Posted on by Mayra Barbosa under Laboratory, Medical Billing, Medicare & Medicaid

Reviewed by Chris Saviano

Key Takeaways

  • CMS released preliminary 2027 Clinical Laboratory Fee Schedule (CLFS) rates on Sept. 21, based on private payer data laboratories reported between May and July 2026.
  • Of 1,528 lab codes with a private payer weighted median, 1,171 fall below their 2026 Medicare rate. CMS puts the average potential change at about 16% lower.
  • Genomic sequencing and molecular pathology show the steepest average reductions, at 23% and 22%.
  • No test’s Medicare payment can fall more than 15% in a single year from 2027 through 2029, so larger reductions will phase in over two or three years.
  • Comments on the preliminary rates are due Oct. 21. CMS expects to publish final rates in November, effective Jan. 1, 2027.

Medicare’s 2027 lab cuts now have numbers attached. On Sept. 21, CMS published preliminary CLFS rates showing that most lab codes will pay less starting Jan. 1, 2027, with molecular and genomic testing facing the deepest average reductions. The data comes from the PAMA reporting cycle we covered in August in “Labs Got a Reprieve on PAMA Cuts for 2026, But 2027 Is a Different Story.”

This post covers what the preliminary rates show, how the annual cap spreads reductions over three years, and what laboratories can do before CMS finalizes them.

What did CMS release for 2027 Medicare lab payment rates?

CMS released preliminary weighted median private payer rates for clinical diagnostic laboratory tests, the basis for most CLFS payments beginning in 2027. The CLFS is the fee schedule Medicare uses to pay for tests such as blood work, urinalysis, and molecular and genomic assays. In its announcement of the preliminary rates, CMS indicated Medicare has been paying about 16% more than private payers for laboratory services and estimated that aligning the 2027 fee schedule with private payer rates would save about $1 billion a year.

The figures reflect the second full data reporting cycle under the Protecting Access to Medicare Act of 2014 (PAMA). Applicable laboratories reported private payer rates and test volumes paid between Jan. 1 and June 30, 2025, during a reporting window that ran May 1 through July 31, 2026. For each code with reported data, CMS calculated a median weighted by test volume.

The rates are preliminary. CMS opened a 30-day public comment period on Sept. 21, plans to publish final rates in November 2026, and will apply them beginning Jan. 1, 2027.

How many lab codes would see lower Medicare rates in 2027?

CMS’s preliminary data shows 1,171 lab codes with a private payer weighted median below the 2026 Medicare rate. The CMS fact sheet lists 1,947 applicable HCPCS codes, 1,528 of which (78.5%) had enough private payer data to calculate a weighted median. Of those 1,528, 1,171 came in below the 2026 CLFS rate, 186 came in above it, 169 were unchanged, and two had no comparable 2026 rate.

Across all codes with private payer data, the average potential change is about 16% below 2026 rates. The remaining 419 applicable codes lacked a weighted median and will be priced by crosswalking or gapfilling.

Which lab test categories face the largest Medicare reductions?

Genomic sequencing and molecular pathology face the largest average reductions in CMS’s preliminary 2027 data, at 23% and 22% below 2026 Medicare rates. Microbiology and immunology follow at 19.3% each. Results by test category:

Test category Codes Average potential change
Genomic sequencing 42 -23%
Molecular pathology 211 -22%
Microbiology 224 -19.3%
Immunology 205 -19.3%
Chemistry 387 -16%
Proprietary Laboratory Analyses (PLA) 151 -2.4%

Source: CMS, Preliminary CY 2027 CLFS Payment Rates fact sheet

Five of the six categories average more than 15%, the greatest reimbursement reduction a test may incur in a single year through 2029 under Medicare. The category figures are weighted averages, and individual codes can land well above or below them, so labs with concentrated molecular and genetic testing menus should check each code rather than rely on the averages.

How does the 15% annual cap on Medicare lab cuts work?

The Consolidated Appropriations Act, 2026 limits how far any single test’s Medicare rate can fall in one year. From 2027 through 2029, payment for a test cannot drop more than 15% below its prior-year rate, under CMS’s CLFS guidance. The cap controls the pace of each reduction, and the preliminary weighted median remains the rate each test is moving toward.

For a test paid $100 under the 2026 CLFS, the schedule depends on where its private payer median lands:

  • A median of $90 means the rate falls to $90 in 2027, completing the reduction in one year.
  • A median of $78, in line with the molecular pathology average, means $85 in 2027 and $78 in 2028.
  • A median of $70 means $85 in 2027, $72.25 in 2028, and $70 in 2029.

