New Medicare fee schedule for laboratory services brings cuts as high as 23%
New Medicare payment rates for laboratory services have been proposed by the Centers for Medicare & Medicaid Services (CMS), who revealed how each diagnostic code will be impacted by the potential change to reimbursement rates.
The new preliminary fee schedules for 2027 were revealed on Monday, with CMS justifying the shift by saying that Medicare has been paying too much for lab services—about 16% too much when compared to reimbursement totals paid by private health insurance companies.
CMS added that, by reducing payment rates for lab tests and related services, taxpayers can expect a savings of $1 billion annually.
“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,” CMS Administrator Mehmet Oz, MD, said in a statement.
“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, including Medicaid and Affordable Care Act Exchanges,” he added.
Nearly all lab work to take the hit
A variety of common tests will be impacted, including those associated with standard preventive health screenings, such as urinalyses and blood tests.
But across the board, if CMS gets its way, Medicare will be paying less for just about everything.
Codes associated with gene sequencing will have fees cut by 23%, with molecular pathology seeing a drop of 22%. Microbiology is the next largest category impacted, seeing a 19.3% reduction in reimbursement.
Other major cuts are to codes associated with immunology tests, where reimbursement will also drop by 19.3%.
Chemistry, which would include your routine analysis of blood, will be hit by a 16% reduction in payments.
CMS added that changes will be rolled out in phases, as federal law now allows for the Clinical Laboratory Fee Schedule to be cut by more than 15% annually. While the plan for reduced rates is not finalized, they would be rolled out gradually over a period of a few years, the agency confirmed.
New rates will be finalized in November, but before then CMS is likely to face industry pushback that could cause them to reconsider or formulate a compromise.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.