A federal court issued a preliminary injunction Apr. 8 that prevents the government from moving ahead with the Medicare competitive bidding demonstration in San Diego County until further notice.

The court ruling is the latest development in the lawsuit filed last January by three labs––Sharp Healthcare, Scripps Clinic, and Internist Laboratory––in the San Diego-Carlsbad-San Marcos metro area, the first site to be selected for the congressionally mandated project. On Apr. 4, the court ruled that it had jurisdiction over the matter, and on Apr. 8, heard oral arguments that resulted in the injunction.

The court enjoins the Centers for Medicare & Medicaid Services from: ––Announcing winners in the bidding process. (CMS required bid submissions by Feb. 15 and had planned to disclose the winning labs Apr. 11 and begin the demo on July 1. Labs that lose would not be able to bill Medicare for demo tests for fee-for-service beneficiaries during the three-year run of the project.) ––Otherwise implementing or carrying out the project in the demo area. ––Disclosing any information in the bid applications submitted.

While the court did not accept all the claims made by the lab plaintiffs, Judge Thomas J. Whelan did rule in their favor on key points. He agreed that the project, as currently designed, threatened irreparable harm to the lab businesses and their patients that could not be compensated by damage awards. He also faulted CMS for failing to follow the public notice and comment process under the Administrative Procedures Act.

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.

The court ruling gives added boost to the lobbying effort underway to get Congress to repeal the demo, say industry sources. Legislation to do that is pending in the House (H.R. 3453, with 40 bipartisan co-sponsors) and in the Senate (S. 2099, with eight bipartisan co-sponsors).