The cost of sequencing, or reading, DNA and RNA is now so low that many genealogists spend about $200 on genealogy DNA tests can help fill out their family trees. Dog parents may spend about $100 to learn what kind of dog they have.

Grail is already using genomics sequencing technology to power a test that screens blood for signs of 50 types of cancer. Phenomix Sciences wants to use the technology to help patients choose the right weight-loss drugs.

But, for patients fighting cancer, the "testing is generally underused and used inconsistently," Dovidio said. "As a result, some patients are given a less appropriate drug. Others are given drugs without any prior testing."

That means that some patients with cancer get very expensive, potentially dangerous specialty drugs that are unlikely to help them. Other patients with cancer fail to get drugs that would be likely to save their lives.

Avalon and competitors are trying to fix the problem by adding programs that will increase the odds that the right patients get the right tests without facing unnecessary prior authorization delays.

The precision medicine problem: Oncologists have been working on genomics tests and other biomarker tests that can improve cancer treatment, through "precision medicine" initiatives, for decades.

Related: Precision medicine: What employers need to know

The cost of the tests themselves typically ranges from about $300 to $10,000.

One challenge has been that patients who get certain results may have a strong incentive to ask for specialty drug treatments that could cost $100,000 or more.

Some health insurers have been reluctant to pay for the tests, because of the costs of the tests, uncertainty about whether use of the tests would approve care outcomes, and concerns about whether use of the tests would encourage desperate families to seek expensive treatments with severe side effects that help only a small percentage of patients.

Insurance agents have tried to fill the gap by selling genomics testing insurance.

Charities pay for precision medicine testing at no cost or for a low cost for many patients with cancer.

The research: Dovidio said the latest research shows that well-managed precision medicine DNA and RNA testing can be a good value both for patients and plans.

A 2022 study of 27,000 patients with non-small cell lung cancer found that only 29% were getting the treatment that matched their genomics testing results, Dovidio said.

A separate study of 9,500 patients with the same form of lung cancer found that only 44% of the patients with test results showing they should get a certain drug were getting the recommended drug, he added.

Another study, published in 2023, showed that, if all patients with a certain type of lung cancer had the right kind of genomics test and took the right drug, the average cost would be only about $16,000 per year of life gained, he said.

Moreover, he said, because genomics testing can identify patients who are poor candidates for use of expensive drugs, one type of testing can reduce the cost of care for a commercial health plan participant with lung cancer by about $8,500 per month, and another type of testing can reduce the total cost of care for a commercial plan participant with lung cancer by an average of about $125,000.