[Federal Register Volume 72, Number 200 (Wednesday, October 17, 2007)]
[Notices]
[Pages 58856-58857]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-20499]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-5045-N]


Medicare Program: Medicare Clinical Laboratory Services 
Competitive Bidding Demonstration Project

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice.

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SUMMARY: This notice announces the first demonstration site for the 
Medicare Clinical Laboratory Services Competitive Bidding Demonstration 
project and the date for the Bidder's Conference. The Medicare Clinical 
Laboratory Competitive Bidding Demonstration was mandated by the 
Congress. Section 302(b) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) 
requires the Centers for Medicare & Medicaid Services (CMS) to conduct 
a demonstration project on the application of competitive acquisition 
for clinical laboratory services that would otherwise be paid under the 
Medicare Part B fee schedule. The objective of the demonstration is to 
determine whether competitive bidding can be used to provide Part B 
clinical laboratory services at fees below current Medicare payment 
rates while maintaining quality and access to care.
    The MMA specifically requires that the demonstration: (1) Includes 
tests paid under the Medicare Part B Clinical Laboratory Fee Schedule; 
(2) excludes entities that have a ``face-to-face encounter'' with the 
patient; (3) excludes Pap smears and colorectal cancer screening tests; 
and, (4) includes requirements under the Clinical Laboratory 
Improvement Amendments (CLIA) program. An initial Report to the 
Congress was submitted April 2006.
    Site(S): The fundamental criteria for selecting demonstration sites 
require that each Metropolitan Statistical Area (MSA) allows for 
potential Medicare program savings from the demonstration, is 
administratively feasible, represents the laboratory market, and will 
yield demonstration results that can be generalized to other MSAs.
    The first demonstration site will be the San Diego-Carlsbad-San 
Marcos, California MSA.
    A Bidders Conference is planned for October 31, 2007 in the San 
Diego-Carlsbad-San Marcos, California MSA.
    The demonstration covers tests provided to beneficiaries enrolled 
in the traditional fee-for-service (FFS) Medicare program who reside in 
the area of the demonstration site or competitive bid area (CBA) during 
the 3 year demonstration period. Beneficiaries who travel outside the 
CBA during the demonstration period and require laboratory services 
will be able to access services from most laboratories in the United 
States. We will not directly pay, however, for services furnished by a 
required bidder that did not bid or bid and did not win or a non-
required bidder that bid and did not win. (The terms ``required 
bidder'' and ``non-required bidder'' are explained in section II 
below.) Laboratories may not bill beneficiaries for laboratory services 
covered under the Medicare program.

FOR FURTHER INFORMATION CONTACT: Linda Lebovic at (410) 786-3402 or 
lab-- bid _demo@cms.hhs.gov. Interested parties can obtain 
information about the demonstration project on the CMS Web site at 
http://www.cms.hhs.gov/DemoProjectsEvalRpts/downloads/2004_
Demonstration_Competitive_Bidding_Clinical_Laboratory_
Services.pdf.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 302(b) of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) amends section 
1847(e) of the Social Security Act (the Act) (42 U.S.C. 1395w-3) --
``Competitive Acquisition of Certain Items and Services,'' to include a 
demonstration project for clinical laboratory services. The statute 
requires the Secretary of Health and Human Services to conduct a 
demonstration project on the application of competitive acquisition for 
payment of clinical laboratory services that would otherwise be made 
under Medicare Part B Clinical Laboratory Fee Schedule.

