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From the Laboratory Economics Newsletter: The Outlook For Medicare CLFS Rates
June 26, 2025The following timely article is reprinted with permission from Laboratory Economics, Jondavid Klipp, editor. We thank them for granting us the right to share their valuable insights on this vital topic. Learn more about Laboratory Economics at www.laboratoryeconomics.com
A note from Clarisa Blattner, XiFin Sr. Director, Revenue and Payor Optimization:
As we look toward 2026, laboratories across the country face a looming challenge that could significantly disrupt operations and patient access to diagnostic services…deep cuts to Medicare Clinical Laboratory Fee Schedule (CLFS) rates. While this issue may seem like a policy detail best left to legislative committees, its real-world consequences are urgent, measurable, and directly tied to the future of laboratory medicine. This article from the June issue of Laboratory Economics does an excellent job outlining the current state of play.
Preserving fair and sustainable CLFS rates is not just about reimbursement; it’s about maintaining patient access to timely, high-quality diagnostic testing. Laboratories are the backbone of modern medicine, and we cannot afford to weaken them through flawed policy implementation. This article underscores how important it is that we as an industry work together to ensure that the next chapter of PAMA reform supports the innovation, equity, and resilience our healthcare system needs.
Birenbaum says that NILA is working with the American Clinical Laboratory Assn. to introduce a new “PAMA-fix” bill within the next month or two. Any new bill would seek to delay the sched- uled Medicare CLFS rate cuts for 2026 and ensure that hospital lab rates are correctly represented in future private-payer payments surveys and rate calculations.
It’s too late to get a PAMA-fix into the Big Beautiful Bill currently being debated in the Senate. The hope is that a PAMA-fix could get inserted into a major government funding or healthcare policy bill at the end of the year. But this will be a tough hill to climb, and time is running short.
Here’s an outline of three possible scenarios:
Scenario 1: PAMA Proceeds as Scheduled by Law
The first PAMA survey, which was based on private-payer lab rates from 2016, resulted in three straight years (2018-2020) of 10% cuts to most lab tests on the Medicare CLFS. A second PAMA survey and additional rate cuts were then frozen for five straight years (2021-2025).
Under current law, Medicare CLFS rates for approximately 800 lab tests will be reduced by up to 15% on January 1, 2026. See table on page 4.
In addition, the second PAMA survey is scheduled to begin on January 1, 2026. Independent labs, hospitals and large POLs are required to submit their private-payer volumes and reimbursement rates from the period January 1, 2019 to June 30, 2019 to CMS by March 31, 2026. CMS will use this data to calculate new median private-payer rates to set the Medicare CLFS for 2027-2029.
Scenario 2: A PAMA-Fix is Introduced and Passed into Law
Despite widespread support from both Democrats and Republicans, the last PAMA-fix bill SALSA (H.R. 2377/S. 1000) failed to get passed into law. The culprit was cost. The Congressional Budget Office (CBO) had projected that passing SALSA into law would cost $6 billion over 10 years. A separate analysis by ACLA had estimated the cost at less than $3 billion.
ACLA is now crafting a new PAMA-fix proposal and seeking supporters to introduce it. A simpler and less costly alternative to SALSA is what’s needed.
There is little argument that current PAMA law pertaining to labs is unworkable. In particular, it will be nearly impossible for most hospital labs to dig up their private-payer volume and pay- ment data from 2019 and report it to CMS, notes Josh Kramer, Managing Partner at the labora- tory IT company Leap Consulting Group (Teaneck, NJ). Kramer says that many hospitals have
gone through system upgrades and changes since 2019 and these hospitals may not have historical claims data readily available from legacy systems. In addition, PAMA does not allow hospitals to ignore paper claims data. And smaller hospitals may not have detailed lab data from paper claims loaded in their systems at all, according to Kramer.
A new PAMA-fix bill will need to include a mechanism (e.g., statistical sampling) to ensure that the higher rates paid to hospital labs are accurately surveyed and included in CLFS rate calculations.
Scenario 3: CLFS Remains Frozen and PAMA is Delayed Another year
In previous scoring of one-year delays in PAMA payment cuts and reporting, the CBO assumed that private payers were adjusting their lab test reimbursement rates for inflation. Based on this assumption, the CBO concluded that the suspension of PAMA would result in cost savings. The CBOis no longer assuming private payer inflation updates. As a result, another one-year PAMA delay is unlikely to be scored to provide savings and thus unlikely to be passed into law.
Medicare CLFS Rates to Drop by Average 8.5% in 2026
Rate cuts of up to 15% for nearly 800 tests on the Medicare CLFS are scheduled to take effect on January 1, 2026. This will result in an overall average drop in Medicare fee-for-service payments of 8.5% for most clinical labs, according to an LE analysis of the top 25 CLFS tests by Medicare Part B carrier allowed charges.
Among the lab tests that face the maximum 15% rate cut are CPT 87798 (Detect agent not otherwise specified by PCR), CPT 80061 (Lipid panel), CPT 87481 (Candida by PCR) and CPT 87801 (Detect agent, multiple organisms, by PCR).
Importantly, scheduled Medicare rate cuts may also influence other payers, including Medicaid and most commercial insurance plans that tie their lab test rates to a percentage of the Medicare CLFS.
Scheduled Medicare Rate Changes for 25 Key Tests
– Laboratory Economics, June 2025