Number: RS22769
Title: Medicare Clinical Laboratories Competitive Bidding Demonstration
Authors: Barbara English, Knowledge Services Group 
Abstract: Medicare pays for clinical laboratory services based on a fee schedule originally established in 1984. Section 302(b) of The Medicare Prescription Drug, Improvement, and Modernization Act, P.L. 108-173, mandated the implementation of the Medicare Clinical Laboratory Competitive Bidding Demonstration to explore whether quality laboratory services offered through competitive bidding could be provided at prices below current Medicare rates. Opponents of competitive bidding had asked the Centers for Medicare and Medicaid Services (CMS) to postpone the demonstration, citing problems such as its complexity and its effect on small businesses. Their concern was expressed during an open forum sponsored by CMS, and as a result, CMS made some changes to the proposal. The President's FY2008 Budget estimated that payments to clinical laboratories would decrease, saving $110 million in FY2008 and $2.38 billion from FY2008 through FY2012 if competitive bidding replaced the fee schedule. On April 28, 2008, a U.S. District Court granted an injunction blocking implementation of the first demonstration project scheduled to take place in the San Diego area. Plaintiffs in the action were local area laboratories that alleged the demonstration project, as planned, would result in substantial economic harm. Legislation has been introduced in the 110th Congress that would eliminate the competitive bidding project.
Pages: 6
Date: May 2, 2008