II. Provisions of the Notice

    Under section 1847(e) of the Act, Pap smears and colorectal cancer 
screening tests are excluded from this demonstration. Requirements 
under CLIA as mandated in section 353 of the Public Health Service Act 
apply. The aggregate amounts to be paid to contractors in a competitive 
acquisition area are expected to be less than the aggregate amounts 
that would otherwise be paid under the laboratory fee schedule. The 
payment basis determined for each competitive acquisition area will be 
substituted for payment under the existing Medicare Part B Clinical 
Laboratory Fee Schedule. The demonstration period is 3 years for each 
demonstration site or ``competitive bid area'' (CBA). The competitively 
set demonstration fee schedule will be used to pay for laboratory 
services in the CBA for the duration of the 3-year demonstration 
period. Multiple winners are expected in each CBA.
    Required bidders are defined as those organizations that will 
supply, or expect to supply, at least $100,000 annually in 
demonstration tests to Medicare beneficiaries residing in the CBA 
during any year of the demonstration. Required bidders that bid and win 
will be paid under one demonstration fee schedule for services provided 
to beneficiaries residing in the CBA for the duration of the 
demonstration.
    Non-required bidders are defined as laboratories that are not 
exempt from the demonstration, but have the option of participating in 
the bidding process. Non-required bidders that do not bid as well as 
those that bid and win, will be paid under the demonstration fee 
schedule for the duration of the demonstration. These laboratories will 
be paid under the same fee schedule as the winning required bidders. 
Non-required bidders that choose to bid and

[[Page 58857]]

do not win will not receive payment for services provided to 
beneficiaries residing in the CBA for the duration of the demonstration 
period.
    A non-required bidder is:
     A small business laboratory, which we are defining as one 
that will supply less than $100,000 annually in demonstration tests to 
Medicare FFS beneficiaries residing in the CBA during each year of the 
demonstration. These laboratories may choose to be a ``passive'' 
laboratory. A passive-small business laboratory will have a $100,000 
ceiling on annual payment from Medicare for demonstration tests for the 
duration of the demonstration.
     A laboratory that exclusively serves beneficiaries 
entitled to Medicare because they have end-stage renal disease (ESRD) 
residing in the CBA may choose to be a ``passive'' laboratory under the 
demonstration. A passive-ESRD laboratory may continue to provide 
services to ESRD beneficiaries residing in the CBA and receive payment 
from Medicare for demonstration tests paid under the competitively set 
Part B Clinical Laboratory Fee Schedule (demonstration fee schedule) 
for the duration of the demonstration.
     A laboratory that exclusively serves beneficiaries 
residing in nursing homes or receiving home health services in the CBA 
may choose to be a ``passive'' laboratory under the demonstration. A 
passive-nursing home laboratory may continue to provide services to 
beneficiaries residing in nursing homes or receiving home health 
services in the CBA and receive payment from Medicare for demonstration 
tests paid under the demonstration fee schedule for the duration of the 
demonstration.
    This notice announces a ``Bidder's Conference'' to be held in the 
San Diego-Carlsbad-San Marcos, California MSA on October 31, 2007 for 
potential bidders to learn about the demonstration rules and ask 
questions about the bidding process. A Bidder's Package provides 
information about the demonstration project and is available to the 
public on the CMS project Web site. There will be a single bidding 
competition covering demonstration tests for each CBA. Bidders will be 
required to submit a bid price for each Health Care Procedure Coding 
System (HCPCS) code in the demonstration test menu. Bidding 
laboratories will be asked to identify demonstration tests that they do 
not perform, and will be asked to explain their plans for responding to 
requests for demonstration tests that they do not perform in house (for 
example, subcontracting and referrals). As part of their bid, 
laboratories will provide information on ownership, location of 
affiliated laboratories and specimen collection sites, CLIA 
certification, laboratory finances, and quality.

III. Collection of Information Requirements

    This information collection requirement is subject to the Paperwork 
Reduction Act of 1995 (PRA). The collection is currently approved under 
OMB control number 0938-1008 entitled ``Medicare Clinical Laboratory 
Services Competitive Bidding Demonstration Project Application Form'' 
with a current expiration date of January 31, 2009.

    Authority: Section 302(b) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA).

(Catalog of Federal Domestic Assistance Program No. 93.773 
Medicare--Hospital Insurance Program; and No. 93.774, Medicare--
Supplementary Medical Insurance Program)

    Dated: October 4, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. E7-20499 Filed 10-16-07; 8:45 am]
BILLING CODE 4120-01-P