Overview
Avalon’s June 2026 webinar offered an early look at findings from its forthcoming 2026 Lab Trend Report, featuring Dr. Mark Monane, MD, MBA of Monane Group on laboratory utilization and emerging tests, and Julie Barnes, JD, Founder and CEO of Maverick Health Policy on the regulatory landscape. Moderator Michelle Norton framed the session around a central tension: lab testing is more clinically essential than ever, yet health plans face mounting pressure to control costs and navigate an accelerating pace of change.
Routine Testing: Volume Is Stable, Costs Are Not
Drawing on data from 37 million members, Dr. Monane reported that routine test utilization grew just 0.5 percent in 2025, while spending rose 3.7 percent — a gap driven not by more tests, but by price inflation, panel expansion, and where tests are being performed. Hospital outpatient labs charge 5 to 7 times more than independent reference labs for identical tests, with no evidence of superior quality. That differential, persistent across every plan studied over four years, represents one of the most actionable cost levers available to health plans today.
Genetic Testing: Fast Growth, Uneven Use
Genetic testing spend jumped 35 percent year over year, far outpacing a 22 percent rise in utilization. The gap reflects premium pricing for new tests and rapidly expanding panels. Cancer and fetal health dominate spending, but the field is marked by a troubling contradiction: hereditary cancer panels are over-ordered in low-risk patients, while 50 percent of non-small cell lung cancer patients receive no biomarker testing at all — missing the targeted therapies most likely to help them. With ten new genetic tests hitting the market every day, the distance between what science can offer and what clinicians know how to use appropriately is widening.
Emerging Tests on the Horizon
Three test categories are drawing particular attention from payers. Multi-cancer early detection tests, which screen for multiple cancers from a single blood draw, address a genuine clinical gap but lack the evidence base to support broad adoption today. Minimal residual disease tests for cancer monitoring have stronger data behind them, though questions about patient selection and testing frequency remain. Alzheimer’s disease blood biomarkers offer a far less invasive alternative to PET scans or lumbar punctures, but are already being ordered in asymptomatic patients well beyond their validated use case. In each area, the science is ahead of the policy — and the policy is struggling to catch up.
Policy: Pressure From Every Direction
Julie Barnes described a federal administration focused on cost reduction through deregulation and technology adoption rather than new rulemaking — a posture that is reshaping how health plans operate whether they are ready or not. The most immediate deadline is January 1, 2027, when CMS requires health plans to implement digital APIs for prior authorization. Only 16 percent of plans are on track. Meanwhile, prior auth volumes are declining under voluntary industry pledges, and a CMS pilot applying AI to prior authorization in traditional Medicare is already drawing litigation and congressional demands for data on denial rates.
On artificial intelligence, the federal government has offered signals but no binding rules, leaving states to fill the gap. State AI legislation in Q1 2026 ran nearly five times higher than a year prior, creating a patchwork of compliance obligations that varies by state. Many health plans are not prepared: a quarter do not document AI model accuracy, and nearly 40 percent have no accountability practices for AI in utilization review. Barnes was direct about the exposure this creates as state laws continue to multiply.
Finally, the rise of direct-to-consumer lab testing and wearables — now used by 57 percent of U.S. adults — is generating a stream of health data that sits entirely outside the clinical record. Members are arriving at appointments with AI-interpreted lab results they ordered themselves, triggering downstream utilization that health plans did not anticipate or price. Provider networks have no protocols for it. The plans that build strategies around this shift now, Barnes argued, will be better positioned than those who wait for it to become a crisis.
Conclusion
Today, laboratory testing within health systems remains an essential component of patient care. However, the landscape is rapidly transforming, presenting significant management challenges. Spending on both routine and genetic testing is outpacing actual utilization, as emerging diagnostics increasingly surpass current clinical guidelines and payer policies. Regulatory deadlines are looming faster than organizations can adapt, while changing consumer behaviors are fundamentally reshaping care pathways—areas where existing systems often fall short. Partnering with a lab partner that offers modern, scalable solutions has never been more critical to stay ahead and deliver optimal care.
