Medicare Update

U.S. District Court Stops Clinical Laboratory Competitive Bidding Demonstration

On April 8, 2008, the U.S. District Court for the Southern District of California enjoined the Secretary of the Department of Health and Human Services (Secretary) from implementing the Medicare clinical laboratory services competitive bidding demonstration project (Demonstration Project) at this time in the San Diego-Carlsbad-San Marcos, California metropolitan area. 

Specifically, in Sharp Healthcare v. Leavitt, Case No. 08-CV-0170 W (S.D. Cal. April 8, 2008), the U.S. District Court for the Southern District of California granted the plaintiffs' (Sharp Healthcare, Scripps Health and Internist Laboratory) motion for a preliminary injunction enjoining the Secretary from:

• announcing the winners in the Demonstration Project's bidding for the San Diego-Carlsbad-San Marcos metropolitan area;
• otherwise implementing and carrying out the Demonstration Project for the San Diego-Carlsbad-San Marcos metropolitan area; and
• disclosing any information included in the bid applications submitted in connection with the Demonstration Project for the San Diego-Carlsbad-San Marcos metropolitan area.

Furthermore, in granting the plaintiffs' motion, the U.S. District Court found that the plaintiffs established the possibility of irreparable injury and that the balance of the hardships was sharply in the plaintiffs' favor.  The U.S. District Court also found that the plaintiffs established a likelihood of success on their claims that:

• the Secretary violated the Administrative Procedure Act's (APA) notice and comment rule making requirements in developing the Demonstration Project rules;
• the Secretary's interpretation of the "face-to-face exception" violates the APA because it is arbitrary, capricious, an abuse of discretion, and/or not otherwise in accordance with the law; and
• the Demonstration Project rules violate the controlling statute by increasing the scope of the Demonstration Project to include collecting and handling laboratory specimens.

In 2003, Congress passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) requiring that the Secretary, through the Centers for Medicare & Medicaid Services (CMS), conduct a demonstration project on the application of competitive acquisition for payment of clinical diagnostic laboratory tests that would otherwise be covered by the Medicare Part B fee schedule.  The MMA also required that the Secretary exclude entities that have a "face-to-face encounter" with patients, and pap smears and colorectal cancer screening tests, from the Demonstration Project.

On October 17, 2007, CMS announced that the first site for the Demonstration Project would be the San Diego-Carlsbad-San Marcos, California metropolitan area.  Under the Demonstration Project, the deadline for submitting bids was February 15, 2008. Prior to the U.S. District Court enjoining the Secretary, CMS was expected to announce the winning bidders on or around April 11, 2008.

Hospitals and Laboratory Seek to Enjoin Clinical Laboratory Competitive Bidding

On January 29, 2007, Sharp Healthcare, Scripps Health and Internist Laboratory filed a Complaint for Injunctive Relief (Complaint) in the U.S. District Court for the Southern District of California. 

The Complaint seeks to enjoin the Secretary of the Department of Health and Human Services (Secretary) from implementing the Medicare clinical laboratory services competitive bidding demonstration project (and its February 15, 2008 bid date) in the San Diego-Carlsbad-San Marcos, California area or any other area.

In the Complaint, the plaintiffs allege that, among other things, the Secretary is implementing the demonstration project without abiding by the notice and comment rule making requirements of the Administrative Procedure Act, and that the project would dramatically change and irreparably harm and damage the system for delivering clinical laboratory services to Medicare beneficiaries in the San Diego-Carlsbad-San Marcos area.

The demonstration project is authorized by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).  On October 17, 2007, the Centers for Medicare & Medicaid Services (CMS) announced that the first site for the Medicare clinical laboratory services competitive bidding demonstration project would be the San Diego-Carlsbad-San Marcos, California metropolitan statistical area. 

For more information, see Sharp Healthcare et al. v. Leavitt, Case No. 3:08-cv-00170-W-POR. 

