By: Julie M. Eggington, Ph.D., Ekaterina Cleary, Ph.D. and Leeza Osipenko, Ph.D.

The recent request for information from the Centers for Medicare and Medicaid Services signals the Trump administration is serious about rooting out healthcare fraud.

The request places particular emphasis on genetic and molecular pathology testing. But the most damaging abuse of lab testing may be of a kind that CMS typically overlooks. Across the nation, doctors and patients are making treatment decisions based on laboratory testing that has never been proven to work. In many cases, clinical laboratories aren’t even following professionally recognized standards of healthcare.

The more moderate estimate is that roughly half of the laboratory developed tests most commonly used in hospitals and laboratories in the US, suffer from design flaws, inadequate validation, and process problems that may undermine the accuracy and clinical validity of their results.

This public health crisis remains hidden because most of these tests exist in a regulatory blind spot. In most states (excluding New York), the tests are overseen by the Centers for Medicare & Medicaid Services (CMS) under the 1988 Clinical Laboratory Improvement Amendments (CLIA). However, CLIA focuses on laboratory facilities and personnel, not on ensuring that tests are clinically valid. Regarding clinical validity, CLIA takes an “on your honor” approach.

Genetic and molecular diagnostic tests are lucrative revenue generators and often serve as gatekeepers to costly precision medicines. Furthermore, strategically priced tests generate substantial profit for third-party administrators of employer-sponsored health plans. Unsurprisingly, the current regulatory vacuum is robustly guarded by industry groups, lobbyists, and university hospitals. These stakeholders recently rebuffed FDA attempts to regulate test safety and marketing. Without congressional authorization, the FDA’s hands remain tied.

Compounding the problem is an opaque billing infrastructure. Laboratory tests utilize Current Procedural Terminology (CPT) codes from the American Medical Association (AMA), which provide no vetting of the tests. Billions of dollars have been lost to fraud as labs manipulate these codes to evade payor safeguards.

For example, there seems to be no end to patient recruitment and billing fraud schemes by genetic testing laboratories crudely manipulating CPT codes. The U.S. House Committee on Oversight and Government Reform is currently questioning the integrity of the AMA’s proprietary billing code system and may be considering an overhaul or total abandonment of the CPT framework.

The new CMS initiative offers an immediate opportunity for reform. We encourage CMS to use the legal definition of “abuse” found in 42 CFR § 455.2, which includes practices that fail to meet professionally recognized standards for healthcare, to targetpoor-quality laboratory tests.

Because of current regulatory gaps, laboratory tests often fail to meet recognized standards for healthcare. A 2023 study found that not a single patient report from more than 20 oncology genetic testing labs met professional standards for results reporting. All of the labs were CLIA certified and accredited by the College of American Pathologists. Yet critical errors and missing information were rampant across the 95 patient reports evaluated. Consequently, patients are undoubtedly receiving incorrect cancer care based on flawed test results. This is the very definition of healthcare abuse. Yet most labs will not make the necessary improvements until they are held accountable by having their revenue threatened.

This approach aligns with the DOJ’s April 2026 creation of the National Fraud Enforcement Division. Because federal courts now classify laboratory tests as professional services rather than medical devices, CMS is uniquely positioned to enforce laboratory test standards through its anti-abuse protocols, bolstered by the National Fraud Enforcement Division’s centralized prosecutorial power.

To reduce fraud in genetic and molecular diagnostic testing, we propose these primary reforms: First, overhauling the billing infrastructure with a nonproprietary system that issues unique, public billing codes to each laboratory test only after a lab registers its test description, intended use, and analytical and clinical validity metrics. This eliminates nonspecific billing and ensures payors know exactly what they are paying for. Second, standardizing validation samples and metric calculations allows for direct comparisons, preventing laboratories from masking poor performance with cherry-picked data. Third, mandating transparency in CLIA proficiency testing results and extending proficiency testing to encompass the entire process through results reporting. This holds labs accountable to professional standards and ensures improved reporting accuracy. Finally, establishing an open clinical utility platform, as is being piloted in our Evimeter project, empowers physicians, patients, and payors to make informed decisions based on shared, transparent data.

Comprehensive reform requires further structural changes to fully protect patients and the healthcare system, but these changes would make for an excellent start.

Fixing the systemic flaws in test oversight and billing is a clinical necessity, not simply a fiscal one. There is no benefit in stamping out billing fraud if lab scan still be reimbursed for tests that have no proven validity. By integrating these reforms into its new initiative, CMS can finally ensure healthcare dollars are spent on valid clinical science rather than subsidized fraud.

Julie M. Egginton, PhD, aims to improve stewardship of clinical genetics as the co-founder of the nonprofit Center for Genomic Interpretation and the founder and principal at Grandview Consulting, LLC.

Ekaterina Cleary, PhD, is a data scientist at Consilium Scientific dedicated to improving patient outcomes and advocating for each person’s right to high-quality, affordable health care.

Leeza Osipenko, PhD, is an expert in health technology assessment and the founder and CEO of Consilium Scientific, a non-profit dedicated to improving integrity of clinical research.