Medicare’s Preliminary Lab Rates Cut Genomic Sequencing 23% and Proprietary Tests Just 2.4%
- CMS released preliminary calendar year 2027 rates for the Medicare Clinical Laboratory Fee Schedule on 21 September 2026, based on what private payors paid labs in the first half of 2025. It says Medicare has been paying about 16% more than private payors, and estimates savings of about $1bn a year.
- 6,411 laboratories reported data, against 1,942 in the first cycle in 2017. Of 1,947 test codes, 1,528 had a private payor median: 1,171 came in below the current Medicare rate, 169 level and 186 above it.
- By category, the weighted change is minus 23% for genomic sequencing, 22% for molecular pathology, 19.3% for microbiology and immunology, 16% for chemistry and 2.4% for proprietary laboratory analyses.
- Under the Consolidated Appropriations Act, 2026, no test’s payment can fall more than 15% a year through 2029. Comments are open for 30 days, final rates are due in November, and they take effect on 1 January 2027. Administrator Mehmet Oz said the data will also inform pricing across Medicaid and the ACA exchanges.
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The average cut is 16%. The distribution matters more: the tests carrying the newest science take the deepest cuts, and the proprietary ones barely move.
- Sequencing and molecular tests absorb the heaviest reductions. Genomic sequencing codes face a weighted cut of 23% and molecular pathology 22%, against 2.4% across 151 proprietary laboratory analysis codes, which are assigned to a single lab’s or manufacturer’s test. On these numbers, holding a proprietary code is the best protection a diagnostics company has against the new rates.
- The 15% cap turns one cut into two. Codes facing 22% or 23% reach their new level in 2028, not 2027. The staging defers the revenue hit without reducing it, so the second step is effectively already announced for anyone modelling 2028.
- Broader reporting did not soften the result. Hospital labs rose from 21 reporters in 2017 to 875, after CMS changed its rules in 2019 to draw more of them in. The median still sits about 16% below current Medicare rates, and Oz’s signal that Medicaid and exchange pricing will draw on the same data widens the reach well beyond Medicare.