ADLT Status Explained: How Medicare Prices Proprietary Genetic Tests
Short answer: An advanced diagnostic laboratory test (ADLT) is a Medicare Part B test offered by a single laboratory that either analyzes multiple DNA, RNA, or protein biomarkers with an empirically derived algorithm or is FDA-cleared or approved. A new ADLT is paid its actual list charge for three calendar quarters, then the weighted median of private payer rates, updated annually.
Most conversation about Medicare lab pricing focuses on the cuts hitting the clinical laboratory fee schedule (CLFS). ADLT status is the other side of the story. It changes how a proprietary test is priced at launch, how often its rate is revisited, and which reporting duties the laboratory carries. For genetic testing labs with a single-site, proprietary assay, understanding the pathway is a revenue decision, not a paperwork exercise. This article walks through the criteria, the application cycle, the payment mechanics, and the compliance duties, using CMS guidance and MedPAC's October 2026 payment summary. It is decision support for laboratory leaders and revenue cycle teams, not a guarantee that any test will qualify.
What is an ADLT under Medicare?
MedPAC describes ADLTs as tests offered by only one laboratory that analyze multiple biomarkers of DNA, RNA, or proteins and provide new clinical diagnostic information not obtainable from any other test or combination of tests. CMS guidance frames the statutory criteria in two tracks. The test must be covered under Medicare Part B and be offered and furnished only by a single laboratory, and it cannot be sold for use by other laboratories, except to a successor owner.
Beyond that, the test must meet one of two criteria. Criterion A covers tests that analyze multiple biomarkers of DNA, RNA, or proteins, use an empirically derived algorithm to predict a patient-specific outcome, and provide new clinical diagnostic information. Criterion B covers tests that are FDA-cleared or approved. For Criterion B, the application must include the FDA premarket approval or notification number, the clearance or approval date, and the FDA reviewer's name and branch.
Why does the pricing pathway matter now?
Medicare spent $12.0 billion on laboratory services in 2025, according to MedPAC, and sets payment rates for more than 2,000 HCPCS codes on the CLFS. Since 2018, most rates come from the weighted median of private payer rates under the Protecting Access to Medicare Act (PAMA), and most rates stay in effect for three years before CMS revises them using new laboratory data. Tests with no private payer data are priced by crosswalking to a similar service or gap-filling from charges and resources. For 2027, MedPAC notes that rates will use private payer rates in effect from January 1, 2025, to June 30, 2025.
That framework is why the CLFS reset has been such a planning problem for molecular labs. See our analysis of the preliminary CY2027 rates for molecular pathology and the 2027 PAMA rate cuts for the code-level picture. ADLTs sit on a different track, and the difference is concrete.
How does a new ADLT get paid?
Under CMS guidance, the initial period for a new ADLT is three full calendar quarters. It starts on the first day of the first full quarter after the later of the Part B coverage determination or the ADLT status grant. During that period, payment equals the actual list charge. Before the initial period begins, the Medicare Administrative Contractor (MAC) sets the payment rate.
CMS defines the actual list charge as the publicly available rate on the first day the test is obtainable by a privately insured patient or marketed to the public. The publicly available rate is the lowest readily accessible charge for a patient without a negotiated rate. After the initial period, payment becomes the weighted median of private payer rates, weighted by volume for each payer and laboratory. If the actual list charge exceeds 130 percent of that weighted median, CMS recoups the difference. In plain terms, the list-charge period is not a free pricing window: an aggressive list price can be clawed back.
A "new ADLT" under the guidance is one for which payment was not made under the CLFS before January 1, 2018. An "existing ADLT" is one that was paid under the CLFS before that date.
How often do ADLT rates change?
This is the structural advantage. MedPAC notes that ADLT rates are updated every year, while most other laboratory test rates are revisited every three years. CMS guidance adds that CLFS amounts are not subject to geographic, budget neutrality, or annual update adjustments. It also records that for non-new clinical diagnostic laboratory tests, reductions were capped at 10 percent per year for CY2018 to 2020 and 15 percent per year for CY2021 to 2023.
Annual updates cut both ways. A rate based on current private payer data can rise as well as fall, and a lab with a single proprietary test needs payer contracts that support the weighted median it will be measured against. Labs should model the annual reset rather than assume a rate, once set, is stable for three years.