UPDATE: CMS Delays Revised Anti-Markup Provisions for Certain Services

On January 3, 2008, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule in the Federal Register, delaying until January 1, 2009, the applicability of the anti-markup provisions in 42 C.F.R. 414.50, as revised by the Medicare Physician Fee Schedule final rule for 2008, except with respect to:

• the technical component of a purchased diagnostic test; and
• any anatomic pathology diagnostic testing services furnished in space that: (i) is utilized by a physician group practice as a "centralized building" (as defined at 42 C.F.R. 411.351) for purposes of complying with the physician self-referral rules; and (ii) does not qualify as a "same building" under 42 C.F.R. 411.355(b)(2)(i).

CMS also recently announced that the word "except" was inadvertantly omitted from Section III of the Final Rule.  CMS reports that a correction notice will be published shortly.

President Bush Signs Medicare, Medicaid and SCHIP Extension Act of 2007

On December 29, 2007, President Bush signed the Medicare, Medicaid and SCHIP Extension Act of 2007 (Act) into law, extending the State Children's Health Insurance Program (SCHIP) and temporarily addressing a number of Medicare program issues.

As widely reported, the Act prevents the 10.1 percent reduction in Medicare physician payments that was scheduled for 2008 and gives physicians a 0.5 percent increase through June 30, 2008.  The 10.1 percent reduction in Medicare physician payments is driven by the statutory sustainable growth rate (SGR) formula, which is intended to control the growth in aggregate Medicare expenditures for physician services. Therefore, Congress will have to revisit the issue before July 1, 2008 or the 10.1 percent reduction will take effect at that time.  The 109th session of Congress passed similar legislation averting a 5 percent reduction in Medicare physician payments for 2007. The 5 percent reduction for 2007 was also driven by the SGR formula.

The Act also extends the Medicare therapy cap exception process through June 30, 2008.  The Balanced Budget Act of 1997 required that the Centers for Medicare & Medicaid Services (CMS) impose the therapy caps on Medicare payments for outpatient physical therapy (OPT), speech-language pathology (OSP) and occupational therapy (OOT) services in all settings, except hospital outpatient departments.  However, the Deficit Reduction Act of 2005 directed CMS to create a clinically-based exception process to the therapy caps for 2006. The Tax Relief and Health Care Act of 2006 extended that exception process through 2007. If Congress had not acted to extend the exception process through June 30, 2008, the Medicare Physician Fee Schedule Final Rule for 2008 would have imposed a combined therapy cap of $1,810 per beneficiary for OPT and OSP, and a separate cap of $1,810 for OOT, beginning January 1, 2008.  Unless Congress repeals the therapy caps or further extends the therapy cap exception process prior to July 1, 2008, the therapy caps will take effect when the Act's extension expires on June 30, 2008.

The Act also contains a number of other provisions impacting Medicare providers and suppliers, such as provisions freezing the inpatient rehabilitation facility compliance threshold at 60 percent and allowing certain comorbidities to count toward that threshold.

CMS Delays Revised Anti-Markup Provisions for Certain Services

On December 28, 2007, the Centers for Medicare & Medicaid Services (CMS) released a display copy of a final rule (Final Rule), delaying until January 1, 2009, the applicability of the anti-markup provisions in 42 C.F.R. 414.50, as revised by the Medicare Physician Fee Schedule final rule for 2008, except with respect to:

• the technical component of a purchased diagnostic test; and
• any anatomic pathology diagnostic testing services furnished in space that: (i) is utilized by a physician group practice as a "centralized building" (as defined at 42 C.F.R. 411.351) for purposes of complying with the physician self-referral rules; and (ii) does not qualify as a "same building" under 42 C.F.R. 411.355(b)(2)(i).

CMS reports that the Final Rule will be published in the Federal Register on January 3, 2008 and is effective January 1, 2008.  The display copy of the Final Rule is reproduced below:   

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 414

[CMS-1385-F2]

RIN 0938-AO65

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, and Other Part B Payment Policies for CY 2008; Delay of the Date of Applicability of the Revised Anti‑Markup Provisions for Certain Services Furnished in Certain Locations (§414.50)

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

ACTION:  Final rule.

SUMMARY:  This final rule delays until January 1, 2009 the applicability of the anti‑markup provisions in §414.50, as revised at 72 FR 66222, except with respect to the technical component of a purchased diagnostic test and with respect to any anatomic pathology diagnostic testing services furnished in space that:  is utilized by a physician group practice as a "centralized building" (as defined at §411.351 of this chapter) for purposes of complying with the physician self-referral rules; and does not qualify as a "same building" under §411.355(b)(2)(i) of this chapter.

