Medicare Lab Test Payment Cap Drops to 5% Starting 2029, Shifting Rate Data to Private Claims Databases

The “Reforming and Enhancing Sustainable Updates to Laboratory Testing Services Act of 2025,” or the RESULTS Act, is making a massive overhaul of how Medicare decides what to pay for most of your standard clinical diagnostic lab tests. If you’ve ever had blood work done, this affects the labs that run those tests and ultimately, the stability of that part of the healthcare system.

The Big Data Switch: Why Medicare Is Calling a Friend

Right now, Medicare tries to set its payment rates for lab tests based on what private insurers pay. But getting that data has been messy. Starting with reporting periods in 2028, the RESULTS Act requires the Secretary of Health and Human Services (HHS) to stop relying solely on labs to report their private payor rates and instead contract with a single, independent national nonprofit entity. This entity must have a massive database—we’re talking at least 50 billion private insurance claims covering all 50 states. The idea is to get a truly comprehensive, real-world picture of what insurers are actually paying for tests like your annual physical panel or cholesterol check.

This shift is a big deal because it takes the data collection out of the hands of thousands of individual labs and centralizes it. For the average person, this should theoretically lead to more accurate Medicare rates, which stabilizes the lab industry. However, the bill is a little vague on what makes a database “representative across all 50 states,” giving HHS significant power in choosing this one, extremely influential, data broker. If the chosen entity’s data skews high, Medicare costs could rise. If it skews low, labs could face significant cuts.

Defining the ‘Final Payment Rate’ and Easing the Cuts

The bill tightens up the definition of the “final payment rate” that labs must report, starting in 2027. It explicitly excludes payments that were denied, are under appeal, were made in error, or were later recouped. This is common sense—we want Medicare rates based on what was actually paid, not what was initially billed or disputed. This clarification should help clean up the data and make the rates more realistic.

Perhaps the most significant change for the labs themselves—and the most stabilizing for the industry—is the cap on payment reductions. Currently, Medicare payment rates can be cut by up to 15% annually between 2026 and 2028. The RESULTS Act reduces that cap to 5% annually starting in 2029. For labs, this means less financial volatility. For taxpayers and the Medicare trust fund, this means a slower pace of potential savings, but it’s a trade-off for ensuring labs can keep the lights on and continue offering services, especially in rural or underserved areas.

The Back-Up Plan and the Transparency Requirement

What happens if HHS can’t find a qualifying data entity, or if the data collection fails? The bill includes a crucial safety net for widely available tests: a default payment rule. If the required private claims data isn’t available, the payment rate will simply be the previous year’s rate increased by the Consumer Price Index (CPI). This is a smart move to prevent service disruptions, ensuring that payments don't suddenly drop to zero just because of a data failure. However, if private market rates are actually falling, this CPI increase could temporarily overpay labs until the data issue is fixed, potentially costing Medicare extra.

Finally, the bill mandates transparency: HHS must publicly explain how it determined the final payment rate for any test, providing enough supporting data so labs can check the math. This requirement for open books is a win for accountability. Less clear, however, is a provision that sunsets (ends) general review limitations on payment rates before January 1, 2029. While more flexibility can be good, removing existing oversight mechanisms could reduce the government’s ability to scrutinize and adjust rates later on if they become excessive or inaccurate.