Medicare has been paying labs about 16% more than private insurers for the same tests. To address this, the Centers for Medicare & Medicaid Services plans to realign its 2027 payment rates under the Medicare Clinical Laboratory Fee Schedule with private sector prices, the agency said.
Congress created a rate-update process in 2014 requiring CMS to periodically align payment rates with private payor rates, but due to legislative delays, the process was used only once. The Consolidated Appropriations Act, 2026, cleared the way for CMS to collect updated private payor data every three years.
"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," said CMS Administrator Dr. Mehmet Oz.
By law, Medicare payment reductions cannot exceed 15% per year through 2029, so the agency will phase in the adjustments gradually. For laboratory tests without private-payor data, CMS held a public meeting Sept. 15-16 to determine pricing. The public has 30 days from now to submit comments on the preliminary rates. Final rates are expected in November, with implementation beginning Jan. 1, 2027.