A Medical Device Daily

A Medicare demonstration project slated for the San Diego-Carlsbad-San Marcos region of California threatens to irreparably harm lab testing services for thousands of Medicare beneficiaries if it is allowed to move forward as expected on Feb. 15, according to a complaint filed against federal regulators in federal court.

“The three-year demonstration project singles out the San Diego region for testing of a new competitive bidding program that if implemented will force many small community laboratories out of business and will force systems like Sharp HealthCare and Scripps Health (both San Diego) to refuse service to non-hospital patients who have come to rely on their labs for ongoing testing,” said Patric Hooper of Hooper, Lundy & Bookman (Los Angeles).

Hooper filed the complaint on behalf of Sharp HealthCare, Scripps Health and independently-owned Internist Laboratory (Oceanside, California). “Rather than creating competition, this Demonstration Project will result in fewer labs, less competition and increases in Medicare’s laboratory expenditures. The ramifications to Medicare beneficiaries, their physicians and the labs that currently serve them could be devastating,” he said.

The plaintiffs argue, in part, that the Department of Health and Human Services (Washington):

• Failed to follow a legally required rule-making process by failing to hold appropriate public hearings and failing to allow Medicare recipients, physicians and others to provide input into the process.

• Demonstration Project requires all labs to perform all 303 tests or obtain the financial and bidding cooperation of reference laboratories, which are now considered competitors.

• Has established a program that “threatens to cause severe and irreparable injury to plaintiffs Internist, Sharp, and Scripps, as well as to their respective employees and patients.”

• Has included many policies that are arbitrary.

“The Department of Health and Human Services Secretary has overstepped its bounds and by doing so threatens to cause havoc to the clinical laboratory landscape of San Diego, Carlsbad and San Marcos,” said Hooper. “We are respectfully asking the court to stop the project in its tracks and allow the public a chance to weigh-in on this ill-conceived government mandate.”