Competitive Bidding – the Continuing Saga

Extract

Competitive bidding is an approach that has long been favored by Congress to attempt to control costs in a variety of arenas by allowing the marketplace to competitively determine prices. Some would argue it is, on the surface, the “American Way”. However, each time this approach has been suggested to control the cost of laboratory services the clinical laboratory community has staunchly argued that while competitive bidding for durable goods may be effective, it will not work for services that are provided by highly skilled professionals in diverse settings to even more diverse populations.

For many years a competitive bidding strategy was discussed by Congress, but the laboratory community effectively lobbied against it. However in 2003, in the wake of public pressure over provision of prescription drugs for Medicare recipients, the Medicare Prescription Drug Improvement and Modernization Act (MMA) was passed by Congress and included a mandate for a competitive bidding demonstration project for clinical laboratory services. The proposed purpose of the project was to determine if market driven competitive bidding could be used to decrease costs to the Medicare program to provide quality clinical laboratory services. Although the project was to begin in April 2007, the complexities involved in the development of bidding guidelines have delayed the implementation.

The current mechanism for reimbursing laboratories for services provided to Medicare beneficiaries is a fee schedule that was established in 1984. Although most laboratory stakeholders recognize that the fee schedule is outdated and irrational based on today's technology, they are united…