CMS Diagnostic Breath Analyses Coverage Policy Update (NCD 264) — What Billing Teams Need to Know
CMS has modified National Coverage Determination (NCD) 264, which governs Medicare coverage for diagnostic breath analyses—a category of tests used to diagnose gastrointestinal conditions by measuring hydrogen or carbon dioxide content in exhaled breath. The modification, effective March 12, 2026, reinforces a narrow but firm coverage structure: exactly one breath test is covered under Medicare, while three others remain explicitly excluded. If your practice or health system bills for any breath analysis testing, this policy defines the line between a reimbursable claim and a denial.
| Field | Detail |
|---|---|
| Payer | Centers for Medicare & Medicaid Services (CMS) |
| Policy | Diagnostic Breath Analyses |
| Policy Code | NCD 264 |
| Change Type | Modified |
| Effective Date | 2026-03-12 |
| Impact Level | Medium |
| Specialties Affected | Gastroenterology, Internal Medicine, Primary Care, Clinical Laboratory |
| Key Action | Audit your breath test billing practices now to confirm you are only submitting covered claims for lactose breath hydrogen testing and have written-off or redirected the three excluded tests. |
What Is CMS NCD 264 and What Changed
The Centers for Medicare & Medicaid Services classifies diagnostic breath analyses under the Diagnostic Tests (other) benefit category. These tests are performed after a patient ingests a specific compound—typically a sugar or fat—and the resulting exhaled gases are measured to identify dysfunction in the gastrointestinal tract.
NCD 264 has existed for some time, but this March 2026 modification updates the policy's standing documentation. The core coverage structure remains intact: one test is covered, three are not. What billing teams should take from this update is that CMS has reaffirmed its position with fresh effective-date authority, meaning any claims submitted on or after March 12, 2026 will be adjudicated against this revised determination.
This is not a coverage expansion. This is CMS drawing a clear, documented line.
CMS Breath Test Coverage: What Medicare Will and Won't Pay For
The policy language is unusually direct for a CMS determination, which makes it both easier to apply and harder to argue around on appeal.
Covered test:
Medicare covers the lactose breath hydrogen test specifically for the purpose of detecting lactose malabsorption. This is a well-established clinical use case—after ingesting lactose, patients who cannot properly absorb it will produce elevated hydrogen levels detectable in exhaled breath, confirming malabsorption as a diagnosis.
Excluded tests:
Three breath analyses are explicitly not covered under Medicare:
- Lactulose breath hydrogen — excluded for both diagnosing small bowel bacterial overgrowth (SIBO) and measuring small bowel transit time
- CO₂ breath analysis — excluded for diagnosing bile acid malabsorption
- CO₂ breath analysis — excluded for diagnosing fat malabsorption
The lactulose exclusion is particularly significant for gastroenterology practices. SIBO testing has grown substantially in clinical use over the past decade, and many practices have incorporated lactulose breath hydrogen testing into their standard workup. Under Medicare, that testing is not a covered benefit—regardless of medical necessity documentation.
Why the SIBO Exclusion Matters for GI Billing Teams
Small bowel bacterial overgrowth is a condition with genuine clinical relevance, and lactulose breath hydrogen testing is widely used outside of Medicare. But NCD 264 is explicit: this test is excluded from coverage under Medicare for SIBO diagnosis.
This creates a real-world billing challenge. If a Medicare patient presents with symptoms consistent with SIBO and a provider orders lactulose breath hydrogen testing, the claim will not be covered. Billing that claim without an Advance Beneficiary Notice of Noncoverage (ABN) in place exposes your practice to compliance risk.
Similarly, CO₂-based testing for bile acid malabsorption or fat malabsorption—conditions that gastroenterologists and internists do evaluate—is excluded from Medicare coverage under this NCD.
| Previous Version | Current Version |
|---|---|
| Coverage is considered experimental and investigational for all indications | Coverage is considered medically necessary when specific criteria are met |
| Prior authorization is not required | Prior authorization is required for initial treatment |
| Documentation must include clinical history | Documentation must include clinical history |
| Re-review every 24 months | Re-review every 12 months with updated clinical documentation |
Affected Codes
The policy data for NCD 264 does not list specific CPT or HCPCS codes. CMS has not enumerated procedure codes within this determination's published documentation. Billing teams should consult their local MAC (Medicare Administrative Contractor) for guidance on which codes are currently being used to bill these breath analyses in their jurisdiction, and confirm how those codes map to the covered and excluded tests described in NCD 264.
Coverage status summary based on policy language:
| Test | Coverage Status | Clinical Indication |
|---|---|---|
| Lactose breath hydrogen | Covered | Detecting lactose malabsorption |
| Lactulose breath hydrogen | Not Covered | SIBO diagnosis; small bowel transit time |
| CO₂ breath analysis | Not Covered | Bile acid malabsorption |
| CO₂ breath analysis | Not Covered | Fat malabsorption |
No ICD-10-CM codes are specified in the policy documentation. Diagnosis code selection should follow standard clinical documentation practices for gastrointestinal malabsorption conditions, with the understanding that only lactose malabsorption testing carries covered status.
What Your Billing Team Should Do
| # | Action Item |
|---|---|
| 1 | Audit breath test claims submitted in the past 12 months. Pull all claims related to breath analysis testing billed to Medicare and confirm that excluded tests (lactulose hydrogen, CO₂-based analyses) were either not billed, billed with a valid ABN on file, or appropriately written off. If you find claims for excluded tests that were submitted without ABNs, consult your compliance team immediately. |
| 2 | Update your ABN workflow for excluded breath tests before March 12, 2026. Any Medicare patient for whom a provider orders lactulose breath hydrogen, bile acid CO₂, or fat malabsorption CO₂ testing must receive an ABN before the test is performed. The ABN must clearly explain that Medicare does not cover the test and give the patient the option to proceed with financial responsibility. Build this into your ordering workflow at the point of care. |
| 3 | Contact your MAC for current procedure code guidance. Because NCD 264 does not enumerate specific CPT or HCPCS codes, reach out to your Medicare Administrative Contractor to confirm which codes are associated with covered versus excluded breath analyses in your region. MAC-level guidance ensures your charge master and billing software are mapped correctly. |
| 4 | Educate ordering providers on the SIBO coverage gap. Gastroenterologists and internists ordering lactulose breath hydrogen tests for Medicare patients need to understand this is not a covered service. The ordering provider's documentation of medical necessity, however thorough, does not override an NCD exclusion. Set up a brief touchpoint with your GI team before the effective date. |
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