic testing. Even if, for example, a cancer genetic testing laboratory has a test with proven clinical utility for patients with certain cancers, testing patients without the relevant cancers would dilute its measurable clinical utility. And due to the existence of false positives in diagnostics, testing patients recruited inappropriately could ultimately harm more patients than the test helps.

Furthermore, the absence of billing standards can distort innovation. When reimbursement is available without robust evidence requirements, the market rewards proliferation over validation. Without oversight, high-quality tests must compete with lower-cost, lower-evidence alternatives that are marketed as equivalent or better than the proven tests.

Stricter oversight of laboratories patient recruitment and requests for reimbursement would provide CMS opportunity to ensure that the goals of precision medicine are achieved. It would not halt innovation. It would redirect it toward demonstrable value.

A path forward

If CMS wants to reduce fraud, waste, and abuse in laboratory testing, it should focus less on chasing individual bad actors – which is proving to be an infinite game of whack-a-mole – and more on correcting structural weaknesses.

That begins with transparency. Tests that differ in design or performance should not share indistinguishable names in billing systems. Clear differentiation would make it harder for lower-quality tests to masquerade as established ones.

It also requires evidence discipline. Coverage and reimbursement should be tied to demonstrated clinical utility at the test level, not inferred from category-level evidence.

The CRUSH RFI presents an opportunity to reset expectations. The laboratory industry will make its case. CMS should be ready to look past the familiar narratives and ask a simpler question: not whether a test could advance medicine, but whether it does.

Julie Eggington is CEO of the Center for Genomic Interpretation and founder of Grandview Consulting. Ekaterina Cleary is a Data Scientist and Leeza Osipenko is CEO at Consilium Scientific, where she leads the development of This post is part of their work at Evimeter, a quantitative framework for evaluating the strength of clinical evidence supporting breakthrough medical devices and diagnostics, funded by Arnold Ventures.

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By: matthew holt
Title: CRUSHing Lab Fraud: Three Myths that Derail Real Reform
Sourced From: thehealthcareblog.com/blog/2026/05/05/crushing-lab-fraud-three-myths-that-derail-real-reform/
Published Date: Tue, 05 May 2026 06:49:00 +0000

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