November-December 2007
Despite widespread opposition to the test, the Centers for Medicare & Medicaid Services (CMS) has selected the San Diego-Carlsbad-San Marcos, California, metropolitan area as the first of two locations for a competitive bidding demonstration for clinical laboratory services provided to fee-for-service Medicare beneficiaries.
The demonstration, mandated by the Medicare Modernization Act of 2003, is designed to determine whether competitive bidding can be used to provide laboratory services under Medicare Part B at fees below current Medicare payment rates.
CMS says it will hold a bidder’s conference on Oct. 31, 2007, in the San Diego-Carlsbad-San Marcos area to help labs there understand how the project will be implemented. Bidders will be required to submit a bid price for each Health Care Procedure Coding System (HCPCS) code in the demonstration test menu.
Bidding laboratories will be asked to identify demonstration tests that they do not perform and will be asked to explain their plans for responding to requests for those tests (for example, subcontracting and referrals). Bidding labs will also have to provide information on ownership, location of affiliated laboratories and specimen collection sites, CLIA certification, laboratory finances, and quality.
The demonstration will last for three years in each demonstration site or competitive bid area (CBA). CMS has said it anticipates selecting multiple "winners" in each CBA and expects to announce winners sometime this winter, with the actual demonstration to begin in spring 2008.
Industry reaction to CMS’s announcement was swift. Alan Mertz, president of the American Clinical Laboratory Association (ACLA), said that for Medicare beneficiaries, the demonstration is "more trick, than treat, as they will find access to high-quality laboratory services compromised." ACLA and other groups representing clinical laboratories have long opposed the demonstration, saying it will result in less access, lower quality, and less competition.
CMS officials told lawmakers recently that it anticipated 10 to 13 labs would be required bidders in each CBA, although ACLA estimates there may be about 50 independent and hospital outreach labs that meet the definition of a required bidder in the San Diego area. Required bidders are defined as those organizations that expect to supply at least $100,000 annually in demonstration tests to Medicare beneficiaries residing in the CBA during any year of the demonstration. Required bidders that bid and win will be paid under one demonstration fee schedule for services provided to beneficiaries residing in the CBA for the duration of the demonstration.
Nonrequired bidders are defined as laboratories that are not exempt from the demonstration but have the option of participating in the bidding process. Nonrequired bidders that do not bid, as well as those that bid and win, will be paid under the demonstration fee schedule for the duration of the demonstration. Nonrequired bidders that choose to bid and do not win will not receive payment for services provided to beneficiaries residing in the CBA during the demo.
CMS Modifies Project Design
CMS has made a few changes to the project design since it held an Open Door Forum on July 16. Linda Lebovic, project officer, described those changes October 11 during Washington G-2 Report’s 25th annual Lab Institute, held in Arlington, Virginia. Among the more recent changes:
1. Laboratories providing services exclusively to beneficiaries residing in nursing homes or receiving home health services in the competitive bidding area will not be required to bid but will be paid at the demonstration fee schedule for demonstration tests otherwise paid under the Part B Clinical Laboratory Fee Schedule.
2. A nonwinning laboratory may serve as a reference laboratory to laboratories participating in the demonstration. However, they would not be allowed to bill Medicare directly for demonstration tests performed for Medicare fee-for-service beneficiaries residing in the competitive bid area.
3. Laboratories must bid on 303 HCPCS codes, which CMS says represents the top 99% of tests paid under the Part B Clinical Laboratory Fee Schedule based on volume and payment in 2006. CMS initially planned on requiring labs to bid on 358 codes.
Repeal Effort Gains Momentum
Despite CMS’s selection of a competitive bidding area, the laboratory industry has not given up on efforts to win congressional repeal of the demonstration. In late September, three senators—Ken Salazar (D-CO), Pat Roberts (R-KS), and Maria Cantwell (D-WA) introduced a bill, S. 2099, to repeal the project. All three senators serve on the Senate Finance Committee, which has jurisdiction over Medicare and the competitive bidding demonstration.
Similar legislation, H.R. 3453, was introduced in the House August 4 by Small Business Committee Chairwoman Nydia Velazquez. That measure has since gained additional support, with the addition of four cosponsors: Reps. Diana DeGette (D-CO), Charles Boustany Jr. (R-LA), Bart Gordon (D-TN), and Jim Matheson (D-UT).
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November-December 2007 - Table of Contents
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