Lab test ruling of 'great interest' to HME industry

Sunday, April 13, 2008

WASHINGTON - The HME industry is trying to figure out whether it can leverage a judge's decision last week to delay CMS's competitive bidding demonstration project for lab tests in the San Diego area.

AAHomecare, which is working with a Washington, D.C., law firm on a potential challenge to competitive bidding for HME, is reviewing the ruling, the association stated last week.

"Obviously, this is of great interest to the homecare community and we will determine how this affects our ability to challenge Round 1 of competitive bidding," stated AAHomecare President Tyler Wilson.

Sharp Healthcare, Internist Laboratory and Scripps Health in January sued CMS to delay competitive bidding for lab tests, arguing that the project would result in patient and economic harm. In a 19-page ruling, U.S. District Court Judge Thomas Whelan sided with the labs, directing CMS not to announce winners in the project, not to implement or carry out the project, and not to disclose any bid information.

In its lawsuit, the clinical labs allege that:

-- Michael Leavitt, secretary of the Department of Health and Human Services, violated notice and comment requirements of the Administrative Procedure Act (APA) in developing certain demonstration project rules;
-- Three of Leavitt's rules violate the APA because they are "arbitrary, capricious, an abuse of discretion or not otherwise in accordance with the law";
-- Leavitt's rules will "cause a taking in violation of the Fifth Amendment to the U.S. Constitution"; and
-- Leavitt violated the Constitution by increasing the scope of the demo project to include collecting and handling lab specimens.

The industry shouldn't get too excited by the judge's decision, cautioned Seth Johnson, vice president of government affairs for Pride Mobility Products.

"Many of the arguments that are part of the clinical lab competitive bidding lawsuit do not apply to the DME argument, because the DME program is not a demonstration project anymore," he said. "It has been through the rule making process and procedures via a proposed rule and a final rule. So they're two totally different competitive bidding programs at two totally different stages in the process."