What the new legislation could mean for labs, providers, and the future of diagnostic testing.
The Protecting Access to Medicare Act (PAMA), passed in 2014, was designed to modernize how Medicare pays for clinical diagnostic laboratory tests (CDLTs). While PAMA was intended to reform lab reimbursement, its implementation has placed significant financial strain on the laboratory sector—especially hospital outreach and physician office labs. More than a decade later, concerns around fairness, accuracy, and long-term sustainability continue to grow as significant reimbursement cuts are scheduled for 2026.
Current Medicare rates under the Clinical Laboratory Fee Schedule (CLFS) are currently based on commercial reimbursement rates from 2016. Furthermore, the rates set to go into effect in 2026 are proposed based on 2019 commercial reimbursement rates, which were pre-pandemic rates. Since that time, the cost of operations for laboratories has seen material increases such as with increasing labor costs and the cost of material from the supply chain and tariffs. Now, new legislation has been introduced that will limit steep cuts in Medicare rates and provide a fairer process for establishing new rates.
Where We Are Now
Under PAMA, applicable laboratories are required to report private payor rates and volumes to CMS. This data is used to calculate a weighted median, which determines Medicare reimbursement rates for CDLTs. Despite its intentions, the rollout faced several key challenges:
- Fewer than 1% of labs submitted data in the first reporting cycle.
- Independent labs—which often have lower private payor rates—accounted for 90% of the data, despite representing only 50% of CLFS volume.
- Hospital outreach labs and physician office labs, which typically receive higher private payor rates, were severely underrepresented.
As a result, CMS implemented three consecutive years of up to 10% cuts (2018–2020), totaling $3.8 billion in lost reimbursement for commonly ordered tests. Congress has since delayed further cuts multiple times, but without new legislation, up to 15% annual reductions are scheduled to resume in 2026, 2027, and 2028 on over 800 laboratory procedures.
Introduction of the Reforming and Enhancing Sustainable Updates to Laboratory Testing Services (RESULTS) Act
The RESULTS Act, introduced by U.S. Representatives Richard Hudson (R-NC), Gus Bilirakis (R-FL), Brian Fitzpatrick (R-PA), Raja Krishnamoorthi (D-IL), and Scott Peters (D-CA) in the House, and U.S. Senators Thom Tillis (R-NC) and Reverend Raphael Warnock (D-GA) in the Senate, would reform PAMA by:
- Rate Setting and Timing
- Limit rate cuts to 5% per year, down from the current 15%. Rate increases have no limit.
- New rates will go into effect in 2029 and based on 2027 data
- Revised Reporting Requirements
- Shifts reporting from every three years to every four years.
- The next data collection period is for service furnished January–June 2027 and paid during this period and the subsequent 6 months.
- A reporting period of January–March 2028.
- Excludes Medicaid Managed Care Organization (MMCO) rates from the data collection as these plans are not market based rates.
- Tiered Reporting Structure
- For widely available tests (paid to >100 labs), CMS would use data from a qualified independent claims data entity. This change will ensure that data from laboratories is much better represented from the 1% of lab that previously reported. Particularly, hospital and physician outreach labs, who generally have significantly higher rates, will help provide more accurate rates.
- For non-widely available tests, labs would continue to report directly to CMS.
- ADLTs remain under the current annual reporting structure.
Key Takeaway
For lab executives, legal advisors, and revenue cycle leaders, 2025 is a critical inflection point. The decisions made this year will shape the financial and operational landscape of the laboratory industry for the next decade. While proposed reforms offer a more balanced and sustainable path forward, the window for action is narrowing.
The ACLA has added more resources to their refreshed ACLA PAMA Reform landing page and relaunched its “Stop Lab Cuts” campaign to rally support for the RESULTS Act and long-term reform of the PAMA payment structure. Watch the short video below and visit StopLabCuts.org to learn more, access advocacy resources, and how to contact congressional representatives. Your voice can help protect access to essential lab services and prevent harmful reimbursement cuts.
At Quadax, we understand the complexity and urgency of navigating PAMA reform. Our team of revenue cycle experts is equipped to help laboratories interpret regulatory changes, optimize reimbursement strategies, and maintain compliance throughout the transition. From data reporting readiness to revenue impact modeling, we provide the tools, insights, and support labs need to protect their bottom line and plan confidently for the future.
