The federal government has taken the first step toward lowering what Medicare pays for laboratory tests. On Monday, Sept. 21, the Centers for Medicare & Medicaid Services (CMS) released preliminary 2027 rates for the Clinical Laboratory Fee Schedule, the system the program uses to pay for services such as blood and urine tests, along with molecular and genomic testing.
According to the agency, aligning those rates with the private sector would save about $1 billion a year. Its central argument is that Medicare has been paying about 16% more than private insurers for the same services.
“Taxpayers and Medicare patients have been paying excessive rates to labs for years,” CMS Administrator Mehmet Oz said in a statement. He added that the agency aims, with help from Congress, to ensure the program does not pay more than private insurers for exactly the same tests.
How the rates were calculated
The method stems from the Protecting Access to Medicare Act (PAMA), enacted in 2014, which requires Medicare prices to be based on what private insurers actually pay. Because of repeated legislative delays, the mechanism has been used only once for most tests. The Consolidated Appropriations Act, 2026, cleared the way for a second round: labs reported data between May 1 and July 31 of this year on payments made in the first half of 2025.
According to CMS data, 6,411 laboratories reported information. Of the 1,947 applicable test codes, 1,528 (78.5%) now have a median rate calculated from private-payer data. Among the roughly 1,500 codes with that benchmark, 1,171 would go down compared with 2026 rates, 186 would go up and 169 would stay the same.
The largest potential reductions are in genomic sequencing (23%), molecular pathology (22%), and microbiology and immunology (19.3% each). Chemistry tests, which include many routine blood tests, would fall 16%. Proprietary Laboratory Analyses tests, by contrast, would see an average cut of just 2.4%.
The cuts would not arrive all at once. Federal law bars reducing the payment for a test by more than 15% per year from 2027 through 2029, so the deepest reductions would be spread across several years.
What comes next
The public has 30 days from publication to submit comments on the rates and supporting data. For tests where labs did not report private-payer prices, CMS held a public meeting on Sept. 15 and 16.
Its determinations will be published in early October, with another 30-day comment period. The agency expects to finalize the rates in November, effective Jan. 1, 2027.
Industry calls for reform
Quest Diagnostics criticized the rates, saying they reflect flaws in the PAMA system, which it argues does not capture sufficiently representative private-market data. The company urged Congress to pass the RESULTS Act, which would replace the methodology; the bill has the backing of more than 130 lawmakers and 70 organizations.
The American Clinical Laboratory Association estimated, as reported by MedTech Dive, that nearly 1,200 tests could face reductions, with hundreds receiving the maximum 15% cut in 2027. Labs warn the cuts could limit access to testing, particularly in rural areas.