Quest Diagnostics (DGX) and Labcorp (LH) shares fell in Tuesday premarket trading after the Centers for Medicare & Medicaid Services said Monday it is planning new payment rates for laboratory services, expected to save $1 billion annually.

Medicare said it has been paying about 16% more for laboratory services than private payors and that it plans to better align the 2027 laboratory fee schedule rates with private sector payment rates.

The Centers for Medicare & Medicaid Services expects to finalize the 2027 payment rates for clinical diagnostic laboratory tests in November, with final rates slated to go into effect by Jan. 1, 2027.

Medicare will gradually phase in the reductions through 2029, as payments for clinical diagnostic laboratory tests cannot be reduced by more than 15% per year through 2029, according to a statement.

Shares of Quest Diagnostics and Labcorp were down 6.9% and 6.2%, respectively, in Tuesday premarket activity.