Why One-Year PAMA Delays Aren’t Enough: The Case for Permanent Reform

Since the Protecting Access to Medicare Act (PAMA) was enacted in 2014, the laboratory industry has endured nearly a decade of unstable policy implementation and financial uncertainty. What began as a well-intentioned effort to modernize lab reimbursement has instead produced a flawed, inequitable system that threatens access to care and long-term sustainability.

While Congress has repeatedly acted to delay reimbursement cuts and data reporting requirements, these 12-month extensions kick the can down the road, offering temporary relief but no resolution. The cycle of short-term patches has become unsustainable. Permanent PAMA reform is urgently needed to preserve patient access to diagnostic testing and ensure the financial viability of the laboratories that provide it.

Congress Must Act Now!

Congress must act now to fix the deeply flawed data collection process under PAMA. The American Clinical Laboratory Association’s (ACLA) landmark court victory against the United States Department of Health and Human Services (HHS) confirmed what labs have been saying for years: CMS’s approach to gathering “market-based” rates was structurally unsound and excluded vast segments of the laboratory market. The court’s decision validated that the methodology was deeply flawed—but without an enforcement mechanism, it acknowledged the problem without compelling a remedy.

From the very start, PAMA was built on a faulty premise. The law aimed to reflect true market prices, yet there has never been a true market to measure in the lab industry. Commercial payors have anchored their rates to Medicare’s published Clinical Laboratory Fee Schedule (CLFS) for decades, creating a closed loop that suppresses reimbursement and distorts any market value calculation. The first PAMA data collection simply imported these depressed rates into the Medicare formula—locking in deep cuts.

With payors still tying rates to the Medicare schedule and having already taken the full reductions from the initial PAMA round, the ongoing process will only perpetuate a downward pricing spiral. The only exception is for advanced diagnostic laboratory tests (ADLTs), which are priced based on actual market data since these newer tests were never part of the outdated CLFS. For all other tests, absent a legislative fix, PAMA will continue to drive reimbursement further below sustainable levels—threatening patient access and the viability of the nation’s diagnostic infrastructure.

Congress has the evidence. The courts have validated the concerns. The time to correct PAMA’s flawed framework is now.

Delays as a Lifeline—But Not a Solution

Recognizing the system’s flaws, Congress has intervened multiple times, issuing short-term legislative delays to prevent scheduled reimbursement cuts and defer data reporting requirements. These delays have spared labs from immediate financial damage and preserved access to testing, at least temporarily.

To date, Congress has:

• Delayed reporting periods six times
• Postponed reimbursement cuts five times

The most recent delay, passed in late 2023, pushes the next round of payment reductions and the second data reporting window to 2026. Without this pause, labs could have faced an additional 15% cut to already reduced rates.

While each delay has provided relief, it has also perpetuated a climate of instability. Labs are forced into short-term planning cycles, hindering infrastructure, staffing, and innovation investment. Worse, these temporary fixes do nothing to correct the structural issues in how data is collected or how rates are calculated.

The True Cost of Inaction

Each time Congress opts for a short-term extension instead of permanent reform, it compounds the uncertainty. Budget-conscious legislators often favor temporary fixes because they appear less costly on paper. The long-term consequences of delay-driven policymaking are significant:

• Eroded patient access: Smaller labs, especially those in rural and underserved communities, cannot absorb repeated cuts. Many may be forced to reduce services or shut down entirely, leaving patients without access to essential diagnostics.
• Reactionary planning: Planning is forced to be short-term and reactionary, not strategic, which simply isn’t sustainable for healthcare infrastructure.
• Stunted innovation: Financial instability deters investment in new tests and technologies, slowing the pace of innovation in areas like cancer detection, infectious disease, and personalized medicine.
• Fragile public health infrastructure: The COVID-19 pandemic highlighted labs’ critical role in public health. Undermining their sustainability makes the U.S. less prepared for future health emergencies.

The Path Forward: Fixing PAMA for Good

As PAMA’s next data reporting deadline and payment cuts approach, temporary delays are no substitute for lasting reform. To restore fairness and sustainability to the Medicare Clinical Laboratory Fee Schedule (CLFS), the industry needs legislative updates that address long-standing structural flaws without disrupting essential functions like ADLT rate-setting.

Key policy solutions under consideration include:

• Modernizing lab representation in data collection by removing the outdated “majority of Medicare revenue” rule and ensuring hospital outreach and physician office labs are appropriately included.
• Limiting year-over-year rate cuts to a manageable 5%, preventing the destabilizing impact of 15% reductions.
• Improving data quality and relevance by excluding Medicaid managed care (MMCO) rates, relying on final payment amounts only, and using up-to-date data collection periods.
• Introducing a third-party, statistically valid claims database to calculate market rates for widely available tests, while keeping direct lab reporting for specialized or low-volume tests.
• Enhancing transparency and accountability, including future judicial review of CLFS rates and publicly available payment rationale.

These reforms would preserve access, support innovation, and bring long-overdue stability to the diagnostic testing ecosystem—without disrupting progress made in ADLT coverage and coding policies.

Time for Congress to Lead

The lab industry is running out of time. Without action, labs will again face drastic reimbursement cuts on January 1, 2026. They will be expected to report years-old pricing data that many may no longer have access to due to system upgrades and outdated records.

The time for half-measures is over. Congress must pass a permanent solution before January 1, 2026, to protect access, restore equity, and ensure that our nation’s labs can continue delivering lifesaving diagnostics.

Join the Movement

Permanent PAMA reform is not just a lab issue; it’s a patient care issue. Organizations like ACLA and NILA, along with the Stop Lab Cuts campaign, are working to raise awareness and push Congress to act. Labs, providers, and patients must continue to advocate for sustainable reimbursement and fair policy.

Now is the time for lawmakers to move beyond short-term extensions and deliver the permanent reform our healthcare system needs.

Add your voice. Tell Congress that permanent reform to PAMA is imperative. Laboratories can’t continue to thrive on temporary relief. Congress must pass permanent PAMA reform to protect access, ensure fairness, and support the future of diagnostics.