EFFECTIVE DATE:  The provisions of this final rule are effective January 1, 2008.  However, the date of applicability of the provisions of §414.50, as revised at 72 FR 66222, with respect to certain services furnished in certain locations, as described herein, are delayed until January 1, 2009.

FOR FURTHER INFORMATION CONTACT:  Donald Romano, (410) 786‑1401.

SUPPLEMENTARY INFORMATION:

I.  Background

            The final rule with comment period, entitled "Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule, and Other Part B Payment Policies for CY 2008; Revisions to the Payment Policies of Ambulance Services Under the Ambulance Fee Schedule for CY 2008; and the Amendment of the E-Prescribing Exemption for Computer Generated Facsimile Transmissions," that appeared in the November 27, 2007 Federal Register (72 FR 66222), amended the anti-markup provisions for certain diagnostic tests in §414.50. 

II.  Provisions of the Final Regulations

            As amended, the anti-markup provisions in §414.50 will apply to the technical and professional components of diagnostic tests covered under section 1861(s)(3) of the Social Security Act (the Act) and paid for under part 414 (other than clinical diagnostic laboratory tests paid under section 1833(a)(2)(D) of the Act, which are subject to the special billing rules set forth in section 1833(h)(5)(A) of the Act).  If a physician or other supplier bills for the technical component or professional component of a diagnostic test that was ordered by the physician or other supplier (or ordered by a party related to such physician or other supplier through common ownership or control) and the diagnostic test is either purchased from an outside supplier or performed at a site other than the office of the billing physician or other supplier, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the technical component or professional component of the diagnostic test may not exceed the lowest of the following amounts:

            ●  The performing supplier's net charge to the billing physician or other supplier.

            ●  The billing physician or other supplier's actual charge.

            ●  The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

            In revised §414.50(a)(2)(iii), we define the "office of the billing physician or other supplier" as medical office space where the physician or other supplier regularly furnishes patient care.  With respect to a billing physician or other supplier that is a physician organization (as defined at §411.351 of this chapter), the "office of the billing physician or other supplier" is space in which the physician organization provides substantially the full range of patient care services that the physician organization provides generally.   Subsequent to the publication of the final rule with comment period, we received informal comments from various stakeholders who allege that the application of the rule is unclear with respect to whether certain types of space arrangements meet the definition of the “office of the billing physician or other supplier."  Further, some of these stakeholders assert that patient access may be significantly disrupted due to the alleged inability of physician groups to render services in a cost-effective manner if medical office space that satisfies the "same building" test in §411.355(b)(2)(i) of this chapter for purposes of the physician self-referral rules in Part 411, Subpart J of this chapter and other medical office space in which patients are seen and that complies with the physician self-referral rules are subject to the anti-markup provisions in revised §414.50.  That is, physician groups allege that, in situations in which they are subject to the anti-markup provisions and are limited to billing Medicare for the amount of the net charge imposed by the performing supplier, because they will not be able to realize a profit and will not be able to recoup their overhead costs, they will not be able to continue to provide diagnostic testing services to the same extent that they are currently providing such services. 

            We are concerned that the definition of "office of the billing physician or other supplier" may not be entirely clear and could have unintended consequences.  Accordingly, in order for us to study the issues further, we are delaying until January 1, 2009, the applicability of the revised anti-markup provisions in §414.50, except for anatomic pathology diagnostic testing services furnished in space that :  (1) is utilized by a physician group practice as a "centralized building" (as defined at §411.351 of this chapter) for purposes of complying with the physician self-referral rules; and (2) does not qualify as a "same building" under §411.355(b)(2)(i) of this chapter.  During the next 12 months, we plan to issue clarifying guidance as to what constitutes the "office of the billing physician or other supplier" or propose additional rulemaking, or both.  Because anatomic pathology diagnostic testing arrangements precipitated our proposal for revision of the anti-markup provisions and remain our core concern, we are not delaying the date of applicability with respect to anatomic pathology diagnostic testing services furnished in space that:  (1) is utilized by a physician group practice as a "centralized building" (as defined at §411.351 of this chapter) for purposes of complying with the physician self-referral rules; and (2) does not qualify as a "same building" under §411.355(b)(2)(i) of this chapter.  In addition, we are not delaying the applicability of the revised anti-markup rule with respect the technical component of any purchased diagnostic test.  The anti-markup prohibition with respect to the technical component of purchased diagnostic tests is longstanding and was incorporated into the expanded and revised provision of §414.50.  Accordingly, it will remain applicable to the technical component of any purchased diagnostic test. 

