[Federal Register: December 23, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HSQ-221-N]
Medicare, Medicaid, and CLIA Programs; Clinical Laboratory
Improvement Amendments of 1988 Continuance of Exemption of Laboratories
Licensed by the State of Washington
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Notice.
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SUMMARY: This notice announces that laboratories located in the State
of Washington that possess a valid license under the Medical Test Site
Licensure Law, Chapter 70.40 of the Revised Code of Washington (RCW),
continue to be exempt from the requirements of the Clinical Laboratory
Improvement Amendments of 1988 (CLIA) until October 6, 1996. This
represents a continuation of the initial exemption announced on October
6, 1993 (58 FR 52112) for an additional 2 years.
DATES: The continuance granted by this notice is effective until
October 6, 1996.
FOR FURTHER INFORMATION CONTACT: Val Coppola, (410) 597-5892.
SUPPLEMENTARY INFORMATION:
I. Background and Legislative Authority
Section 353 of the Public Health Service Act (PHS Act), as amended
by the Clinical Laboratory Improvement Amendments of 1988 (CLIA),
requires any laboratory that performs tests on human specimens to meet
requirements established by the Department of Health and Human Services
(HHS). Under the provisions of the sentence following section
1861(s)(14) and paragraph 1861(s)(16) of the Social Security Act, any
laboratory that also wants to be paid for services furnished to
Medicare beneficiaries must meet the requirements of section 353 of the
PHS Act. Subject to specified exceptions, laboratories must have a
current and valid CLIA certificate to test human specimens and to be
eligible for payment from the Medicare or Medicaid programs.
Regulations implementing section 353 of the PHS Act are contained in 42
CFR part 493.
Section 353(p) of the PHS Act provides for the exemption of
laboratories from CLIA requirements in a State that applies
requirements that are equal to or more stringent than those of CLIA.
The statute does not specifically require the promulgation of criteria
for the exemption of laboratories in a State. The decision to grant
CLIA exemption to laboratories within a State is at the discretion of
HCFA, acting on behalf of the Secretary of HHS.
42 CFR part 493 subpart E implements section 353(p) of the PHS Act.
Section 493.513 provides that HCFA may exempt from CLIA requirements,
for a period not to exceed 6 years, all State licensed or approved
laboratories in a State if the State meets specified conditions.
Section 493.513(k) provides that we will publish a notice in the
Federal Register announcing the names of States whose laboratories are
exempt from meeting the requirements of part 493. On October 6, 1993,
we published a notice in the Federal Register announcing that the State
of Washington had applied for exemption of its laboratories from CLIA
requirements; that the evaluation of this application demonstrated that
all requirements for exemption were met; and that Washington was
granted an exemption.
II. Requirements for Granting CLIA Exemption
In order to determine whether we should grant or continue an
existing CLIA exemption to laboratories within a State, we conduct a
detailed and in-depth comparison of State and CLIA requirements to
determine whether the State meets the requirements at Sec. 493.513. In
summary, the State must:
<bullet> Have laws in effect that provide for requirements that are
equal to or more stringent than CLIA requirements;
<bullet> Have an agency that licenses or approves laboratories that
meet State requirements which meet or exceed CLIA requirements, and,
therefore, meet the condition level requirements of the CLIA
regulations;
<bullet> Meet the requirements and be approved in accordance with
Sec. 493.515, Federal review of laboratory requirements of State
laboratory programs;
<bullet> Demonstrate that it has enforcement authority and
administrative structures and resources adequate to enforce its
laboratory requirements;
<bullet> Permit HCFA or HCFA agents to inspect laboratories within
the State;
<bullet> Require laboratories within the State to submit to
inspections by HCFA or HCFA agents as a condition of licensure;
<bullet> Agree to pay the cost of the validation program
administered by HCFA and the cost of the State's pro rata share of the
general overhead to develop and implement CLIA as specified in
Secs. 493.645(b) and 493.646; and
<bullet> Take appropriate enforcement action against laboratories
found by HCFA or HCFA agents not to be in compliance with requirements
comparable to condition level requirements.
