Labs Face “Coercive” Bid, Not Competitive Bidding

Lab coalition plans next strategy to change most egregious aspects of Medicare Bidding Demo

CEO SUMMARY: In the weeks since the December 5 bidders’ conference in San Diego, where Medicare officials took the wraps off the complete requirements for the Laboratory Bidding Demonstration Project, the Clinical Laboratory Coalition has begun to consider strategies to delay or cancel the project. Options include litigation in court to stop the submission of bids on February 15, as well as continued education of members of Congress about the poor design and bias of the bidding demo.

ONE NATIONAL LABORATORY LEADER has a blunt and concise way to describe the Medicare Clinical Laboratory Services Competitive Bidding Demonstration project, moving toward implementation in the San Diego-Carlsbad-San Marcos MSA (metropolitan statistical market).

“This is not really competitive bidding. This is coerced bidding to force labs to bid below the true cost of providing the service,” declared Alan Mertz, President of the American Clinical Laboratory Association (ACLA), in Washington, DC. “This is like what happens when someone holds a gun to your head!”

In recent weeks ACLA and other members of the Clinical Laboratory Coalition have met to develop strategies to to delay or stop the demonstration project in the San Diego MSA. “Litigation is one option,” said Mertz. “As well, the coalition is working to get Congress to repeal the project by adding language to any bill that Congress passes about Medicare this year.”

The federal Centers for Medicare & Medicaid Services (CMS) released the specific requirements for the project at a bidders’ conference in San Diego last month. Labs are scrambling to submit bids by the CMS deadline of February, 15. (See TDR, December 31, 2007.)

“We are seriously exploring litigation to try to raise strong objections to the competitive bidding demonstration proceeding forward,” Mertz explained. “I can’t discuss any specifics at this time.

“But I can tell you the Clinical Lab Coalition has agreed to move forward with a full court press to try to get Congress to repeal this project early this year,” he noted. “Congress will have to pass a Medicare bill in early summer, and we expect to address the bidding project in that bill. So, we are going back to all the key members of Congress and the champions we met with last year to tell them the clock is ticking, but it’s not too late to stop the laboratory competitive bidding demonstration project. Those efforts are already underway up on Capitol Hill.

Grassroots Organizing

“In addition, we are doing grassroots organizing to encourage people in San Diego, including lab professionals, other providers, and Medicare beneficiaries, to lobby their members of Congress on this issue,” Mertz added. “We also urge all labs across the country to participate in this grassroots effort.

“Labs should not in anyway give up,” he continued. “Laboratorians should be contacting their congressmen and senators to ask Congress to stop this project before July. We have to keep the pressure on Congress. If we do, we have a good chance of stopping this through congressional action.

“Of course, it would be best to stop this project before CMS sees any bids,” he warned. “If they see the bids on February 15, and even if we succeeded in getting a repeal after February 15, the damage will be done because CMS will have the bids that they covet. We would like to stop CMS from getting that bidding data because of its stated intention to use these bids as a prototype for a new national lab fee schedule.

“However, keep in mind that, for CMS to make wholesale changes in the fee schedule for those 303 tests listed in the bidding project, we believe it would require congressional action,” said Mertz. “They have some authority to make recommendations on what’s fair and reasonable regarding fees for a few tests. But for CMS to use the bids to make broad changes in the fee schedule—based on those 303 tests—would first require congressional action.

“Further, this Congress is likely to be suspicious about any information they will get from CMS on lab fees,” continued Mertz. “I don’t think it’s possible for CMS to slip all these numbers over the transom and then have Congress change the national fee schedule based on this data. Many key players in Congress understand that the laboratory competitive bidding demostration designed by CMS is not a fair, objective, and transparent process.

“They know this because the lab industry laid the groundwork for this push last year,” Mertz said. “We had intensive and numerous meetings with all the key members of Congress as part of the advocacy campaign by ACLA and the Clinical Laboratory Coalition.

“As a result of this lab-advocacy work, a number of influential members of Congress understand that what CMS is doing is not really competitive bidding,” he added. “This is coerced bidding to force labs to bid below the true cost of providing the service. CMS is coercing them almost as if it had a gun to their heads and was saying, ‘CMS will ban your lab from serving Medicare beneficiaries for three years if you don’t give us these low prices.’ What the government is doing is more like bank robbery than it is ‘competitive bidding!’ It’s the equivalent to someone walking into a bank, putting a gun to your head and saying, ‘Give me your money or you’re dead.’ That’s not competitive bidding and many in Congress understand that.”

Benefits Of Lab Advocacy

THE DARK REPORT observes that the Clinical Laboratory Coalition’s advocacy efforts in Congress during the past year are proving to be most timely. If enough members of Congress truly understand the important role labs play in healthcare, that increases the odds that Congress will make informed decisions about competitive bidding and similar issues affecting the laboratory medicine profession.


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