Diagnostic-Testing Stocks Slide After Proposed Cuts to Medicare Payments for Lab Services

By Kelly Cloonan

Shares of diagnostic-testing companies declined after the Centers for Medicare & Medicaid Services proposed cuts to Medicare payment rates for laboratory services.

Labcorp Holdings stock slid 5.9% to $254.42, while Quest Diagnostics stock fell 6.9% to $227.90, in premarket trading Tuesday.

CMS said its proposed Medicare payment rates for laboratory services would save an estimated $1 billion annually, and better align with private-sector payment rates.

Medicare has been paying about 16% more for laboratory services than private payors, CMS said. With the preliminary 2027 rates, most Medicare laboratory test payments would be aligned with private-sector rates, CMS said.

"Taxpayers and Medicare patients have been paying excessive rates to labs for years, but with some help from Congress, CMS is working to ensure that Medicare isn't paying more than private insurers for the exact same tests," CMS Administrator Mehmet Oz said.

CMS said it anticipates finalizing the 2027 payment rates for clinical diagnostic laboratory tests in November. The final payment rates would go into effect beginning Jan. 1, 2027.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

September 22, 2026 09:25 ET (13:25 GMT)