The California Clinical Laboratory Association has filed suit in federal district court in the District of Columbia against Health And Human Services challenging the legality of policies developed by the Medicare contractors that govern clinical laboratory services.  They allege that the Local Coverage Determinations (LCDs) that were adopted by the Medicare contractors (MACs) are unconstitutional and deprive Medicare beneficiaries of access to necessary lab tests.  This action emanates from the development of LCDs by Palmetto and validation by Noridian that govern molecular pathology and genetic tests.

The complaint alleges: 

1. That the development of the rules or LCDs  violates the Constitution as an inappropriate delegation of legislative authority reserved for Congress,
2. MACs are developing LCDs outside the normal rulemaking process under the Administrative Procedure Act, and
3. Secretary of HHS is not providing nationwide consistency in covered services for beneficiaries  when MACs have individual LCDs within their jurisdiction.

The complaint requests that the LCDs process be abandoned and that specific LCDs be withdrawn.

SB 1212 ( Walters) was amended in March in an effort to deal with the complaints from some clinical labs that have not been allowed to enroll as Medi-Cal providers due to the moratorium that has been in effect for more than a decade. The moratorium was implemented to prevent fraud and abuse in 2001 with a 6 month effective date. It has been renewed in 6 month increments ever since then with a limited number of exemptions that has grown over the years. The CSP has worked with DHCS to create some of the exemptions but problems have remained.

Senator Walters was approached to author the bill by a genetics lab in her district that has been unable to enter the Medi-Cal program for 13 years. The bill as amended would have created an exemption to the moratorium if the applicant lab was contracted to provide services to a Medi-Cal managed care plan. The CSP supported the bill but suggested that there needed to be additional reforms. For example, one of the most onerous aspects of the moratorium is the provision that applies to any laboratory that was enrolled on or after March 2001 to not be allowed to expand service categories or add specialty codes or services. In essence the provider who enrolled after that date is allowed to only perform and bill for the services that they provided at the time of enrollment with no opportunity to add new types of tests or enhanced services.