Labcorp, Quest Urge RESULTS Act to Prevent Medicare Cuts

Clinical laboratory giants Labcorp and Quest Diagnostics are urging Congress to pass the Reforming and Enhancing Sustainable Updates to Laboratory Testing Services Act, or RESULTS Act, before year-end to counteract looming Medicare and Medicaid reimbursement cuts set to begin in 2027. The companies detailed financial impacts from the proposed payment reductions during third-quarter earnings calls, highlighting risks to patient access and laboratory viability.

Financial Impact of Payment Cuts

The Centers for Medicare and Medicaid Services (CMS) released a preliminary clinical laboratory fee schedule last month that would lower payments by 15% on 775 tests in 2027, with additional reductions planned for 2028 and 2029, according to the American Clinical Laboratory Association. Labcorp projects a $125 million reduction in revenue for 2027, while Quest Diagnostics estimates the cuts would affect roughly 1% of its 2026 revenue.

Labcorp CEO Adam Schechter stated during the company’s earnings call that the cuts threaten patient access to laboratory services, negatively impact patient care and innovation, and endanger the viability of laboratories nationwide. Quest Diagnostics CEO Jim Davis echoed concerns, noting that the data collection process underpinning the rate reductions was flawed and the resulting cuts excessive.

Legislative Efforts and Market Share Disputes

The Protecting Access to Medicare Act of 2014, or PAMA, overhauled how clinical diagnostic lab tests are reimbursed by tying payments to private payer market rate data. The industry argues this process overestimates independent labs’ market share. In October, CMS released data showing independent labs represent about three-quarters of the volume reported, a finding Davis said “emboldens” the push for the RESULTS Act.

The RESULTS Act would direct CMS to contract with an independent, not-for-profit commercial claims database to set payment rates. The Congressional Budget Office is evaluating the federal cost of the legislation compared to PAMA’s cuts, with a score expected in November. Davis anticipates House and Senate committees will then consider including the Act in an end-of-year spending package.

Both companies note that Congress has delayed PAMA cuts six times previously. If the RESULTS Act fails to pass in 2024, Labcorp and Quest expect to offset some impacts through other measures, though delays to the cuts themselves remain possible. Labcorp will provide 2027 guidance in February; Quest plans to release its forecast with fourth-quarter earnings early next year.

The lame-duck session following the midterm elections presents a critical window for passage. While both firms remain cautiously optimistic, they emphasize continued advocacy efforts. “We’re still cautiously optimistic about RESULTS,” Schechter said. “We’ll still continue to fight for that.”