The Commissioner of Social Services shall, where feasible and cost effective, enter into contracts with suppliers of stock and standard durable medical equipment, medical surgical supplies, oxygen and laboratory services for such services provided to recipients of medical assistance excluding those services provided by hospitals or routinely provided by nursing homes as part of their rate. In the case of laboratory services billed through a hospital outpatient clinic, payment shall be made at the lower of the provider’s charges to the general public or the contracted rate. Except for hospital based laboratory work and those laboratory tests specifically exempted by the commissioner, no payment shall be made for laboratory services except under contract, where feasible. Except for those facilities specifically exempted by the commissioner, all oxygen services for residents of nursing facilities and chronic disease hospitals shall be supplied through such a contract.