Laboratory Competitive Bidding

Effective January 02, 2007, CR 5205 provides instructions for implementing the lab competitive bidding demonstration required by Section 302(b) of the Medicare Modernization Act of 2003 for services paid under the Medicare Part B. Pap smears and colorectal cancer screening tests are excluded.

• The project will cover demonstration tests for beneficiaries who live in demonstration sites, as determined by the beneficiary’s zip code.
• Hospital inpatient testing is exempt from the demonstration.
• Physician office lab (POL) testing and hospital outpatient testing are excluded and will continue to be paid on the existing lab fee schedule, except where the lab functions as an independent lab performing testing for a non-patient.

Required Bidders

Labs with $100,000 or more in annual Medicare Part B payments for 2005 for “demonstration tests” provided to beneficiaries residing in the CBAs will be required to bid.

Passive Laboratories

Small labs with less than $100,000 in annual Medicare Part B payments for demonstration tests provided to beneficiaries residing in the CBAs will not be required to bid. Passive labs will be paid the lab competitive bidding demonstration fee schedule for demonstration tests provided to beneficiaries residing in the CBA until they exceed the annual ceiling of $100,000 at which time they will stop being paid anything by Medicare for demonstration tests provided to beneficiaries residing in the CBAs for the duration of the demonstration.

Winners

Both required and non-required bidders that bid and win will be paid the lab competitive bidding demonstration fee schedule for demonstration tests provided to beneficiaries residing in the CBAs.

Non-Winners

Both required and non-required bidders that bid and do not win may neither be paid by Medicare for demonstration tests provided to beneficiaries residing in the CBAs for the duration of the demonstration, nor may they charge the beneficiary for Part B lab services or request an ABN.

Demonstration-Covered Laboratory Tests

Only the performing lab may bill for services. Non-winner labs may neither bill Medicare or the beneficiary for any demonstration-covered services, but may refer services to a winner lab or a passive lab.

Labs will be paid according to the clinical lab fee schedule for tests and/or beneficiaries not covered under the demonstration.

Demonstration Sites

There are two demonstration sites and each site runs for three years with a staggered start of one year.

Implementation

By January 01, 2007, CMS will provide Medicare carriers and FIs with a national zip code pricing file identifying the zip codes included in CBA1; a list of the labs eligible to participate (“winners” and passive laboratories); and a list of those laboratories not selected to participate in CBA1.

For covered services in CBA1 with dates of service April 01, 2007 – March 31, 2010, Medicare will pay the lab demonstration fee schedule amounts.

Claims submitted by non-winner labs for dates of service April 01, 2007 – March 31, 2010, for Medicare beneficiaries in CBA1 will be denied using:

• Reason code 96 (non-covered charges)
• Remark code M114 (This service was processed in accordance with rules and guidelines under the Medicare Clinical Laboratory Services Competitive Bidding Demonstration Project. If you would like more information regarding this project, you may contact your local contractor.)
• Remark code N83 (No appeal rights. Administrative decision based on the provisions of a demonstration project.)

Using these same reason and remark codes, Medicare will reject any laboratory claims with a date of service between April 01, 2007, and March 31, 2010 with a modifier of “90” submitted by laboratories for demonstration-covered services provided to beneficiaries residing in the CBA, regardless of the referring laboratory’s participation status.

A subsequent CR will be issued with requirements to implement the demonstration in the second CBA (CBA2) with a tentative start date of April 01, 2008.