Reimbursement pressure and policy reform are quietly reshaping the US diagnostics environment. Market access capabilities, once viewed as a secondary concern, are becoming a core strategic requirement for sustaining performance and competitive positioning.
Pricing and market access has historically been under-invested in by diagnostics (Dx) companies. Most companies have accepted existing coding, coverage, and reimbursement as a fixed framework within which their testing portfolios must compete. But the US diagnostics landscape is shifting in ways that are no longer adequate or effective. Delays in building a robust market access team now risk leaving organizations unprepared when their services are needed most.
Emerging challenges
The US diagnostics market is changing amid broader economic pressure. Three key disruptors, unique to diagnostics, are emerging that warrant close attention from industry leaders.
- Protecting Access to Medicare Act (PAMA)/Saving Access to Laboratory Services Act (SALSA): PAMA was passed to help Medicare control lab testing costs, with new rules starting in 2025 and phased implementation through 2027. As a result, many labs face reimbursement cuts of up to 15% each year, greatly reducing payment levels for common tests. The proposed SALSA aims to limit reimbursement cuts to 5% per year, providing greater financial stability for labs while also addressing other gaps in PAMA, specifically how payment and test volume data are collected from reporting labs. Currently, PAMA data collection has skewed statistics to favor high-volume independent labs vs. smaller labs with low test volumes or hospital-based labs.
- Laboratory Benefit Managers (LBMs): LBMs are emerging as new intermediaries, serving a similar purpose in laboratory testing as Pharmacy Benefit Managers in managing access to medication. Their growing influence has the potential to materially reshape commercial reimbursement dynamics. LBMs may negotiate lower reimbursement rates from commercial payors, reduce total utilization, and strengthen the ability to steer prices. They prioritize near-term cost reduction over access or outcome improvement, indicating a need for advance planning and proactive strategies. Their growing prevalence is evidenced by rapid growth, with leading LBMs like Avalon Healthcare Solutions noting over 40% annual growth.
- Budget pressure: Despite lab costs accounting for less than 3% of healthcare spend and being instrumental in disease diagnosis and therapy, diagnostics is facing intensifying budgetary pressures from multiple directions, such as hospital cost management and payor reimbursement. Additionally, reductions in FDA funding and Medicaid support, along with potential tariff impacts, while not directly targeted at Dx, are likely to have downstream effects like reduced Medicaid access to testing and longer approval periods for new tests.
Emerging opportunities
Despite these challenges, there are plenty of meaningful opportunities for Dx companies to protect and strengthen their performance. At Simon-Kucher, we have extensive experience supporting Dx companies that have successfully leveraged each of these avenues:
- Favorable coding factors: Organizations can respond to budgetary pressures through marketing efforts, policy engagement, informative campaigns, and other measures. In the wake of tariff uncertainty, institutions like AdvaMed are working hard to secure waivers on both US and reciprocal tariffs. While this is an example of a trade organization, alignment with and support of these initiatives can mitigate pressures that would significantly impact profitability.
- Proprietary Laboratory Analyses (PLA) coding: Product-specific coding has enabled improved revenue capture through differential payment rates often accessible to innovative tests such as molecular diagnostics. More than 60 PLA codes are currently active, indicating Centers for Medicare and Medicaid Services’ (CMS) willingness to approve these codes and Dx manufacturers’ increasing use of them. PLA codes are only available when Current Procedural Terminology (CPT) codes are not possible or applicable. CPT Code 0022U tests and characterizes 1–23 genes, while CPT 0037U characterizes 325 genes to assist with oncology treatment identification. Although both tests are similar, the reimbursement rate needs to be differentiated to appropriately reflect the varying scope of each test.
- Make America Healthy Again (MAHA): The US Department of Health and Human Services has indicated an increased investment in disease prevention. While the specific nature of investment and opportunity remains unclear, positioning existing products around preventative qualities and investing in biomarker development will be beneficial to manufacturers. Clinical studies that showcase benefits of pre-emptive care (i.e., shorter inpatient stays, lower readmission rates, and overall disease prevention) are critical to driving HCP uptake and utilization.
- New Technology Add-on Payment (NTAP) program: Under CMS, this program provides up to three years of additional payment beyond the diagnostic-related group (DRG) reimbursements where innovative technologies are being utilized.
To receive NTAP designation, products must demonstrate:
- Newness: FDA approval in the past two to three years
- Cost: Significant increase in hospital costs rendering the standard DRG payment insufficient
- Breakthrough device designation: Meaningful clinical improvement over prior standards of care
For example, T2Bacteria Panel by T2 Biosystems received NTAP status for FY 2020, allowing hospitals to receive up to an additional $97.50 per patient case beyond the MS-DRG reimbursement. In the past two years, 15–20 items have received NTAP approval annually (representing approximately 40% of applications) and 2026 promises to be interesting with 49 applications submitted (~30% more than the prior years).
Figure 1: NTAP applications (2020-2024)
Source: Simon-Kucher analysis based on insights from CMS, MEDPAC, Holland & Knight, McDermott+, and Avalere Health. Approved applications include conditionally approved submissions. Withdrawn/ineligible applications include withdrawals and applications lacking timely FDA approval.
- Transitional Coverage for Emerging Technologies (TCET) pathway: TCET provides reimbursement for a subset of technologies that receive break-through classification while clinical evidence is still being gathered. This is a relatively new pathway and the first approvals are expected to begin shortly. As of now, the program is capped at five approvals per year but could grow depending on success and market response.
- High-value assays investment: Dx companies can also invest in the development of new assays that unlock new coding and/or capture increased payment over time. This may involve shifting into multi-plexing, rapid time-to-results, predictive biomarkers, etc. Ultimately, the objective is to differentiate offerings and provide innovative solutions which significantly broadens monetization potential compared to commoditized alternatives.
When these avenues are not applicable, traditional commercial and contracting strategies should be leveraged to gain preferential access among hospitals, labs, and payors. Strong value messaging and targeted communication can influence operational guidelines (at the hospital, regional, or specialty level) to ensure diagnostics are used in ways that deliver the most value.
Understanding best-in-class: The capabilities that define market leadership
Top tier diagnostic companies are preparing for disruption by systematically evaluating scenarios and defining the impact of these risks on their organizations. This approach enables prioritization and development of mitigation strategies. To support this effort, many of these organizations are investing in market access teams to build preferential positioning.
Five key pillars consistently distinguish market leaders:
- Dedicated market access capability: Best-in-class Dx companies maintain teams solely focused on market access, lobbying and advocacy, and value-aligned pricing, and not burdened with competing operational responsibilities.
- Policy influence capability: Market leaders proactively ensure diagnostics priorities are clearly understood and represented among relevant policy-makers.
- Disciplined commercial actions: Dx companies focus on driving growth through robust commercial and marketing strategies aligned with access and reimbursement realities.
- Traditional coding, coverage, and reimbursement strategies: Leaders shape coverage, coding, and reimbursement for standard tests to enable downstream pricing flexibility while also remaining strategic in assay development to capture high-value reimbursement.
- Access pathway optimization: Companies utilize established mechanisms such as PLA, NTAP, TCET such as PLA, NTAP, and TCET to maximize both revenue and access.
At Simon-Kucher, we pride ourselves on a dedicated focus on commercial excellence within the diagnostics market. Our team of experts is happy to facilitate further conversation, provide additional materials, and engage in food-for-thought conversations as your organization looks to navigate these US market hurdles.
For additional detail, please reach out to us today.
