Measure Repeals Competitive Bidding, Lifts Freeze on Clinical Laboratory Fee Schedule

By a vote of 355 to 59, the House of Representatives today passed legislation eliminating the impending 10.6 percent cut in the physician fee schedule, repealing the clinical laboratory competitive bidding demonstration project and lifting the freeze on the clinical laboratory fee schedule. The House bill, HR 6331, is a major victory for ASCP and its members.

HR 6331, also known as the "Medicare Improvements for Patients and Providers Act of 2008,” provides an 18 month Medicare physician payment fix. Not only does it reverse the 10.6 percent cut in the Medicare physician fee schedule expected to go into effect on July 1, 2008, but it also reverses the cut projected for 2009, currently estimated to be 5 percent. The flawed sustainable growth rate, which ASCP has repeatedly urged Congress to reform, is the culprit responsible for the projected cuts in the physician fee schedule. Additionally, HR 6331 provides a positive 0.5 percent update for 2008 and a 1.1 percent update for 2009.

More importantly, the House Medicare bill repeals the clinical laboratory competitive bidding demonstration project. ASCP has been working hard with the Clinical Laboratory Coalition on the repeal, one of ASCP’s top advocacy priorities. As part of these efforts, ASCP has issued several action alerts resulting in more than 9,000 letters being sent to federal legislators urging the demonstration project’s repeal. These messages have been heard.

In addition, under HR 6331, the “freeze” on the clinical laboratory fee schedule would be lifted. Congress imposed a five-year freeze on the clinical laboratory fee schedule in 2004. The freeze is set to expire on December 31, 2008. Lifting the freeze on the fee schedule, or in other words not extending it, was another ASCP advocacy priority. In response to ASCP advocacy campaigns, almost 2,000 ASCP members wrote their federal legislators about this issue.

Given today’s tight fiscal climate in Congress, it was unclear whether the laboratory industry would be able to repeal competitive bidding and lift the freeze on the clinical laboratory fee schedule. HR 6331 provides both. That said, in repealing competitive bidding and lifting the freeze on the clinical laboratory fee schedule, the House of Representatives was unable to provide a full update for the clinical laboratory fee schedule. The Senate bill would reduce the annual inflationary adjustment to the fee schedule by 0.5 percentage points.

Another item of good news for the laboratory industry is that HR 6331 once again extends the technical component grandfathering provision for independent laboratories, thus enabling these laboratories to continue receiving Medicare reimbursement for the technical component (TC) of pathology services provided to hospital inpatients and outpatients. The bill extends the grandfathering provision through December 31, 2009.

Now that the bill has been approved by the House, attention turns to the Senate. The Senate may vote on the House bill, or it may try to craft a bipartisan compromise. The White House has threatened a veto of HR 6331. If a Medicare fix is not signed into law by July 1, the Centers for Medicare and Medicaid Services would be required to reduce physician reimbursement rates in line with the project cut. Should a Medicare fix be signed into law after July 1, CMS will subsequently readjust reimbursements.