It may have looked desperate when a couple of Southern California healthcare systems and a small, independent laboratory went to court last week to stop an imminent federal program in its tracks. But other efforts to throw a lawsuit in front of a rolling CMS train have had some success.
The CMS is about to embark on a three-year experiment with competitive bidding for clinical laboratory services in the San Diego area. Bids on the demonstration project, mandated by the Medicare Modernization Act of 2003, are due Feb. 15.
But four-hospital Scripps Health and three-hospital Sharp HealthCare, both based in San Diego, along with Internist Laboratory in Oceanside, say the demonstration program as devised will be bad for business and patients, and they filed a complaint in the U.S. District Court in San Diego against HHS, arguing providers never had a say as promised under federal rulemaking requirements.
They just basically told us this is what theyre doing, said Deborah Giles, corporate counsel for Scripps. Anytime youre trying to stop the government machinery, its a difficult thing, but we really felt like we had no other options considering what were facing.
It may be a good option. Just recently the National Community Pharmacists Association and the National Association of Chain Drug Stores successfully blocked a CMS rule that would have lowered Medicaid reimbursement for generic drugs.
But other cases signal dimmer odds. This past summer in Texas, a lawsuit failed to stop a Medicare competitive-bidding program for durable medical equipment in the Dallas-Fort Worth area.
The San Diego demonstration is intended to find out whether competitive bidding could lower Medicares bill for laboratory services without compromising quality or access. A CMS spokeswoman said the agency does not comment on litigation, but the CMS has communicated with and sought input from the laboratory industry and other stakeholders.
The lawsuit, however, argues the government provided no meaningful opportunities for input and as a result came up with a flawed plan that may hobble systems integrated delivery of care if theyre forced to farm out laboratory work. Internist Laboratory, the third plaintiff, provides only a small fraction of the 303 coded services it will be required to bid on, essentially forcing it into agreements with competitors, the lawsuit argued.
Lawyer Patric Hooper of Hooper, Lundy & Bookman, who filed the complaint, pointed to a Colorado case from the 1980s in which he won an injunction on the grounds that the federal agency that administers health benefits to military families glossed over its rulemaking obligations. The same issue is at the heart of the San Diego case, Hooper said. This project is being rushed into place, and the CMS folks did not go through the kinds of rulemaking and other regulatory processes that ordinarily they must go through when theyre trying to change the system.