CMS Targets $1 Billion in Annual Savings With new Medicare Lab Payment Rates — Here’s What Could Change in 2027

The Centers for Medicare & Medicaid Services (CMS) is proposing new 2027 Medicare payment rates for laboratory services, with the changes expected to save taxpayers about $1 billion annually.

On Monday, the CMS said Medicare has been paying about 16% more for laboratory services than private payors and plans to bring most 2027 payments closer to private-sector rates.

Payment Changes

The preliminary 2027 rates are based on information collected from laboratories about what private insurers pay for the same tests. Congress created the process in 2014, but legislative delays meant it had been used only once for these tests. The Consolidated Appropriations Act, 2026, allows CMS to collect updated private-payor data every three years.

By law, Medicare payments for a clinical diagnostic laboratory test cannot be reduced by more than 15% per year through 2029, so CMS will gradually phase in the reductions.

The public has 30 days to review and submit comments on the preliminary rates and supporting data. For laboratory tests without private-payor data, CMS held a public meeting on Sept. 15 and 16 to determine pricing. Those decisions will be published in early October with another 30-day comment period.

Oz Comments

CMS Administrator Dr. Mehmet Oz said, "By releasing this preliminary information, we are providing greater transparency into the actual market rates for laboratory services, rooting out waste, and supporting better-informed pricing decisions across the healthcare system."

CMS expects to finalize the 2027 Clinical Laboratory Fee Schedule rates in November, with the final rates taking effect Jan. 1, 2027.

The proposed Medicare payment changes are particularly relevant to large diagnostic laboratory providers such as Quest Diagnostics Inc. (NYSE:DGX). In a recent survey, Quest Diagnostics found that 96% of registered voters said diagnostic laboratory tests were important to their or their family’s care, while 83% said they had relied on a laboratory test in the past two years to help a doctor make a medical decision.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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