January 2008
San Diego-area laboratorians are beginning the New Year with a looming deadline—those required to submit bids for CMS’s three-year competitive bidding demonstration project for lab testing services must have their proposals in by Feb. 15, 2008. Meanwhile, many laboratorians elsewhere in the country have reason to exhale. CMS has confirmed a list of metropolitan statistical areas (MSAs) where the second demonstration site is not likely to be located because these are the current sites of ongoing durable medical equipment demonstration projects (see box).
At the December 5 bidders’ conference in San Diego, CMS released the final bidder’s package and addressed some of the questions and concerns about the evaluation process. According to CMS officials, 66 laboratories in the competitive bidding area (CBA) were invited to the conference. These are labs that are providing greater than $25,000 annually in payment from Medicare for the over 300 demonstration tests provided to fee-for-service beneficiaries residing in the CBA. As of now, CMS officials have declined to state how many labs are expected to be required bidders. Labs supplying at least $100,000 annually in demonstration tests for Medicare beneficiaries living in the CBA will be required to bid.
But at least one required bidder left the meeting confused about how to compile a realistic bid. Gary Stevens, co-owner of Oceanside-based Internist Laboratory, estimates that he probably only performs half of the 303 tests that are part of the demonstration project. "We are required to give a price on each of these tests because that goes in to how the composite price for the tests are configured," he explained, adding that he will have to send the rest of the tests to a reference lab. "Therefore, I’m dependent on reference labs to give me a bid. But at the conference, Quest established the fact that the bid they give to other labs doesn’t have to be as low as the bid that they give to CMS." If the reference lab gives him a higher bid than they give CMS for the same test, Stevens is afraid that he could lose the bid.
After presenting this concern at the conference, Stevens was advised by officials to negotiate a better rate from the reference lab. "I don’t have any negotiating power or leverage to get them to lower their bid to me since it’s to their advantage to knock me out," he explained.
Stevens estimates that 65% of his business comes from Medicare fee-for-service, and he believes that his business is the only independent lab in the CBA. "The reference laboratories that do business outside of this area can bid low to clear all the small players out. But when you look at their bottom line, it won’t be as impacted as mine because my whole business comes from this area," he added. "Those labs have business from the rest of the country to soften their bid, but I don’t."
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