New Administration, New Priorities: What 2025 Policy Shifts Mean for Clinical Laboratories
As the Trump administration begins its new term, sweeping changes are already underway across key federal health agencies. These orders will impact healthcare and the clinical laboratory. From executive orders to agency restructuring, the policy direction is shifting fast—and clinical and pathology laboratories must be ready to adapt. While some changes promise deregulation and efficiency, others bring uncertainty, particularly in areas like reimbursement, compliance, and test innovation. Further impacts are expected for public health and research laboratories that ultimately impact the clinical laboratory.
The following are regulatory forces that will change the contours of how we practice clinical laboratory medicine.
Regulatory Pullbacks: FDA LDT Rule Rescinded
One of the most immediate and impactful reversals has been the FDA’s decision to rescind its final rule expanding oversight of Laboratory Developed Tests (LDTs) in March 2025. This is a clear signal that the administration favors a reduction in federal regulation, placing responsibility for lab-developed diagnostics largely back under CLIA and CMS.
What it means for labs:
Short-term regulatory relief, particularly for academic and hospital labs using LDTs.
Long-term uncertainty: Without FDA guardrails, questions remain about quality standards for novel tests.
State-level regulation may rise to fill the vacuum (e.g., NY, CA).
What About the VALID Act?
The VALID Act (Verifying Accurate Leading-edge IVCT Development) was reintroduced in the U.S. House of Representatives on May 31, 2025, by Reps. Diana DeGette (D-CO) and Larry Bucshon (R-IN). Originally proposed in 2018, the legislation aims to create a unified regulatory framework for in vitro clinical tests (IVCTs), including both laboratory-developed tests (LDTs) and in vitro diagnostics (IVDs), under FDA oversight. The Senate has not yet introduced a companion bill, and as of now, there is no clear Senate sponsor advocating for its advancement.
The clinical laboratory community remains divided on the necessity and impact of the VALID Act. Supporters, including organizations like AdvaMed and the College of American Pathologists (CAP), argue that a modern, risk-based regulatory framework is needed to ensure test quality and support innovation. However, they criticized the FDA’s now-rescinded LDT final rule as overly burdensome and potentially disruptive. On the other side, opponents such as the American Society for Clinical Pathology (ASCP) argue that the VALID Act and broader FDA oversight would impose significant costs and regulatory burdens on laboratories, potentially stifling innovation and limiting patient access to new tests.
The chances of the VALID Act becoming law are a long-term endeavor, with uncertain prospects in the near term and it may take years before legislation could be considered
Health Agency Realignment and Budget Cuts
Trump’s early executive orders signal a leaner federal bureaucracy, including potential consolidation or funding reductions for agencies like the CDC, CMS, and HHS Office of Civil Rights. These moves may impact:
Public health funding for laboratory initiatives
Data privacy enforcement under HIPAA
CMS program guidance and reimbursement oversight
For labs, this may mean:
Less support for pandemic preparedness or infectious disease surveillance
Uncertainty in Medicare policy updates or PAMA repricing enforcement
Possible delays or shifts in CLIA updates and inspections.
Reimbursement and Cost-Cutting Pressure
Although no new healthcare legislation has been formally introduced, cost-control measures are expected to play a significant role in the Trump administration’s policy direction. Key proposals under discussion include:
Medicaid Cuts: Reductions in federal and state reimbursements for routine and preventive lab testing, disproportionately affecting underserved and rural communities.
Reevaluation of Medicare Part B Spending: Potential changes to the clinical laboratory fee schedule that could reduce reimbursement for essential testing services.
Financial Pressure on Medicaid-Dependent Providers: Hospitals and clinics serving large Medicaid populations may face increased financial strain, potentially leading to service reductions, facility closures, or limited access to diagnostic testing.
Shift Toward Value-Based Care Models: Greater emphasis on outcomes-based reimbursement could impact how lab data is measured, reported, and reimbursed, especially for routine and preventive testing.
According to The Dark Report, Medicaid cuts currently being considered in both the U.S. House and Senate could have three major impacts on clinical laboratories:
Barriers to Re-enrollment: New eligibility requirements would make it more difficult for beneficiaries—especially those in rural areas—to reapply for Medicaid, decreasing patient volumes and test utilization.