III.       Waiver of Proposed Rulemaking

            We ordinarily publish a notice of proposed rulemaking and invite public comment on the proposed rule.  The notice and comment rulemaking procedure is not required, however, if the rule is interpretive or procedural in nature, and it may be waived if there is good cause that it is impracticable, unnecessary, or contrary to the public interest and we incorporate in the rule a statement of such a finding and the reasons supporting that finding.  Likewise, we ordinarily provide for a delayed effective date of a final rule, but we are not required to do so if the rule is procedural or interpretive.  Where a delayed effective date is required, this requirement may be waived for good cause.  We set forth below our finding of good cause for the waiver of notice and comment rulemaking and the waiver of a delayed effective date.

            Our implementation of this action without opportunity for public comment and without a delayed effective date is based on the good cause exceptions in 5 U.S.C. 553(b)(3)(B) and (d), respectively.  We find that seeking public comment on this action is impracticable and contrary to the public interest.  We are implementing this delay of effective date as a result of our review of the informal comments on the final rule with comment period from various stakeholders.  As discussed above, we understand from those comments that patient access for common diagnostic tests may be significantly disrupted unless we delay the effective date of revised §414.50 with respect to anatomic pathology diagnostic testing services furnished in space that:  (1) is utilized by a physician group practice as a "centralized building" (as defined at §411.351 of this chapter) for purposes of complying with the physician self-referral rules; and (2) does not qualify as a "same building" under §411.355(b)(2)(i) of this chapter.  Likewise, if we do not make this final rule effective upon publication, patient care may be significantly disrupted during the interim period between the issuance of the rule and a delayed effective date.

IV.       Collection of Information Requirements

            This document does not impose information collection and recordkeeping requirements.  Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).

V.        Regulatory Impact Statement

            We do not believe that this delay in the date of applicability will result in any significant economic impact on any small entity.  Until January 1, 2009, the majority of billing suppliers affected by the revised §414.50 do not have to comply with the revised requirements in §414.50.

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

Dated:  _________________________

___________________________________

Kerry Weems,

Acting Administrator,

Centers for Medicare & Medicaid Services.

Approved:  _________________________

___________________________________

Michael O. Leavitt,

Secretary

BILLING CODE 4120-01-P

CMS Releases Q&A on Clinical Laboratory Competitive Bidding Demonstration

On October 17, 2007, the Centers for Medicare & Medicaid Services (CMS) announced that the first site for the Medicare clinical laboratory services competitive bidding demonstration project would be the San Diego-Carlsbad-San Marcos, California metropolitan statistical area.

The objective of the demonstration project 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 demonstration project is mandated by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).

The MMA requires that the project: (i) include tests paid under the Medicare Part B clinical laboratory fee schedule; (2) exclude entities that have a “face-to-face encounter” with patients; (iii) exclude pap smears and colorectal cancer screening tests; and (iv) include Clinical Laboratory Improvement Amendments (CLIA) program requirements.

On December 5, 2007, CMS held a bidder's conference in San Diego, California in which CMS, and its subcontractor RTI International, provided more details about the demonstration project design and its implementation. Recently, CMS posted the presentation materials from that bidder's conference on the CMS website.  More recently, CMS released a series of questions and answers to follow-up the bidder's conference.  The questions and answers are reproduced below:

Question 1:  Will the Centers for Medicare & Medicaid Services (CMS) establish an anti-mark-up rule between laboratories under the terms and conditions of the demonstration?

Answer 1:  Mark-up between laboratories may continue under the demonstration.

Question 2:  Can referring and reference laboratories share bid prices with each other if the referring and reference laboratories both are submitting bids?  Do both referring and reference laboratories have to submit bids individually to be declared winning laboratories under the demonstration?

