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Medicare proposes lower payments for lab tests, estimates $1 billion in annual savings
If finalized, rates would take effect Jan. 1, 2027
Updated:
key insights:
- Medicare has proposed new payment rates for laboratory tests that it estimates would save taxpayers $1 billion a year.
- CMS says its preliminary analysis shows current Medicare rates are about 16% higher than the rates private insurers pay for the tests it reviewed.
- The rates are open for public comment, and if finalized, would take effect January 1, 2027.
Medicare is moving toward lower payments for many laboratory tests after finding that private insurers generally pay less for the same services.
The Centers for Medicare & Medicaid Services (CMS) said its preliminary 2027 payment rates could save taxpayers an estimated $1 billion annually. The proposed changes cover clinical diagnostic tests, including blood tests and urinalysis.
The figures are preliminary. CMS plans to publish final rates in November, with the new payments scheduled to begin January 1, 2027.
The agency based its proposal on prices and test volumes reported by laboratories. Under a system established by Congress in 2014, Medicare rates for most lab tests are meant to reflect what private insurers pay. Legislative delays meant CMS had completed only one previous full round of data collection for most of these tests.
In its latest analysis, CMS calculated private insurer rates for 1,528 test codes. Those rates were lower than current Medicare rates for 1,171 codes, higher for 186, and unchanged for 169. Two codes had no comparable 2026 Medicare rate. Across the tests reviewed, the potential rate change averaged about 16% lower.
Phased-in reductions
The reductions would be phased in. Federal law limits the cut for any individual test to 15% in a year through 2029.
For Medicare patients, a lower payment to a lab does not necessarily mean a lower bill for a test. Medicare says people usually pay nothing for covered diagnostic laboratory tests ordered by a healthcare provider. A patient could face costs if a recommended test is not covered or is performed more often than Medicare allows. Patients can ask their provider whether a test is covered before having it done.
CMS is accepting comments on the preliminary rates for 30 days following its September 21 release.