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Competitive bidding for Medicare Part B clinical laboratory services

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  • John Kautter
  • Gregory Pope

Abstract

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. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • John Kautter & Gregory Pope, 2014. "Competitive bidding for Medicare Part B clinical laboratory services," International Journal of Health Economics and Management, Springer, vol. 14(2), pages 95-108, June.
  • Handle: RePEc:kap:ijhcfe:v:14:y:2014:i:2:p:95-108
    DOI: 10.1007/s10754-013-9139-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Clinical laboratory; Competitive bidding; Auction; Medicare; Part B; CLIA; Reimbursement; D44; H51; I11; I18; L88;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

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