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The rules say that plans must pay for a medical service or item if regular Medicare would pay for it in this case. 
You can find this rule at 42 Code of Federal Regulations (CFR) Section 422.101. 
 
The rules say Coverage Indications, Limitations, and/or Medical Necessity: 
 
This is a limited coverage policy for pharmacogenomics testing (PGx) including single gene, multi-gene 
panels, and combinatorial tests. These tests are generally covered (with a few exceptions) as described in 
further detail below to improve safety in the use of specific medications by avoiding potentially harmful 
medications, doses and/or adverse reactions known to occur with certain genotypes. 
 
PGx testing is considered reasonable and necessary in limited circumstances as described below as an 
adjunctive personalized medical decision-making tool once a treating clinician has narrowed treatment 
possibilities to specific medications under consideration for use, or is already using a specified medication, 
based on other clinical considerations including the patients diagnosis, the patients other medical conditions, 
other medications, professional judgment, clinical science and basic science pertinent to the drug, and the 
patients preferences and values. PGx tests must demonstrate analytical validity, clinical validity, and clinical 
utility to be considered reasonable and necessary for coverage. This is demonstrated through a required 
technical assessment of the test. PGx tests are considered germline tests and must adhere to other relevant 
germline testing policies published by this contractor. It is understood that some panel/combinatorial tests may 
include content that has demonstrated clinical utility and some that has not. In such circumstances, this 
contractor may provide coverage for the components of tests that have demonstrated clinical utility when used 
in the proper clinical context described below. 
 
 
 
 
 
 Clinical Indications 
 
PGx tests are indicated when medications are being considered for use (or already being administered) that are 
medically necessary, appropriate, and approved for use in the patients condition and are known to have a 
gene(s)-drug interaction that has been demonstrated to be clinically actionable as defined by the FDA (PGx 
information required for safe drug administration) or Clinical Pharmacogenetic Implementation Consortium 
(CPIC) guidelines (category A and B). The selection of the medications in question must be derived from 
clinical factors/necessity rather than from a PGx test. Once the putative therapeutic agents are selected, and 
those agents are known to have gene-drug interactions as identified above, then a PGx test may be considered 
reasonable and necessary when the result of that test is necessary for the physicians decision-making process 
regarding safely administering or dosing the drug. PGx testing is not considered reasonable and necessary 
merely on the basis of a patient having a particular diagnosis. Unless the record reflects that the treating 
clinician has already considered non-genetic factors to make a preliminary drug selection, PGx testing is not 
considered reasonable and necessary. This LCD does not address (provides neither coverage nor non-coverage 
criteria) PGx testing for anticoagulation dosing, which is addressed by the National Coverage Determination 
(NCD) 90.1. 
 
Coverage information: 
 
The clinical record must clearly show the use of or intent to prescribe a drug that has known drug-gene 
interactions that require a PGx test to be ordered to define the safe use of that drug in that patient. 
 
If a treating clinician orders a single gene test or a test for a particular allele(s), but as a matter of operational 
practicality, the laboratory tests that single gene or allele on a platform that looks for variants in other genes / 
alleles as well, that particular test done in that particular instance is considered a single gene / allele test for 
coverage purposes. In this scenario the provider may bill for the component of the test that was reasonable and 
necessary (in this example, the single gene test). 
 
A multi-gene panel is considered reasonable and necessary if more than one single gene on that panel would be 
considered reasonable and necessary for safe use of the medication in question or if multiple drugs are being 
considered (each fulfilling the criteria of actionable gene-drug interactions identified above) that have different 
relevant genes. Additionally, a gene panel must contain at a minimum all the necessary relevant gene/allele 
content required for their indicated use to meet clinical utility requirements. Such minimum criteria are 
determined by experts including relevant associations such as the Association for Molecular Pathology and are 
considered during the technical assessment. A multi-gene panel is not considered reasonable and necessary if 
only a single gene on the panel is considered reasonable and necessary. 
 
If two or more single genes are tested, rather than a multi-gene panel, then the record must reflect that a 
clinician individually ordered each gene, and each single gene must individually be reasonable and necessary at 
the time they are ordered. 
 
The ordering provider of a PGx test is restricted to providers who have the licensure, qualifications, and 
necessary experience / training to both diagnose the condition being treated and also to prescribe medications 
(the provider must be able to do both) for the condition either independently or in an arrangement as required 
by all the applicable state laws. 
 
Test components that are not reasonable and necessary 
 
Genes not identified as having actionable use are not considered reasonable and necessary. The algorithms 
employed in combinatorial testing are also not currently considered reasonable and necessary components of 
multi-gene testing. 
 Technical requirements 
The treating clinician receiving the laboratory report must be able to use the genetic information presented to 
guide treatment. To accomplish this, the laboratory must clearly report the clinical significance of the resultant 
genotype, based on empirical data or validated methodologies, as an annotation or interpretation. For clarity, 
the report should document the specific genotype-drug interaction that lead to the resultant interpretation. 
 
A lab may test for a reference allele as a matter of exclusion (e.g. report that a patient has a reference allele 
when alternate alleles are not found). However, in such cases, the report must identify which allele is the 
reference allele and that the reference allele is reported as a matter of exclusion. 
 
Noncovered Indications 
PGx testing is not covered when a treating clinician is not considering treatment with a medication that has an 
actionable drug-gene interaction, or when the use of a medication with a drug-gene interaction is not reasonable 
and necessary. 
 
You can find this information in Medicare's Local Coverage Determination (LCD): MolDX: 
Pharmacogenomics Testing (L38394). 
 
If you want to read these Medicare rules, you can go to this website www.medicareappeal.com.