Three Strikes Against CMS Before Bid Demo Begins

CMS fails to engage voices of patients, of physicians, of lab profession in demo’s design

CEO SUMMARY: There’s a touch of irony in the fact that the Medicare program is a national leader in encouraging hospitals, physicians, and other providers to pay greater attention to the voice of patients. Yet within the Centers for Medicare & Medicaid Services (CMS), officials tasked with developing the laboratory competitive demonstration project seem to have ignored the voices of Medicare beneficiaries, the physicians who serve them, as well as the laboratory medicine profession.

IN TODAY’S HEALTHCARE WORLD, Medicare asks hospitals, physicians, and other providers to involve patients in efforts to raise the quality of care, reduce medical errors, and lessen the cost per episode of care.

To ensure that hospitals and physicians are listening to the voice of the customer, health accreditation guidelines require providers to survey patients following their treatment. Accreditation requirements direct hospitals and physicians to act upon patient satisfaction surveys and demonstrate how this information was used to improve performance at the next accreditation inspection. The Medicare program is a national leader in pushing hospitals and physicians to reach out to patients, understand their concerns, and take active steps to improve the patient experience and quality of care.

Yet, at the same time that the Medicare program is making a major priority of listening to the voice of the patient, officials at the Centers for Medicare & Medicaid Services (CMS) tasked with creating and implementing the laboratory competitive bidding demonstration project have deliberately excluded the voices of their customers during their design process. It is an irony that should not be lost on senior administrators at CMS, nor their Congressional overseers.

Meeting Constituents’ Needs

 This is particularly true since many Americans view CMS, and most government agencies, as a service bureau, chartered to provide public services which meet the needs of its constituency, as defined by enabling legislation. In this role, CMS must consider the voices of its customers.

In the case of the Medicare Clinical Laboratory Services Competitive Demonstration Project, Congress established two general objectives. One objective is to determine whether “competitive bidding can be used to provide Part B clinical laboratory services at fees below the current Medicare payment rates” (from CMS letter dated December 5, 2007). The other objective is to achieve these lower fees “while maintaining beneficiary access to laboratory services and quality of care” (also from the CMS letter dated December 5, 2007.)

These exact quotes from the CMS letter do not give either goal primacy at the expense of the other. Thus, it has surprised many in the laboratory industry that the form and structure of the laboratory competitive bidding demonstration project for the San Diego MSA indicate a clear lack of attention to issues that will affect Medicare beneficiaries, their attending physicians, and the laboratories, pathologists, and Ph.D.s that provide them with diagnostic testing services and consultations.

…count one strike against CMS/RTI. There is little or no evidence in the public domain that its preparation for the competitive bid demonstration project involved serious discussions with patients
and their advocates.

CMS has an obligation to consider the interests of Medicare beneficiaries and how the laboratory competitive bidding demonstration project might negatively affect their care or cause them to lose access to familiar, favored, and high-service laboratory providers. CMS/RTI does not seem to have consulted with beneficiaries or those who can speak for them.

No Public Information

The story on pages 9-11 provides a list of important issues that will directly affect patients, assuming that CMS proceeds with the competitive bidding demonstration project as currently structured. If CMS and RTI convened a representative panel of patient advocates and explored how its plans to limit the number of laboratory providers would positively or negatively affect Medicare beneficiaries, that information has not been widely circulated.

Thus, count one strike against CMS/RTI. There is little or no evidence in the public domain that its preparation for the competitive bid demonstration project involved serious discussions with patients and their advocates. If true, CMS is proceeding to implementation lacking the patient’s perspective on how the proposed changes in laboratory service providers might have a negative affect on Medicare beneficiaries in the San Diego MSA.