What does the application cycle look like?
Applications use the CMS ADLT application form, and requests for a unique level II HCPCS code go through MEARIS. Applications must be received in the first month of a quarter: January 1 to 31, April 1 to 30, July 1 to 31, or October 1 to 31. The advisory panel and CMS review in the second month, and CMS emails the outcome in the third month. Applications received in the second or third month roll over to the next quarter.
Evidence of Medicare Part B coverage, including the first covered date, is required, and CMS will not approve ADLT status without it. That sequencing matters for laboratories planning a launch. Coverage evidence and the application window both have to line up. A missed first-month window delays the decision by a full quarter.
What reporting duties come with ADLT status?
ADLT rates depend on laboratory-reported data, so the compliance load is real. For each ADLT, the TIN-level reporting entity reports the HCPCS code, each private payer rate, and the associated test volume. A laboratory is an applicable laboratory if it bills Medicare under its own NPI and receives more than 50 percent of its Medicare revenue from the CLFS and the physician fee schedule. MedPAC adds that the laboratory must meet the CLIA definition and the low-expenditure threshold, which is $12,500 in Medicare CLFS revenue during the data-collection period. A single laboratory is exempt from that threshold for its ADLTs, though it still applies to its other tests.
New ADLTs collect data during the first five months of the initial period and report in the sixth month. Excluded from reporting are $0 denied claims, capitated payments, unresolved appeals, bundled payments that cannot be tied to specific HCPCS codes, and estimated rates. Changes to the application, including test sales, licensing, or ownership changes, must be reported to CMS within 30 days. For Criterion A tests, that includes changes to biomarkers or algorithms. An algorithm update that nobody reports to CMS is a compliance problem waiting to happen.
How should genetic testing labs apply this?
First, decide whether the test is genuinely single-site and proprietary. A test that is licensed to or sold for use by other laboratories fails the single-laboratory requirement. Second, document the algorithm and the new clinical information in a way that maps to Criterion A, or gather the FDA identifiers for Criterion B. Third, build the Part B coverage evidence early, because CMS requires it before approving status. Fourth, put the quarterly application window, the 130 percent recoupment test, and the annual data reporting calendar on one compliance calendar owned by a named person.
Finally, remember that status does not replace denial prevention. A test priced at list charge still needs correct ICD-10 linkage, medical necessity documentation, and prior authorization status, or the claim never pays. Our guide to genetic testing denials covers the common failure points, and our look at the RESULTS Act and PAMA reform explains the legislative debate that could change how all of these rates are set. Teams using ScreenMyGene can centralize order-level documentation and coverage checks, but the pricing and application strategy remains a laboratory leadership decision.
Frequently asked questions
What qualifies a test as an ADLT?
The test must be covered under Medicare Part B, offered and furnished only by a single laboratory, and meet one of two criteria: a multi-biomarker DNA, RNA, or protein analysis using an empirically derived algorithm that provides new clinical diagnostic information, or FDA clearance or approval.
How is a new ADLT paid at launch?
For the initial period of three full calendar quarters, a new ADLT is paid its actual list charge. After that, payment becomes the weighted median of private payer rates, updated annually. CMS recoups any amount if the list charge exceeded 130 percent of that median.
When can a laboratory apply for ADLT status?
Applications must arrive in the first month of a quarter: January, April, July, or October. The advisory panel and CMS review in month two and email the outcome in month three. Applications received later in the quarter roll to the next one.
How often are ADLT rates updated?
MedPAC states that ADLT rates are updated every year. Most other clinical laboratory tests are revisited every three years, so an ADLT rate follows current private payer data more closely, in either direction.
What changes must an ADLT laboratory report to CMS?
Changes to the application, including test sales, licensing, or ownership, must be reported within 30 days. For tests approved under the multi-biomarker algorithm criterion, changes to biomarkers or the algorithm must also be reported.
This article is for educational and informational purposes only and is not legal, financial, coding, or medical advice. Laboratories should consult qualified counsel, compliance, and billing professionals about their specific situation and confirm requirements against current CMS instructions.
Sources: MedPAC, Payment Basics: Clinical Laboratory Services (revised October 2026); CMS, Guidance for Laboratories on Advanced Diagnostic Laboratory Tests (ADLTs).