Genetic Testing Lab Audits: How UPIC and RAC Reviews Start and Escalate
Short answer: Most genetic testing lab audits begin with routine Medicare contractor reviews, such as RAC or UPIC audits, not with a criminal investigation. Law firm Katten notes many recent cases started that way before referral to HHS OIG and DOJ. With genetic tests at 43% of 2024 Part B lab spending, labs should expect more scrutiny and prepare documentation now.
Why genetic testing labs are in the audit crosshairs
On January 28, 2026, HHS OIG released report OEI-09-25-00330, titled "Total Medicare Part B Spending on Lab Tests Rose in 2024, Driven by Increased Spending on Genetic Tests," according to Katten. Total Part B clinical lab spending rose 5% from 2023 to $8.4 billion in 2024, even as fewer enrollees received lab tests, per Arnold & Porter's summary of the report. The report is the annual analysis of the top 25 lab tests by spending required under the Protecting Access to Medicare Act.
The headline number for audit planning is the mismatch. Genetic tests made up about 5% of paid Part B lab tests but 43% of lab reimbursement, roughly $3.6 billion. Katten reports genetic test reimbursement rose about 20% from 2023 and has nearly doubled since 2019, while non-genetic reimbursement fell to its lowest level since 2018. Fee schedule rates have been static since 2020, so the growth reflects utilization rather than higher rates.
The spending concentration contractors can see
Arnold & Porter reports genetic test spending grew from $1.4 billion in 2018 to $3.6 billion in 2024, while non-genetic spending fell to $4.8 billion. Ten of the top 25 codes by spending were genetic tests, together totaling about $1.5 billion, and six of those ten rose at least 30%, per Katten. In 2024, 346 labs each received more than $1 million in Part B genetic test payments and 55 exceeded $10 million.
The single largest line item was CPT 87798, the catchall code used when no organism-specific code exists for an infectious disease genetic test. It paid $442.5 million in 2024, up 51% from 2023, with a median payment of $447 per claim, per Arnold & Porter. Katten rounds it to $443 million and notes it was the most reimbursed Part B code that year. A high-dollar, nonspecific code with fast growth is exactly what a data-driven reviewer flags first.
How a contractor audit becomes an enforcement referral
Katten's February 13, 2026 analysis predicts the spending shift will almost certainly bring more civil and criminal enforcement by HHS OIG and DOJ over the next 12 to 24 months, comparing it to the wave that followed the rise in TRICARE compound pharmacy reimbursement. It also observes that many recent cases began with routine RAC or UPIC audits by Medicare contractors, such as Qlarant, which then refer matters to HHS OIG and DOJ.
That sequence matters operationally. An additional documentation request is not an enforcement action, but it is the first moment a lab's records are read by someone whose job includes referrals. DOJ's national health care fraud takedowns show where the pipeline can end: the 2024 takedown charged 36 defendants in genetic testing telemedicine schemes involving over $1.1 billion in alleged fraud, and the 2025 takedown charged 49 defendants in telemedicine and genetic testing fraud involving more than $1.17 billion. Neither involves ordinary compliant labs, but both explain why contractors treat the category carefully. For the broader policy context, see our coverage of the OIG work plan for Part B genetic testing and of CMS payment suspensions for genetic testing labs.
What the claims data says about pay-first jurisdictions
MedScout's April 28, 2026 analysis of Medicare fee-for-service claims shows how jurisdiction shapes risk. Twenty-eight states already require MolDX registration; the other 22 generally pay claims first and audit later. In pay-first regions, 87798 claim volume nearly doubled from 694,000 to 1.3 million, while MolDX regions stayed roughly flat. Labs billing the code rose from 402 to 501 in pay-first regions and fell from 435 to 358 in MolDX regions. Texas, under Novitas, grew 244%, from 165,000 to 569,000 claims, about two-thirds of non-MolDX growth.
MedScout also cites precedent: OIG flagged $888 million at risk of improper payment for CPT 81408 in its 2023 audit, and after contractors tightened rules and denials increased, volume fell close to zero. Labs in pay-first jurisdictions should read this as a preview of how fast a contractor posture can change. Our explainer on national MolDX expansion and the CRUSH rule covers the policy track.
Audit-readiness steps drawn from published counsel guidance
Arnold & Porter's recommendations to labs, ordering providers, and investors are a practical checklist. First, review coding practices for high-cost genetic tests, especially nonspecific or panel codes. Second, audit medical necessity documentation for oncology and infectious disease genetic testing. Third, evaluate financial relationships with manufacturers, marketing entities, telemedicine providers, and referring practitioners. Fourth, assess internal controls over billing under the Clinical Laboratory Fee Schedule. Fifth, consider exposure under the Anti-Kickback Statute, the False Claims Act, and the Eliminating Kickbacks in Recovery Act, which extends to private payor arrangements.
Operationally, that translates to a few habits: keep a retrievable documentation package for each high-dollar test, track denial and additional-documentation-request trends by code, and route contractor letters to a named owner with a response deadline. Strong front-end documentation also reduces denials generally; see our guide to genetic testing denials and the basics of Medicare coverage for genetic testing. Decision-support tools on the ScreenMyGene homepage can help teams align orders with coverage criteria before claims are filed.
Frequently asked questions
What is the difference between a RAC and a UPIC audit?
Both are Medicare contractor reviews. Katten identifies RAC and UPIC audits, with Qlarant named as one example contractor, as common starting points for recent genetic testing cases. The sources reviewed here do not detail each program's mechanics, so labs should confirm scope in each request letter.
Does an audit mean the lab is under investigation?
No. Katten describes these audits as routine contractor reviews that sometimes lead to referral to HHS OIG and DOJ. A documentation request is not an allegation. Prompt, organized responses and consistent coding give a lab the best footing if a review expands.
Why is CPT 87798 drawing so much attention?
It is a catchall code for infectious disease genetic tests without an organism-specific code. It paid $442.5 million in 2024, up 51%, and was the highest-spending Part B lab code, per the OIG report as summarized by Arnold & Porter and Katten.
Which labs face the most exposure?
The OIG data shows 346 labs received over $1 million in genetic test payments and 55 exceeded $10 million in 2024. Katten also expects scrutiny of high-cost testing, nonspecific coding, and manufacturer or telemedicine arrangements. Exposure depends on a lab's own coding, documentation, and referral relationships.
What should a lab do first?
Start with a documentation and coding self-review of the highest-dollar tests, especially nonspecific or panel codes, then review financial relationships with referral sources. Involve qualified healthcare counsel for any contractor letter that requests records or signals a broader review of billing.
Educational disclaimer: This article summarizes publicly reported information as of October 18, 2026 for laboratory, revenue cycle, and clinical decision-support audiences. It is not legal, billing, coding, or compliance advice. Enforcement predictions are those of the cited authors, not statements by CMS, OIG, or DOJ. Consult qualified healthcare counsel before responding to any audit or making compliance decisions.
Sources: Katten, "Genetic Testing Enforcement Poised to Rise," Feb. 13, 2026; Arnold & Porter, "Genetic Testing Under the Microscope," March 2026; MedScout, April 28, 2026; HHS OIG report OEI-09-25-00330 (Jan. 28, 2026) as summarized by the sources above.