Next, did CMS/RTI take up all the ways that the laboratory competitive bid demonstration project could cause prob- lems for physicians, providers, and facilities such as hospitals and nursing homes? Again, there is little public evidence that CMS called together a representative panel of physicians, hospital administrators, long-term care (LTC) facility managers, and similar healthcare professionals to understand how they could be negatively affected. If it lacks this input and guidance, is CMS/RTI justified in telling Congress and the American public that their scheme for implementing the competitive laboratory bidding demo in San Diego MSA will not interrupt or disrupt patient care in harmful or negative ways?

Forced To Use A Different Lab

 Every pathologist has direct knowledge of episodes where, as a physician changed from using one laboratory to another, there were identified failures that affected patient care. These problems are invariably associated with physicians being forced to use laboratories that are not their preferred choice or because of new policies as a consequence of laboratory mergers and acquisitions.

Another source of such problems is the use of exclusive contracts by private payers (including Medicare Advantage plans) to restrict all but contracted labs from providing services to their beneficiaries. Breakdowns in patient care can result from something as simple as not understanding the new laboratory’s reference ranges (because the new lab uses a different methodology and/or reporting format from the previous laboratory).

Further, it is well known that physicians consistently complain to private insurance companies about being forced to use laboratories that are not of their choosing. Yet that is precisely what CMS/RTI is preparing to do to physicians in the San Diego MSA.

All of these negative experiences make it appropriate to ask this question. Has CMS/RTI engaged stakeholders from the physician and provider community to identify their concerns and design a bidding formula, evaluation and award procedure, and implementation process that avoids disruption to the physicians’ clinical practice and operational work flow?

Based on the available public evidence, the answer to that question seems to be “no.” Thus, for failure to directly engage physicians and providers for feedback and guidance on this competitive bid demo, tally another strike against CMS/RTI.

That brings us to the third class of customer that CMS/RTI has a legislative directive—and ethical imperative—to consider. It is the laboratory medicine profession. The term “laboratory medicine profession” is used deliberately. What most elected officials in Congress do not realize is that laboratory medicine is a complex medical specialty. The body of clinical knowledge in this field is immense. The number of specific assays available to support clinical care is climbing toward 5,000.

Carving Out 303 Lab Tests

CMS/RTI proposes to carve out 303 specific lab tests because these 303 tests happen to represent 99% of what Medicare spent to pay Part B claims for beneficiaries in the San Diego MSA in fiscal 2006. But the bidding formula and the process used to select “winning” laboratories fails on several counts. Those failures are documented in other publications and public Web sites, and in greater detail than it is possible to present here.

The important point is that CMS/RTI deliberately ignored the voice of the laboratory medicine profession. No more damning evidence can be laid at the CMS/RTI doorstep than the simple fact that the Laboratory “Technical Expert Panel” selected by CMS was never convened to meet in person and as a group for the purpose of providing CMS with detailed input into the design and implementation of the lab competitive bid demo.

Yes, there was at least one introductory meeting with all parties physically present. And yes, there were some conference calls. But several laboratory technical experts admit that their thoughts, ideas and concepts were never solicited by CMS and RTI. Rather, the meeting and conference calls were progress reports by CMS/RTI to the technical experts.

No Input From Lab Experts

By the way, some of the technical experts tell THE DARK REPORT that the last conference call organized by CMS was almost two years ago! Since the 2003 legislation calling for the competitive laboratory bidding demonstration project, CMS and its contractor, RTI, have repeatedly assured the laboratory community that it would have input and a role in helping to develop the competitive bidding demonstration project. Yet that has not happened.

By shutting out legitimate input and interaction with the laboratory industry, CMS didn’t even swing at the ball! That’s a called third strike, meaning CMS is out at the plate before the competitive bid demo is even ready to commence.

There’s real irony in the fact that the Medicare program requires healthcare providers to listen to the voice of patients—yet its own officials seem to have intentionally ignored the voices of the key stakeholders in the San Diego MSA bidding demo site.

By failing to learn from the experience of these important stakeholders. CMS and RTI are charting a course that may make everyone unhappy with the outcome, including the Medicare program!


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