CMS proposes Medicare payment cuts for over 1,100 laboratory test codes

The Centers for Medicare & Medicaid Services (CMS) proposed resetting Medicare laboratory payments in 2027, which could save taxpayers $1 billion annually. Based on expanded private-payer data from 6,411 laboratories, preliminary rates are 16% lower on average than 2026 rates, affecting over 1,100 test codes. While genomic and molecular tests face cuts over 20%, annual reductions are capped at 15% through 2029. CMS has opened a 30-day public comment period before finalizing rates in November 2026.

Medicare laboratory payment cuts

• ▪The Centers for Medicare & Medicaid Services is preparing to reset Medicare laboratory payments in 2027, estimating that preliminary rates are about 16% lower on average than 2026 rates.
• ▪Of the 1,528 laboratory codes calculated by the Centers for Medicare & Medicaid Services, 1,171 codes have preliminary rates below the 2026 Medicare rate.
• ▪Under the Consolidated Appropriations Act, 2026, Medicare payment cuts for individual clinical diagnostic laboratory tests are capped at 15% per year for 2027, 2028, and 2029.
• ▪The Centers for Medicare & Medicaid Services estimates that the proposed 2027 Clinical Laboratory Fee Schedule rates could save taxpayers approximately $1 billion annually.

Private-payer data reporting expansion

• ▪A total of 6,411 laboratories submitted private-payer data in the latest reporting cycle, representing a 230% increase from the 1,942 laboratories in the first cycle.
• ▪Physician-office laboratories represented the largest reporting group in the latest cycle with 3,262 entities, followed by 1,499 other labs, 875 hospital labs, and 775 independent labs.
• ▪Hospital laboratories represented 13.6% of reporting laboratories in the latest cycle, with 875 hospital labs participating compared to 21 hospital labs in 2017.

Test category rate reductions

• ▪Microbiology and immunology preliminary rates are approximately 19.3% lower, while chemistry tests are 16% lower than 2026 Medicare rates.
• ▪Preliminary weighted private-payer rates are 23% lower for genomic sequencing tests and 22% lower for molecular pathology compared to 2026 Medicare rates.
• ▪Proprietary laboratory analyses show a potential decline of 2.4% compared to 2026 Medicare rates, representing a much smaller reduction than other test categories.

PAMA methodology industry criticism

• ▪The American Clinical Laboratory Association stated that the original rate-setting methodology contributed to nearly $4 billion in Clinical Laboratory Fee Schedule cuts from 2018 through 2020.
• ▪The American Clinical Laboratory Association argued in December 2025 that the original rate-setting process captured data from fewer than 1% of laboratories and was unrepresentative.

Public comment period timeline

• ▪The finalized 2027 Clinical Laboratory Fee Schedule rates are scheduled to take effect on January 1, 2027.
• ▪The Centers for Medicare & Medicaid Services opened a 30-day public comment period on the preliminary rates and expects to publish final rates in November 2026.