Bracing for Medicare and Medicaid reimbursement cuts in 2027, Labcorp and Quest Diagnostics continue to push for Congress to pass legislation before year-end that would revamp the payment rate-setting process.
In third-quarter earnings calls, the CEOs of both leading clinical laboratory companies said the proposed fee schedule changes, set to begin Jan. 1, would clip revenues next year. Labcorp anticipates a $125 million hit from the government payment reductions in 2027, while Quest quantified the impact as roughly 1% of 2026 revenue.
The Centers for Medicare and Medicaid Services’ preliminary clinical laboratory fee schedule, released last month, would lower payments by 15% on 775 tests for 2027, with more reductions in 2028 and 2029, according to the American Clinical Laboratory Association. The CMS expects to finalize the payment rates in November.
“In our view, these payment cuts will threaten patient access to laboratory services, they will negatively impact patient care and innovation, and they will impact the viability of laboratories across the United States,” Labcorp CEO Adam Schechter said Wednesday on the company’s call.
The Protecting Access to Medicare Act of 2014, or PAMA, overhauled how clinical diagnostic lab tests are paid by tying payments to private payer market rate data. The industry argues the data collection process overestimates independent labs’ share of the market.
“The preliminary fee schedule is not fully representative of the broader commercial laboratory market,” said Schechter.
Quest Diagnostics CEO Jim Davis, on an earnings call last week, said Congress has delayed PAMA cuts six times, but in 2026, labs were required for a second time to provide their data.
“We remain deeply concerned that the data collection process this year was also flawed, and the resulting preliminary rate cuts for 2027 are excessive,” Davis said.
Quest and the industry are working hard to get the Reforming and Enhancing Sustainable Updates to Laboratory Testing Services Act, or RESULTS, across the finish line this year, Davis said. The legislation would direct the CMS to contract with an independent, not-for-profit commercial claims database to set payment rates.
The Congressional Budget Office is now evaluating the federal cost of the RESULTS Act compared with the cuts under PAMA. Once the CBO releases its score, sometime in November, Davis said, he anticipates that primary committees in the House and Senate will convene. The hope is that they will include the RESULTS Act in an end-of-year spending package.
“Securing a score is an important milestone as the sponsors work toward potentially including the RESULTS Act in any year-end package,” Davis said. “We are calling on Congress to enact this important legislation by year's end.”
Davis noted that the CMS recently released data showing independent labs represent about three-quarters of the volume reported, which continues to far overestimate their market share.
“With this information, it emboldens us even further to push fast and furious for the RESULTS Act,” Davis said.
The Senate and House of Representatives return for a lame-duck session after the midterm elections.
If the RESULTS Act fails to pass this year, both Quest and Labcorp said they expect to offset part of the impact of the PAMA reimbursement cuts. It is also possible that PAMA cuts could be delayed for another year.
Labcorp said it would provide 2027 financial guidance in February, while Quest said it planned to release its 2027 forecast early next year in connection with its fourth-quarter and full-year earnings.
“We're still cautiously optimistic about RESULTS,” said Labcorp’s Schechter. “We'll still continue to fight for that.”