Answer 2:  Each bidding laboratory must provide bid prices for all 303 demonstration test codes. A referring laboratory may request a price list from a laboratory providing its reference testing.  Referral and reference laboratory relationships should be identified in Sections C (questions 4 and 5) of the application.

A laboratory firm expecting to receive annual payment less than $100,000 for demonstration tests provided to beneficiaries enrolled in Medicare fee-for-service (FFS) and residing in the competitive bidding area (CBA) is not required to submit a bid, but would be paid under the competitively set fee schedule.  Laboratories required to bid that choose not to submit a bid will be considered non-winning laboratories and will not be able to bill Medicare directly for demonstration tests provided to beneficiaries enrolled in Medicare FFS and residing in the CBA.

Question 3:  Under the demonstration, CMS will exempt laboratories providing services exclusively to beneficiaries in nursing facilities or receiving home health services from being required bidders.  Does that exemption from bidding extend to other units associated with a nursing facility such as assisted living and independent living, for example?

Answer 3:  Laboratories providing services exclusively to beneficiaries residing in nursing homes or receiving home health services in the CBA will not be required to bid, and will be paid at the competitively set demonstration fee schedule for demonstration tests otherwise paid under the Part B Clinical Laboratory Fee Schedule (CLFS).  Laboratories that wish to provide services beyond beneficiaries residing in nursing homes or receiving home health service (such as for assisted living or independent care) in the CBA will be required to bid and win under the demonstration.

CMS is exempting laboratories providing services exclusively to nursing facilities from being required bidders, thereby making it easier for nursing facilities to continue to provide continuity of care.  In addition, laboratories providing both Part A and Part B laboratory services to nursing facilities would be able to continue existing business relationships.  Laboratories would not be at risk of losing Medicare Part A business as a result of the demonstration and would be paid at the competitively set rate for demonstration tests otherwise paid under Part B CLFS.  Laboratories will also continue to receive payment for mileage, phlebotomy, and the existing payment under any schedule other than the Part B CLFS for those tests included in the demonstration.

Question 4:  Are hospital laboratories required to bid under the demonstration if the hospital is a foundation where the parent organization provides the facilities and staff for the clinics (including laboratory services)? What if the laboratory is licensed as an independent laboratory but the medical director(s) of the laboratories are part of a medical group?

Answer 4:  Laboratories that are enrolled with a Medicare carrier, intermediary, or A/B MAC and perform Part B clinical laboratory services as an independent laboratory or a hospital laboratory performing "nonpatient" services are subject to the demonstration regardless of their affiliation with other entities.  Under the demonstration, a hospital laboratory would continue to submit a "nonpatient" Part B claims either to its fiscal intermediary (using a 14X Type of Bill) or an A/B MAC.  An individual who is seen by hospital personnel on a day only for the sole purpose of specimen collection for clinical laboratory testing (whether on hospital premises or off-site) is considered a "nonpatient."

Question 5:  Will CMS make information on the number of beneficiaries in the CBA available?  What about utilization information?

Answer 5:  Various Medicare enrollment tables such as national and state enrollment trends, state enrollment by aged, disabled and all, as well as county level enrollment are available at: http://www.cms.hhs.gov/MedicareEnrpts.

Question 6:  Will CMS provide total volume per test code for individual laboratories? Will CMS provide information on denied claims?

Answer 6:  No. CMS provided the total Medicare payment for demonstration tests provided to beneficiaries enrolled in FFS residing in the CBA to individual laboratories.  A letter was sent to individual laboratories either located in the CBA and/or paid more than $25,000 annually for demonstration tests provided to beneficiaries enrolled in FFS residing in the CBA.  Market test code volumes and weights for the entire CBA are provided on page 19 of the Bidder's Conference materials.

Question 7:  Can a laboratory participate in the demonstration if it enters the CBA market after the demonstration has started without having participated in the bidding process?

Answer 7:  A laboratory firm entering the CBA market and expecting to receive annual payment under the demonstration to exceed $100,000 is required to submit a bid during the bidding process as described in Federal Register Notice (CMS 5045N) published on October 17, 2007.  In this example, the laboratory would be considered a non-winning laboratory for the duration of the demonstration.

