WASHINGTON – Clinical laboratory groups were continuing efforts last month to thwart the government’s plans to test a demonstration project for competitive bidding for laboratory services.
A variety of groups reacted in October when the Centers for Medicare & Medicaid Services announced plans to test the bidding approach in Southern California. The groups ripped the proposal, calling it cumbersome and complicated, and voiced concerns that the prices established by the bidding process in California would be eventually rolled out nationwide.
As of mid-November, at least three congressmen had proposed bills to rescind the legislation that called for the competitive bidding demo.
The project was mandated by the Medicare Modernization Act of 2003 and is intended to determine whether competitive bidding can be used to provide laboratory services under Medicare Part B at fees that are less than current Medicare payment rates. CMS estimates that Medicare paid nearly $6.7 billion to clinical laboratories in 2006.
In trying the idea in the clinical lab arena, CMS is testing whether it can duplicate the success it’s had with competitive bidding for durable medical equipment among suppliers. Currently, it pays set rates for clinical lab services, which it sets before the start of each year. Under the demonstration, CMS will pay one competitively set price for each test code, but non-winning labs will not be allowed to bill Medicare directly.
In mid-October, CMS announced it would test the project in the San Diego-Carlsbad-San Marcos, Calif. metropolitan area. An initial meeting for prospective bidders was delayed in late October because of the wildfires in the area. That only increased the anxiety of organizations representing clinical labs, which voiced concerns about whether the program could be rolled out on January 1.
Organizations billing more than $100,000 in an area would be required to bid, even if they don’t have a lab in the area, said Joan Glisson, senior vice president of the American Clinical Laboratory Association. Bidding organizations must bid to provide 303 tests, about 95 percent of the volume and dollar amount paid by Medicare. Most labs don’t provide all tests, so winning labs will have to make arrangements to have tests done that they don’t provide, she said.
Glisson said many groups believe the process is too cumbersome to be rolled out nationwide, and they fear that results from the demonstration project will be used to set prices.
“There will be some access issues,” she said. “It will put a lot of smaller community labs out of business because if they’re not a winning bidder, they can’t survive three years without Medicare.”
Other clinical lab groups say they are concerned about the impact the program will have on patient care.
“The clinical laboratory competitive bidding project is focused primarily on cost rather than quality, value and patient benefit,” said Mark Brager, spokesman for AdvaMed, the Washington-based Advanced Medical Technology Association.