AdvaMed, AACC Call for Repeal of Competitive Bidding Demonstration

Industry association AdvaMed (Washington, DC), the American Association for Clinical Chemistry (AACC; Washington, DC), and other laboratory groups are raising concerns regarding plans by the Centers for Medicare and Medicaid Services (CMS) to launch a clinical laboratory competitive bidding demonstration program.

In mid October, CMS announced that the first of two planned demonstration sites would be the San Diego–Carlsbad–San Marcos region in Southern California. A bidders' conference for laboratories was planned for October 31, but due to wildfires in the area, the event's date has been postponed until further notice.

CMS reports that the demonstration was mandated by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. It is designed to determine whether competitive bidding can be used to provide laboratory services under Medicare Part B at fees below current Medicare payment rates, while maintaining quality and access to care. Medicare paid nearly $6.7 billion to clinical laboratories in 2006.

“CMS is seeking to enhance its role as a prudent purchaser of clinical laboratory services, while maintaining a strong focus on beneficiary access and quality of care,” said acting CMS administrator Kerry Weems. “This demonstration uses market-based competition to increase efficiency in Medicare. In this demonstration, Congress is building on the experience of CMS demonstrations for durable medical equipment, which found that competitive bidding can reduce spending, while assuring access and quality.”

AACC contends that many laboratories could be forced out of business in regions where the demonstrations are conducted. And, if CMS deems the demonstration a success and effectively makes its case to Congress, a clinical laboratory competitive bidding program could be implemented nationwide.

AACC reports that Senators Ken Salazar (D–CO) and Pat Roberts (R–KS) have introduced legislation, the Preserving Access to Laboratory Services Act of 2007 (S. 2099), in an effort to repeal CMS's authority to implement the project. AACC is rallying support for the legislation by urging other senators to sign on as cosponsors.

In a release regarding the planned bidding demonstration, AdvaMed noted that the clinical laboratory competitive bidding project is focused primarily on cost rather than quality, value, and patient benefit. “A competitive bidding scheme based primarily on cost may inadvertently sacrifice the value of clinical laboratory services in delivering high quality of care,” the association states. “It may also artificially reduce the number of clinical lab choices available to patients as smaller, specialized labs are unable to compete on cost factors with larger organizations.”

AdvaMed reports that it plans to work closely with CMS to monitor the competitive bidding project. It also will continue working with Congress to secure passage of the Medicare Advanced Laboratory Diagnostics Act (H.R. 1321) to update Medicare reimbursement policies to encourage development and diffusion of new clinical diagnostic laboratory tests.

More information on the planned demonstration program is available at www.cms.hhs.gov/center/clinical.asp (click on “Demonstration”).

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