A fight over competitive bidding in the laboratory industry took a sharp turn this week when US District Court Judge Thomas J. Whelan granted a plaintiffs’ motion for a preliminary injunction against HHS Secretary Michael Leavitt (pictured, left). According to an AAHomecare email alert to members this week, the 19-page order granting motion for a preliminary junction concludes that: “For the foregoing reasons, the Court grants Plaintiffs’ motion for a preliminary injunction (Doc. No. 15) and orders that Defendant Michael Leavitt, Secretary of the United States Department of Health and Human Services, his employees, his agents, and other acting in concert with them, are enjoined from: 1) Announcing winners in the Medicare Clinical Laboratory Services Competitive Bidding Demonstration Project for the San Diego-Carlsbad- San Marcos Metropolitan Area; 2) Otherwise implementing and carrying out the Medicare Clinical Laboratory Services Competitive Bidding Demonstration Project for the San Diego-Carlsbad-San Marcos Metropolitan Area; and 3) Further disclosing any information included in the bid applications submitted in connection with the Medicare Clinical Laboratory Services Competitive Bidding Demonstration Project for the San Diego-Carlsbad- San Marcos Metropolitan Area.”
 
“The law firm we are working with on potential competitive bidding challenges in the durable medical equipment program is reviewing the April 8 order," said Tyler Wilson, president of AAHomecare. "Obviously, this is of great interest to the home care community and we will determine how this affects our ability to challenge Round One of competitive bidding.”

The fight over competitive bidding in the laboratory industry brewed late last week when US District Court Judge Thomas J. Whelan ruled that he would hear the labs’ arguments in their case against CMS. A report in laboratory trade journal Dark Daily confirmed details of the case which involved several companies seeking to delay or stop implementation of a Medicare Part B laboratory competitive bidding demonstration project in San Diego.

According to Dark Daily, Judge Whelan ruled that: 1) the court has jurisdiction over the labs’ claims in the case; 2) the labs have standing in the case; and 3) at least some of the claims are ripe for review. “The judge resolved these issues in our favor fairly convincingly,” said attorney Patric Hooper of Hooper Lundy & Bookman in Los Angeles, in the Dark article. “The easiest thing for the judge to have done in this case would have been to get rid of it on jurisdictional grounds. The fact that he did not suggests to us that he sees at least some merit in the case.”

The legal and legislative fight waged by the laboratories bares an undeniable resemblance to the battle over DMEPOS competitive bidding, and industry advocates are still pondering the significance. “We hope this case helps to raise eyebrows and connect some dots,” said Tyler Wilson, president of the American Association for Homecare. “We are closely reviewing the order granting motion for a preliminary injunction to determine what the implications are for the DMEPOS bidding program.”

Like AAHomecare, the Clinical Laboratory Medical Association (CLMA) held a legislative conference last month and competitive bidding was at the top of the agenda. Senator Ken Salazar (D-Colo), who spoke at the AAHomecare conference, has also sponsored the “Protecting Access to Clinical Laboratory Services Act of 2007 (S 2099)” to repeal the competitive bidding demonstration project for clinical laboratory services. On the House side, clinical laboratories have a similar bill dubbed HR 3453.

Like AAHomecare, the CLMA laments the inclusion of competitive bidding in the President’s Fiscal Year (FY) 2009 budget. A note to CLMA members says: “The President’s proposal assumes budgetary savings (5%) from the implementation of competitive bidding before CMS can assess the demonstration to determine if savings are, in fact, realized or before it can be determined whether there are significant impacts to patients or providers that may result in greater overall costs to the Medicare program.”

Industry advocate Jim Walsh (pictured, left), JD, general counsel for the VGM Group, Waterloo, Iowa, is cautiously optimistic about the ripple effect of the decision. "These are complex legal issues...that are parallel but not exactly in sync. In both cases, though, the legislation tried to strictly limit the right of providers to challenge CMS' decisions in forming a program or executing it.....either administratively or judicially," said Walsh. "In ruling in favor of the laboratories, the Court in Sharp made a determination that there were areas of decision making that were not precluded from review and (importantly) that the plaintiffs would be irreparably harmed by being put out of business if they lost the bid. We will cite this decision in our efforts on behalf of HME plaintiffs in our cases, and it should be helpful that a court has ruled that CMS overstepped its bounds in a competitive acquisition program."