Competitive bidding for Medicare Part B clinical laboratory services
The traditional Medicare fee-for-service program may be able to purchase clinical laboratory test services at a lower cost through competitive bidding. Demonstrations of competitive bidding for clinical laboratory tests have been twice mandated or authorized by Congress but never implemented. This article provides a summary and review of the final design of the laboratory competitive bidding demonstration mandated by the Medicare Modernization Act of 2003. The design was analogous to a sealed bid (first price), clearing price auction. Design elements presented include covered laboratory tests and beneficiaries, laboratory bidding and payment status under the demonstration, composite bids, determining bidding winners and the demonstration fee schedule, and quality under the demonstration. Expanded use of competitive bidding in Medicare, including specifically for clinical laboratory tests, has been recommended in some proposals for Medicare reform. The presented design may be a useful point of departure if Medicare clinical laboratory competitive bidding is revived in the future.
KeywordsClinical laboratory Competitive bidding Auction Medicare Part B CLIA Reimbursement
JEL ClassificationD44 H51 I11 I18 L88
This study was funded by the Centers for Medicare and Medicaid Services. The views expressed are those of the authors and are not necessarily those of the Centers for Medicare & Medicaid Services.
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