Federal Funding Reductions: Proposed changes include implementing work requirements and limiting states’ ability to expand coverage, potentially slashing lab test reimbursements.
Increased Out-of-Pocket Costs for Patients: If states shift more costs to beneficiaries, fewer patients may pursue diagnostic testing, reduce lab revenue and pushing labs to absorb greater uncompensated costs.
For clinical laboratories, these developments point to a period of uncertainty that could require strategic adjustments in reimbursement forecasting, payer mix management, and advocacy.
Workforce Shortage Collides with Shrinking Reimbursement
Medicaid already reimburses laboratories at rates below the actual cost of performing many essential tests—especially high-volume diagnostics like HbA1c, urinalysis, and complete blood counts (CBCs). With the new Medicaid cuts under the Trump administration, rural and small urban hospitals are now questioning the very viability of maintaining in-house laboratory services.
These cuts are expected to have dramatic ripple effects across the healthcare system. A June 2025 report by The Commonwealth Fund projects that by 2029, nearly 500,000 healthcare jobs could be lost due to facility downsizing, restructuring, and closures, most notably in medically underserved regions.
Many of these hospitals already operate with just one laboratorian per shift, barely covering minimum testing requirements amid worsening workforce shortages. For these facilities, the question is no longer which tests to scale back—it's whether their laboratory can remain open at all.
Outsourcing may become the only remaining option for healthcare institutions forced to operate with reduced Medicaid revenue and limited staffing, threatening timely access to diagnostic services for the most vulnerable populations.
Strategic Considerations for Lab Leaders
What Lab Leaders Can Do Now
All laboratory leaders should take stock of their organization’s financial realities and understand how reimbursement trends—especially Medicaid—affect their operations. Now is the time to engage with hospital administrators and seek a clearer understanding of your organization’s current operating environment, budget constraints, and strategic priorities.
A few proactive steps on your part could make the difference between maintaining a sustainable, high-performing laboratory—or facing deeper cuts in an already constrained system.
Five Strategic Actions to Consider
Quantify Your Medicaid Volume
Assess how much of your lab’s revenue and test volume depends on Medicaid. Understanding your exposure will help you prepare for reimbursement shifts and proactively plan for test menu optimization, turnaround time adjustments, and operational improvements.Scenario Plan for Staffing Coverage
Develop contingency plans to maintain operations in the event of staffing shortages or attrition. Reach out to peers and colleagues to learn which strategies have been effective in attracting and retaining laboratory professionals, especially in similar facility types or geographic areas.Advocate for Reimbursement Equity
Get involved with professional organizations such as ACLA, ASCLS, ASCP, and NILA to support efforts aimed at preserving fair lab reimbursement and shaping policy at both the state and federal levels. Collective advocacy is more effective when voices from the field participate directly.Invest in Automation and Cross-Training
Adopt technologies that reduce manual workload—such as enhanced automation paired with auto-verification—to free up staff for more complex tasks. Cross-training personnel builds flexibility, enhances operational resilience, and ensures coverage across shifts or specialties during hiring lags.Prioritize Workforce Retention
Retain your top talent through competitive compensation, opportunities for ongoing education, meaningful career advancement, and comprehensive wellness support. Organizations like ASCP and ASCLS offer wage and satisfaction surveys, toolkits, and workforce initiatives that can help shape a strong retention strategy.
Final Thoughts: Complacency Is Not an Option
In today’s fast-changing healthcare environment, laboratories cannot afford to be passive observers. Policy shifts—whether in reimbursement, workforce regulation, or scope of practice—are not distant policy debates. They will directly impact every aspect of laboratory operations, from staffing models and financial viability to testing menus and patient access.
Laboratory leaders must stay informed, proactive, and engaged. Understanding your organization’s financial structure, anticipating regulatory changes, and building a resilient workforce are no longer optional—they are essential for survival.
Complacency is the real threat. Whether you lead a large reference lab or a single-person bench in a rural hospital, your decisions now will determine whether your lab adaptor disappears. The labs that will thrive in this next era are those that plan, advocate, and lead with clarity and purpose.
The future of diagnostics depends on what we do next.