"Competitive Bid Update"

Implementation Date Passes on Medicare Competitive Bid Project

YESTERDAY, APRIL 1, WAS THE DAY that the Centers for Medicare & Medicaid (CMS) was scheduled to implement the first sites for the Medicare Clinical Laboratory Services Competitive Bidding Demonstration project. It was good news for the laboratory industry that the day passed with no action on this issue, says Alan Mertz, President of the American Clinical Laboratory Association (ACLA), in Washington, DC.

“Implementation is not happening,” stated Mertz. “Since last fall, there has been no movement on the competitive bidding plan. None of the milestones on the implementation timetable announced last year have been achieved.

“CMS has not announced the sites, and the federal Office of Management and Budget (OMB) is still reviewing the proposal,” he continued. “OMB is working on the design of the demonstration project and will be involved in naming the sites that will participate.

 Working For Legislation

“To be honest, we hope that the laboratory services competitive bidding demonstration project never comes together at all,” observed Mertz. “We are using this time before implementation to persuade members of Congress to repeal the demonstration project. Getting such legislation introduced and passed can be a lengthy process. It takes time and effort to get a sponsor for the bill and then to educate Congress about this demonstration project.

“Even when CMS announces the sites and releases the final design, we estimate that it will take at least two or three months before they could implement the demonstration project,” Mertz explained. “They would need a bidders’ conference and laboratories serving the demonstration sites would require time to prepare the bids.”

Reducing Medicare Access

The demonstration project is part of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA). ACLA argues that lab services are highly complex, professional services. Laboratory medicine is unlike healthcare equipment or supplies, which can be put out for bid easily. “Also, competitive bidding could reduce the number of labs providing services in a region because losing bidders might no longer be able to provide laboratory services to Medicare beneficiaries and could be forced to close,” noted Mertz.

THE DARK REPORT observes that it’s no surprise that the OMB has yet to develop a viable plan for competitive bidding of laboratory testing services. The questions that still need to be answered are difficult and highly complex. For example, how should the bidding procedure address smaller laboratory providers, as well as hospital and physician office laboratories? Would all 1,100 laboratory test codes be covered or just those test codes ordered most frequently? What will be the effect of competitive bidding on rural or underserved areas with few laboratory providers? With so many unanswered questions, CMS has taken on a significant challenge.

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