PAMA Cuts Resume Jan 31—Is Your Lab Ready?

PAMA cuts are currently scheduled to resume January 31, 2026—but if history is any guide, another delay remains possible.

Congress has intervened six consecutive times to postpone PAMA reimbursement cuts since 2020. The bipartisan RESULTS Act, introduced in September 2025, would freeze Clinical Laboratory Fee Schedule rates at current 2025 levels and cancel pending cuts through 2028. Industry advocacy through the "Stop Lab Cuts" campaign continues to push for passage.

However, planning as if cuts will proceed is the prudent approach. Congressional relief has never been guaranteed, and labs that wait for last-minute action risk being unprepared if cuts take effect. The next phase of reductions will cut payments by up to 15 percent across roughly 800 laboratory tests—and the rates are based on 2019 private payer data collected before the pandemic, which doesn't reflect today's increased operational costs for labor, supplies, and technology.

For many labs, this isn't just a billing challenge—it's an operational wake-up call.

What the Data Shows

📊 Clinical lab reimbursement has declined significantly since PAMA's initial implementation, with cumulative cuts exceeding 30% on many high-volume tests

📉 Molecular and genetic testing are among the hardest hit, despite rising demand and increased operational complexity

💰 Hospital outreach programs face compounding pressure as commercial payers often follow Medicare's lead on rate adjustments

⚠️ Independent labs operating on thin margins have the least room to absorb additional cuts without operational restructuring

🗓️ 2019 data problem: The upcoming rates are based on pre-pandemic private payer data—before significant increases in labor costs, supply chain expenses, and technology investments hit the industry

The labs that will maintain profitability through 2026 are those taking proactive steps now—regardless of whether cuts proceed January 31st or get delayed again.

Five Best Practices to Protect Your Lab's Revenue

Here's what leading laboratories are doing to prepare:

1️⃣ Conduct a Test-by-Test Reimbursement Analysis

Not all 800 tests are equally impacted. Identify which tests in your menu face the steepest cuts and calculate the specific revenue impact based on your volume. Prioritize focus areas where the financial exposure is greatest.

2️⃣ Review Your Payer Mix Strategy

Labs with heavy Medicare exposure face the largest direct impact. Evaluate whether shifting outreach focus toward commercial payers, diversifying service lines, or adjusting your test menu can offset PAMA-related losses.

3️⃣ Audit Your Billing and Denial Rates Now

Revenue leakage from denied claims, coding errors, and documentation gaps compounds the PAMA impact. Labs that address billing inefficiencies before January can preserve revenue that would otherwise be lost twice—once to PAMA, and again to preventable denials.

4️⃣ Align Operations with Financial Reality

If certain test categories become unprofitable under new rates, tough decisions may be required. Evaluate whether consolidating services, adjusting staffing models, or transitioning low-margin tests to reference labs makes financial sense.

5️⃣ Build PAMA Impact into 2026 Budgets and Forecasts

Many labs underestimate the cumulative effect of PAMA cuts on monthly cash flow. Model the specific impact on your lab's revenue by month and quarter so leadership has clear visibility into the financial outlook.

Where LabMetrics Consulting Can Help

At LabMetrics Consulting, we help laboratories pinpoint where reimbursement shortfalls occur, close billing gaps, and adjust operations to support financial sustainability. Our revenue cycle assessments deliver clear insight into where performance can be strengthened without sacrificing service delivery or growth objectives.

Our PAMA preparation services include:

✅ Reimbursement Impact Analysis – Test-level projections showing exactly where cuts will hit your revenue

✅ Revenue Cycle Assessment – Identifying billing gaps, denial patterns, and recovery opportunities

✅ Payer Mix Optimization – Strategic guidance on diversifying revenue streams

✅ Operational Efficiency Review – Aligning workflows and staffing with post-PAMA financial realities

✅ Financial Modeling – Month-by-month projections to support budget planning and leadership visibility

Recent Success: We helped a hospital-based lab recover $285,000 in denied claims and reduce denial rates by 35 percent ahead of 2026. By addressing billing inefficiencies before the next round of PAMA cuts, they positioned themselves to absorb reimbursement reductions without sacrificing service quality or margin.

Your Next Step

If PAMA is part of your 2026 planning, now is the time to act. Connect with our team to discuss how a revenue cycle assessment and reimbursement impact analysis can help your lab build a more resilient revenue strategy.

Schedule a consultation today

P.S. Whether Congress delays PAMA again or cuts proceed as scheduled, the labs that thrive are the ones building operational and financial resilience now—not waiting to see what happens. We're monitoring the RESULTS Act and will keep clients informed of any developments. In the meantime, let's discuss how to protect your margins heading into 2026.