Millions of Medicare beneficiaries could see changes in how common laboratory tests are reimbursed after the Centers for Medicare & Medicaid Services (CMS) released preliminary 2027 payment rates for clinical lab services. The preliminary rates were released Monday and are based on the latest private insurer payment data collected under the Protecting Access to Medicare Act (PAMA), a law designed to align Medicare reimbursement with market prices. CMS said the new rates show Medicare has been paying about 16 percent more for laboratory services than private insurers and estimates the changes could save taxpayers roughly $1 billion annually.
Mehmet Oz in a statement. The new rates do not directly change what most Medicare beneficiaries are paying out of pocket for covered laboratory tests. However, the reimbursement levels can affect lab revenues and have become the focus of a broader fight over whether Medicare's payment methodology accurately reflects the cost of providing testing services.
CMS said the updated rates will better reflect market realities and reduce excessive spending, but lab groups are issuing warnings that significant reimbursement cuts could affect patient access to testing, particularly in rural and underserved areas. CMS released preliminary weighted median private-payor rates for clinical diagnostic laboratory tests under the Clinical Laboratory Fee Schedule (CLFS), the system Medicare uses to pay laboratories for services such as blood tests, urinalysis, and molecular diagnostics. Source: CMS preliminary CY 2027 Clinical Laboratory Fee Schedule data The largest potential reductions were concentrated in genomic sequencing (-23 percent), molecular pathology (-22 percent), microbiology (-19.3 percent), and immunology testing (-19.3 percent), according to CMS.
Chemistry testing, a category that includes many routine blood tests commonly used by Medicare beneficiaries, showed an average potential reduction of 16 percent, but proprietary laboratory analysis tests saw a much smaller average reduction of 2.4 percent. The agency said this is the second full data collection and reporting cycle for most lab tests since PAMA was enacted in 2014. Congress delayed the process several times before requiring a new reporting cycle in 2026, allowing CMS to use updated private-payor data to calculate the proposed 2027 rates.
According to CMS, these payment reductions will not occur all at once. Federal law limits decreases for a clinical diagnostic laboratory test to no more than 15 percent annually through 2029, meaning any larger reductions would be phased in over several years. Quest Diagnostics issued a statement criticizing the preliminary rates and said they highlight flaws in the PAMA reporting system.
In a statement provided to Newsweek, the company said the rates "clearly reflect the underlying flaws in the Protecting Access to Medicare Act (PAMA) rate-setting process and the urgent need for Congress to enact sustainable, long-term reform through passage of the RESULTS Act." Quest said the current system fails to collect sufficiently representative private-payor data and added that Congress should replace the methodology with a broader reporting framework through the Reforming and Enhancing Sustainable Updates to Laboratory Testing Services (RESULTS) Act. Currently, more than 130 members of Congress and 70 patient and provider organizations, including the American Medical Association, American Cancer Society and American Hospital Association, support the legislation. Quest also commissioned a survey and found that 96 percent of registered voters considered diagnostic laboratory testing important to their own or their family's care, while 74 percent said Congress should act to prevent further payment cuts before patients are affected.
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