Medicare Pilot Aimed at Lab Costs Blocked in San Diego Area
On Tuesday, a federal judge blocked Medicare officials from launching a pilot project in the San Diego area that aims to cut Medicare costs by requiring medical laboratories to compete for Medicare business, the San Diego Union-Tribune reports.
Patric Hooper -- an attorney at Hooper Lundy and Bookman, who represented lab owners in the case -- said the ruling could delay the program by at least six months.
CMS currently pays standard fees to laboratories nationwide but wanted to use the pilot project to see if competitive bidding could lower costs for Medicare. Losing bidders would not receive Medicare payments during the program's three-year span.
However, critics of the program said it could disrupt lab services, force Medicare beneficiaries to travel farther for lab tests and push other labs out of business.
Labs with less than $100,000 in annual Medicare revenue would not be required to participate in the program and would receive payments in line with the project.
Congress ordered the pilot project in 2003, and CMS officials selected San Diego as its demonstration site for the project.
Judge Thomas Whelan concluded that Medicare should have undergone a formal rule-making process to create the program, noting that the program instead conducted "a number of random presentations at industry and trade group meetings" between 2004 and 2007.
In addition, Whelan ruled that the plaintiffs in the case -- Sharp HealthCare, Scripps Health and Internist Laboratory of Oceanside -- could suffer from lost business, layoffs or lab closures if their bids for the project are not selected.
Whelan's injunction bars Medicare from announcing the winning bidders on April 11, and the Union-Tribune reports that the delay gives the program's opponents -- including the American Clinical Laboratory Association in Washington, D.C. -- additional time to lobby Congress to eliminate the program.
According to the Union-Tribune, Medicare officials could not be reached for comment Tuesday, and it remains unclear whether the federal government will appeal the ruling (Darcé, San Diego Union-Tribune, 4/8).