Clinical labs oppose new bidding proposal

Appeal sent to HCFA by lab association

The laboratory industry is lobbying policy-makers to rethink a proposal to require competitive bidding for Medicare lab services, American Clinical Laboratory Association President David Sundwall told a recent gathering of the Health Industry Manufacturers Association in Washington, DC.

Sundwall says he is sending the Health Care Financing Administration a letter signed by virtually every laboratory physician organization, saying "don’t do this. There are too many variables for you to learn anything from competitive bidding of Medicare clinical laboratory services," he said.

Sundwall said this is not the right time for competitive bidding for clinical laboratory services. Despite the laboratory industry’s opposition, Sundwall says Congress would support the HCFA proposal because of its "deep affection for competitive bidding as a mechanism for saving money."

HCFA is developing competitive bidding plans for lab services and several other Medicare Part B benefits in an effort to reduce payments in these areas. The Balanced Budget Act of 1997 instructs HCFA to implement five competitive bidding demonstration projects in three competitive acquisition areas, and specifies that at least one must include oxygen therapy. HCFA is in the early stages of developing a competitive bidding project plan for durable medical equipment that includes oxygen services.

HCFA analyst Ann Meadow says HCFA plans to primarily target clinical chemistry and hematology tests and, to a lesser extent, serology tests.

Laboratories bidding for contracts in the metropolitan service areas chosen by HCFA for the project should be certified in chemistry and hematology because those are the disciplines that are basically covered in the tests HCFA is planning to put up for bidding, Meadow says.

Bidding results and test prices based on the bids would apply for a defined period, most likely a year. HCFA would most likely award bids to "large labs [that] have billed a certain threshold of allowed charges . . . except possibly hospital outpatient departments that are doing primarily testing on their own outpatients," Meadow adds.

The project likely would allow multiple winners in a given metro area, and would allow the lab testing market to continue in the relatively free-wheeling state that currently exists, Meadow says. HCFA also would work to ensure that testing quality is maintained. Meadow noted that labs would have to be certified under the Clinical Laboratory Improvement Act (CLIA).

Look for Medicare carriers to start denying claims for clinical lab tests performed in physician offices that are not in compliance with recent regulatory changes to the CLIA that officially go into effect Jan. 1, 1998. Auditors are expected to be particularly on the look-out for bills for tests without appropriate prior approval, documentation and proper CLIA license numbres. As of Jan. 1, any claim without a valid ID number on the HCFA 1500 form will be automatically denied. However, a revised claim can be resubmitted for payment once the ID number has been added.