Since the cap applies to each code separately, a lab’s overall change in Medicare revenue depends on its test mix and volume. Two labs with similar total Medicare volume can see different results if one bills more molecular testing and the other more chemistry.

Why did so many more hospital labs report PAMA data in 2026?

Hospital laboratories made up about 13.6% of reporting labs in the 2026 cycle, up from 1.1% in 2017, with the count rising from 21 to 875. CMS credits regulatory changes made in 2019 with increasing hospital reporting. Total participation grew from 1,942 reporting laboratories in 2017 to 6,411 in 2026, a 230% increase.

Lab industry groups have criticized PAMA’s underlying data for years. The American Clinical Laboratory Association (ACLA) argued that the first reporting cycle captured data from fewer than 1% of laboratories and contributed to nearly $4 billion in CLFS cuts from 2018 through 2020. The American Hospital Association objected to the new preliminary rates, saying they would cut close to 1,200 tests by as much as 15% using incomplete commercial market data. AHA has expressed support for the RESULTS Act as a substitute for PAMA’s reimbursement rate-setting process.

What happens to lab tests with no private payer data?

Tests without private payer data will be priced by crosswalking to a similar test or by gapfilling through Medicare Administrative Contractors. In the preliminary 2027 data, 419 of 1,947 applicable codes had no weighted median. For existing tests with no reported data, CMS held a public meeting Sept. 15-16, 2026, where an expert panel of laboratory professionals recommended which method should apply. CMS expects to publish its determinations in early October, followed by a separate 30-day comment period.

What should laboratories do before the 2027 CLFS rates are final?

Laboratories have until Oct. 21, 2026, to comment on CMS’s preliminary 2027 CLFS rates, and the published data is detailed enough to project 2027 Medicare revenue now. Priorities for the coming weeks:

  • Download the code-level preliminary rates from CMS’s CLFS page and match them against your test menu and Medicare volume. Raw data is posted only for codes reported by 10 or more reporting entities.
  • Project Medicare revenue for 2027, 2028, and 2029 by applying the 15% cap to each code, since many reductions will span more than one year.
  • Compare the preliminary medians with the rates your lab reported. CMS removed duplicate records and outlier records (rates more than 100 times the 2026 CLFS rate) and has asked for comment on whether those exclusions are appropriate.
  • Send written comments to CLFS_Annual_Public_Meeting@cms.hhs.gov by Oct. 21.
  • Identify commercial contracts that set lab payment as a percentage of the Medicare CLFS. Unless the contract establishes a base year, reimbursement rates will adjust in line with Medicare rate changes.
  • Watch for CMS’s early-October pricing determinations if you bill codes without private payer data.

The RESULTS Act, which would replace self-reported PAMA data with an independent commercial claims database, has not been enacted. ARUP Laboratories renewed its call for passage on Sept. 22, the day after CMS released the preliminary rates. Until Congress acts, labs should plan on final rates taking effect Jan. 1, 2027, as scheduled.

How PGM Is Preparing Laboratory Clients for 2027

PGM is in the process of analyzing the preliminary CLFS rates and will evaluate the anticipated changes in Medicare revenue for each laboratory client after CMS releases the final rates in November. Labs that want a clearer picture of what 2027 means for their test menu can reach PGM’s laboratory billing and revenue cycle management team through our contact page.

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Frequently Asked Questions About Preliminary 2027 CLFS Rates

Why do more than 1,100 codes face cuts when earlier estimates cited about 800 tests?

The earlier figure described a different set of cuts. Before the 2026 data came in, industry groups cited roughly 800 tests facing reductions of up to 15% under the phase-in left over from the first PAMA cycle, which relied on data reported in 2017. The 1,171 figure compares 2025 private payer rates with 2026 Medicare rates, drawing on 6,411 reporting laboratories instead of 1,942.

Will commercial payers lower lab rates after Medicare does?

They did after the first PAMA cycle. The American Society for Clinical Pathology has reported that insurers used the rates CMS set under PAMA as grounds for further cuts to laboratory reimbursement.

Does Medicare Advantage payment count as private payer data under PAMA?

Yes. CMS defines private payers for CLFS reporting to include Medicare Advantage plans and Medicaid managed care organizations, along with health insurance issuers and group health plans. Medicare Advantage revenue is treated differently when deciding whether a lab must report at all: Since 2019, it has been excluded from total Medicare revenue in the majority-of-Medicare-revenues threshold.

How often will CMS update CLFS rates after 2027?

Under PAMA, CMS updates CLFS rates for most tests using new private payer data every three years, and CMS says the Consolidated Appropriations Act, 2026 cleared the way to return to that schedule. Before 2026, legislative delays meant the process had been used only once. The 15% cap on annual reductions currently runs through 2029.