A laboratory firm entering the CBA market expecting to receive annual payment for demonstration tests that is less than $100,000 is not required to submit a bid, and would be paid under the competitively set fee schedule.  In this example, a laboratory would be considered a passive laboratory under the demonstration.

Question 8:  What happens if a laboratory acquires another laboratory that is a winning laboratory under the demonstration?  What happens if a laboratory acquires another laboratory that is a non-winning laboratory under the demonstration?

Answer 8:  The status of the laboratory under the demonstration will be defined by the laboratory firm ownership.  In other words, a laboratory firm that is a winner under the demonstration and its acquired laboratory will remain a winning laboratory.  A laboratory firm that is declared a non-winning laboratory because it failed to bid or submit a winning bid will remain a non-winning laboratory  (including its acquired laboratory) under the demonstration. Should a laboratory firm that chose to be exempt from bidding as a small business acquire a laboratory during the demonstration period, the $100,000 annual payment threshold for demonstration tests provided under the demonstration will apply to the laboratory annual payment combined.

CMS will validate the ownership of a laboratory firm based on the Medicare enrollment information provided on the CMS-855b form.

Question 9:  Can a non-winning laboratory draw blood and bill Medicare directly?

Answer 9:  If a laboratory is enrolled in Medicare as an independent laboratory and is declared a non-winning laboratory under the demonstration, then the laboratory may not bill Medicare directly for test codes that are paid under the Part B CLFS, including for phlebotomy.  Phlebotomy services that are provided by entities other than independent laboratories and paid under fee schedules other than the Part B CLFS are not included in the demonstration.

Question 10:   Can a laboratory refuse to provide a laboratory test for a Medicare beneficiary residing in the CBA?

Answer 10:  A laboratory that is enrolled as a Medicare supplier cannot legally refuse to provide services to a beneficiary based on payment.

UPDATE: House Passes Medicare, Medicaid and SCHIP Extension Act of 2007

Today, the U.S. House of Representatives passed the Medicare, Medicaid and SCHIP Extension Act of 2007 (S.2499) in a 411-3 vote,  On December 18, 2007, the U.S. Senate passed the Act by unanimous consent.  The Act contains a number of Medicare provisions, including a provision that would prevent the 10.1 percent cut to Medicare physician payments beginning January 1, 2008, and instead gives physicians a 6-month 0.5 percent increase through June 30, 2008.

UPDATE: Senate Passes Medicare, Medicaid and SCHIP Extension Act of 2007

On December 18, 2007, the U.S. Senate passed the Medicare, Medicaid and SCHIP Extension Act of 2007 (S.2499) by unanimous consent.  Among other things, the Act would prevent the 10.1 percent cut to Medicare physician payments beginning January 1, 2008 and instead gives a 6-month 0.5 percent increase for physicians through June 30, 2008.  Under the Act, the physician payment changes would be offset, in part, by  an adjustment to the  Medicare  Advantage  stabilization fund.  The Act has been sent to the U.S. House of Representatives.

Congress to Consider Medicare Legislation Blocking Physician Payment Cuts

Today, Senate Finance Committee Chairman Max Baucus announced in Press Release that Congress will consider the Medicare, Medicaid and SCHIP Extension Act of 2007 (Act) this week.

If enacted, the Act would block the 10.1 percent reduction in the Medicare payment rates for physician services in 2008 for a period of 6 months.  In fact, the Act would replaced the scheduled 10.1 percent reduction with a 0.5% increase through June 30, 2008.  As reflected in the Press Release, the Act is expected to contain the following Medicare provisions:

