CMS proposes Medicare lab cuts to save $1Bn a year
- CMS posted preliminary 2027 rates under the Clinical Laboratory Fee Schedule.
- CMS found Medicare pays about 16% more for lab services than private payers.
- The changes would save the government an estimated $1 billion a year.
- ACLA says 775 tests face the maximum 15% cut in 2027.
WASHINGTON, D.C., UNITED STATES — The Centers for Medicare and Medicaid Services (CMS) has posted preliminary 2027 payment rates for clinical diagnostic laboratory tests, setting up cuts it estimates will save the government about $1 billion a year.
The agency found that Medicare has been paying about 16% more in total for lab services than private payers, since Medicare lab rates are tied to what private insurers pay.
Cuts capped at 15% a year through 2029
By law, Medicare payment for a clinical diagnostic test cannot be reduced by more than 15% a year through 2029, and the CMS said it would phase in the reductions, Healthcare Dive reported.
The rates are a step toward setting 2027 Medicare payments under the Clinical Laboratory Fee Schedule.
“Taxpayers and Medicare patients have been paying excessive rates to labs for years, but with some help from Congress, CMS is working to ensure that Medicare isn’t paying more than private insurers for the exact same tests,” CMS Administrator Dr. Mehmet Oz said.
Congress enacted the Protecting Access to Medicare Act (PAMA) in 2014, requiring the CMS to periodically update payment rates for most lab services based on what private insurers pay.
Lab group warns of patient access risk
The American Clinical Laboratory Association (ACLA) said the proposed rates would reduce payments for almost 1,200 tests, including 775 tests that would face the maximum 15% cut in 2027.
The trade group said the new rates rely on data from just 2% of all labs paid under Medicare Part B in 2024.
“The result is a distorted and incomplete picture of the market that drives payment cuts,” ACLA said.
PAMA has already produced three consecutive years of payment cuts of up to 10%, followed by six years of payment freezes, and labs now face three more years of cuts of up to 15% starting in 2027, the group said.
ACLA warned that the steep annual cuts threaten patient access to critical lab testing services and continued investment in diagnostic innovation.
For lab and health system finance teams, lower reimbursement per test puts pressure on the cost of the medical billing and claims work behind each order.
Organizations looking to protect margins can weigh healthcare outsourcing for revenue cycle support, comparing options among the top U.S. healthcare outsourcing companies before the 2027 rates take effect.
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