Medicare's Demonstration of Competitive Bidding for Clinical Laboratory Services: What It Means for Clinical Laboratories (Clinical Chemistry Forum‪)‬

During the past 2 years, Research Triangle Institute (RTI) [3], under contract from the Health Care Financing Administration (HCFA), has conducted developmental work for a demonstration project that would use competitive bidding to set fees for Medicare Part B clinical laboratory services. This work has included research on the current state of the clinical laboratory industry (1) and development of a design plan (2) for the demonstration, which is known as the Demonstration of Competitive Bidding for Clinical Laboratory Services. Because competitive bidding has not previously been used to set Medicare fees for clinical laboratory services, clinical laboratories are naturally interested in how the demonstration would work. Here, we briefly describe the preliminary plan for the demonstration, which RTI prepared for HCFA. The preliminary nature of the plan should be emphasized. The plan has been presented to HCFA, but HCFA has made no final decisions on when the demonstration will take place, where the demonstration will be located, or whether the final design of the demonstration will be revised. Some of the plan s features discussed below--such as the partial exclusion of hospital outpatient tests, the number and nature of quality indicators, and the number of demonstration tests--may be subject to modification as HCFA refines the plan in preparation for implementation. Moreover, the plan was developed before passage of the Balanced Budget Act of 1997 (BBA 97 (3)), which contains a number of provisions regarding Medicare competitive bidding demonstration projects. These provisions will undoubtedly supersede some of the recommendations in the preliminary plan. We present the plan with its original recommendations. Where appropriate, we discuss probable changes to the plan necessitated by BBA 97.