• Increase in physician payment update; extension of the physician quality reporting system. Replaces the scheduled 10.1% cut to the Medicare physician reimbursement rate in 2008 with a 0.5% increase through June 30, 2008. Extends the physician quality reporting system. Revises the Physician Assistance and Quality Initiative fund.
• Extension of incentive payment program for physician scarcity areas. Extends a provision that provides a 5% bonus payment to physicians practicing in physician shortage areas through June 30, 2008.
• Extension of the floor on work geographic adjustment. Extends for six months the work geographic index (GPCI) floor of 1.0 through June 30, 2008.
• Extension of treatment of certain physician pathology services. Extends for six months the provision that allows independent laboratories to continue to bill Medicare directly for the technical component of certain physician pathology services provided to hospitals as authorized by the Balanced Budget Act of 1997 through June 30, 2008.
• Extension of exceptions process for therapy caps. Ensures Medicare beneficiaries access to therapy services through June 30, 2008.
• Extension of payment rule for brachytherapy; extension to therapeutic radiopharmaceuticals. Extends the current “charges to cost” methodology which provides a separate payment for brachytherapy services through June 30, 2008. Includes therapeutic radiopharmaceuticals in this provision.
• Extension of reasonable costs payments for certain clinical diagnostic laboratory tests in rural areas. Provides reasonable cost reimbursement for clinical lab tests performed by certain small rural hospitals as part of their outpatient services through June 30, 2008.
• Extension of authority of specialized Medicare Advantage plans for special needs individuals. Extends the authority of specialized plans to target enrollment to certain populations through 2009. Includes a moratorium on new plans and expanded service areas through December 31, 2009.
• Access to Medicare reasonable cost contract plans. Extends section 1876 authority for cost contracts through December 31, 2009.
• Adjustment to the Medicare Advantage stabilization fund. Removes $1.5 billion from the stabilization fund for regional preferred provider organizations in 2012.
• Medicare secondary payer reporting requirements. Requires the submission of data by group health plans and liability insurers to the Secretary of Health and Human Services that is necessary to appropriately identify individuals for whom Medicare is the secondary payer.
• Payment for Part B drugs. Implements HHS OIG recommendation to require CMS to adjust its Average Sales Price (ASP) calculation to use volume-weighted ASPs based on actual sales volume. Establishes an appropriate reimbursement rate for generic albuterol.
• Payment rate for certain diagnostic laboratory tests. Reimburses certain diabetes laboratory tests that are approved for home use at the same rate as other glycated hemoglobin tests beginning April 1, 2008.
• Long-term care hospitals. Provides regulatory relief for three years to ensure continued access to current long-term care hospital services, while also imposing a limited moratorium on the development of new long-term care facilities. Establishes new facility and medical review requirements to ensure patients are receiving appropriate levels of care at these facilities and freezes the market basket update for the last quarter of rate year 2008. Requires the Secretary to conduct a study on long-term care hospital facility and patient criteria.
• Payments for inpatient rehabilitation facility (IRF) services. Permanently freezes the inpatient rehabilitation services compliance threshold at 60%, effective for cost reporting periods starting July 1, 2006, and allows comorbid conditions to count toward this threshold. Sets the market basket update factor at 0% from April 1, 2008 through FY09. Requires the Secretary to study beneficiary access to inpatient rehabilitation services and care at IRFs and to make recommendations for classifying inpatient rehabilitation facility hospitals and units.
• Accommodation of physicians ordered to active duty in the Armed Services. Extends until June 30, 2008 a provision that permits physicians in the armed services to engage in substitute billing arrangements for longer than 60 days when they are ordered to active duty.
• Treatment of certain hospitals for payment under Medicare. Extends until September 30, 2008, provisions that have allowed certain hospitals to be eligible for wage index reclassification that were otherwise unable to qualify for administrative wage index reclassification.
• Medicare enrollment assistance. Provides $15 million to State Health Insurance Assistance Programs and $5 million for Area Agencies on Aging and Aging Disability Resource Centers for beneficiary outreach and assistance.

Bidder's Conference Scheduled for Clinical Laboratory Demonstration Project

On November 21, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Notice in the Federal Register announcing the new date for the bidder's conference for the Medicare clinical laboratory services competitive bidding demonstration project. 

The bidder's conference will now take place on December 5, 2007 in San Diego, California.  During the bidder's conference, CMS, and its subcontractor RTI International, are expected to provide details about the project design and implementation and answer questions.

On October 17, 2007, CMS announced that the first site for the demonstration project would be the San Diego-Carlsbad-San Marcos, California metropolitan statistical area, and scheduled the bidder's conference for October 31, 2007.  However, the bidder's conference was postponed due to the State of Emergency resulting from the fires in the State of California.

For additional information on the demonstration project, including how to register for the December 5, 2007 bidder's conference, visit the demonstration project page of the CMS website.