San Diego clinical laboratories that filed a lawsuit to halt the Medicare competitive bidding for independent lab services in their locale cleared a major hurdle late last Friday when a federal court ruled it had jurisdiction in the case and set a hearing for Tuesday, Apr. 8, on their request for a preliminary injunction.

The labs––Sharp Healthcare, Scripps Clinic, and Internist Laboratory––seek to stop the project before this Friday’s date set by the Centers for Medicare & Medicaid Services to announce the winning bids. Labs that lose will not be able to bill Medicare for demo tests for fee-for-service beneficiaries during the three-year run of the project, scheduled to start this July 1.

In addition to asserting his jurisdiction, Judge Thomas J. Whalen, of the U.S. District Court for the Southern District of California, said the labs had standing to bring the suit because the demo’s required bidder design obligated them to submit bids (as CMS required last Feb. 15) and they are “now threatened with the prospect of losing the ability to participate in Medicare. Thus, far from being an ‘abstract disagreement,’ plaintiffs have felt the effects of the agency’s decision in a concrete way.”

He rebutted CMS arguments that the labs should seek administrative remedies before suing, noting that if they lost, they could not bill Medicare and thus would have no such remedies available.

The lab bidding demo, which Congress required in the Medicare Modernization Act of 2003, is designed to see if competitive bidding can be used to pay for independent lab services at rates below the current Part B lab fee schedule. Meantime, on Capitol Hill, a broad coalition of lab industry groups is lobbying for enactment of pending legislation to repeal the demo.