Medicare Compliance & Reimbursement

The lowdown on how it started, and what to expect

On December 8, 2003, President Bush signed into law the Medicare Modernization Act, which included a call for a demonstration project to be conducted for clinical laboratory services.

The project will apply competitive acquisition techniques on payments for clinical laboratory services, which would otherwise be paid through the Medicare Part B fee schedule. Pap smears, colorectal screening tests and waived tests will be excluded. An initial report is due to Congress by December 31, 2005.

On September 30, 2004, CMS awarded a contract to RTI International and its subcontractor Palmetto GBO to direct the project. The task order indicated that the demonstration project would be completed in two phases. Phase One will be dedicated to design, development, solicitation and the bid process. Phase Two will focus on the operation of the bid sites.

The total amounts to be paid to the contractors in the demonstration project area will be less than they would otherwise be paid. Contracts will be recompeted every three years, and multiple winners are expected. The statute does not specify the number or location of the sites.