As specified in our regulations at 42 CFR 493.515, our review of a
State laboratory program includes (but is not necessarily limited to)
an evaluation of:
<bullet> Whether the State's requirements for laboratories are
equivalent to or more stringent than the condition level requirements;
<bullet> The State's inspection process requirements to determine:
+ The comparability of the full inspection and complaint inspection
procedures to those of HCFA;
+ The State's enforcement procedures for laboratories found to be
out of compliance with its requirements; and
+ The ability of the State to provide HCFA with electronic data and
reports with the adverse or corrective actions resulting from
proficiency testing (PT) results that constitute unsuccessful
participation in HCFA-approved PT programs and with other data HCFA
determines to be necessary for validation and assessment of the State's
inspection process requirements;
<bullet> The State's agreement with HCFA to ensure that the
agreement obligates the State to:
+ Notify HCFA within 30 days of the action taken against any CLIA-
exempt laboratory that has had its licensure or approval withdrawn or
revoked or been in any way sanctioned;
+ Notify HCFA within 10 days of any deficiency identified in a
CLIA-exempt laboratory in cases when the deficiency poses an immediate
jeopardy to the laboratory's patients or a hazard to the general
public;
+ Notify each laboratory licensed by the State within 10 days of
HCFA's withdrawal of the exemption;
+ Provide HCFA with written notification of any changes in its
licensure (or approval) and inspection requirements;
+ Disclose any laboratory's PT results in accordance with a State's
confidentiality requirements;
+ Take the appropriate enforcement action against laboratories
found by HCFA not to be in compliance with requirements comparable to
condition level requirements and report these enforcement actions to
HCFA;
+ Notify HCFA of all newly licensed laboratories, including the
specialties and subspecialties for which any laboratory performs
testing, within 30 days; and
+ Provide HCFA, as requested, inspection schedules for validation
purposes.
III. Evaluation of the Washington Request for Continued CLIA Exemption
Washington has applied to HCFA for continued exemption of its
laboratories from CLIA requirements.
As with the initial application, we evaluated the request for
continuation of the Washington CLIA exemption for equivalency against
the three major categories of CLIA rules: The implementing regulations,
the enforcement regulations, and the deeming/exemption requirements.
We evaluated the application to verify Washington's assurance of
compliance with the following subparts of part 493: Subpart A, General
Provisions; Subpart E, Accreditation by a Private, Nonprofit
Accreditation Organization or Exemption Under An Approved State
Laboratory Program; Subpart H, Participation in Proficiency Testing for
Laboratories Performing Tests of Moderate or High Complexity, or Both;
Subpart M, Personnel for Moderate and High Complexity Testing; Subpart
P, Quality Assurance for Moderate or High Complexity Testing, or Both;
Subpart Q, Inspection; and Subpart R, Enforcement Procedures.
Washington was found to continue to meet the requirements of
Subparts E, H, M, P, Q, and R, exactly as they had been described in
the October 6, 1993 Federal Register notice. We also evaluated
Washington's compliance with Subpart A, as described below.
Subpart A, General Provisions
Washington has modified a portion of its requirements which deal
with laboratories that perform certain moderate complexity microscopic
examinations. Due to the labile nature of the material examined, the
time required to perform routine inspections of this testing is less
than the time required to inspect most other moderate complexity
procedures. The State has developed this subdivision of moderate
complexity testing in order to reduce the licensure charges to the
laboratories that perform only waived tests and one or more of the
following:
<bullet> Wet mounts;
<bullet> Potassium hydroxide preparations;
<bullet> Pinworm examinations;
<bullet> Fern tests;
<bullet> Post-coital examinations, qualitative;
<bullet> Nasal smears for eosinophiles;
<bullet> Post vasectomy semen analysis, qualitative; and
<bullet> Any other tests classified as physician-performed
microscopy procedures under Federal law and regulation. All regulatory
requirements for moderate complexity testing apply to the laboratories
performing the tests within this subcategory. These tests satisfy the
requirements of Subpart A of 42 CFR 493.
IV. Validation Inspections
The Federal validation inspections of CLIA-exempt laboratories, as
specified in Sec. 493.517, were conducted on a representative sample
basis as well as in response to substantial allegations of
noncompliance (complaint inspections). The outcome of those validation
inspections has been and will continue to be HCFA's principal tool for
verifying that the laboratories located in and licensed by the State
are in compliance with CLIA requirements.
HCFA staff of the Laboratory Survey Section, Division of Health
Standards and Quality in the HCFA Regional Office in Seattle,
Washington have conducted validation inspections of approximately 7
percent of the laboratories inspected by the Washington Office of
Laboratory Quality Assurance (LQA). The validation inspections were of
the concurrent type; i.e., HCFA inspectors accompanied Washington's
inspectors, each inspecting against his or her agency's respective
regulations. Analysis of the validation data revealed no significant
differences between the State and Federal findings. The Washington
inspection process covers all appropriate CLIA conditions and the State
laboratory licensure requirements were found to meet or exceed CLIA
requirements. The HCFA survey staff found the State inspectors highly
skilled and qualified. The LQA is maintaining its workload at the
proper level to assure that all laboratories within the State will be
inspected in a 24 month cycle. All parameters monitored by HCFA staff
to date indicate that the LQA is meeting all requirements under the
CLIA exemption. This Federal monitoring will continue as an on-going
process.
The CLIA exemption of laboratories located in and licensed by
Washington may be removed if we determine the outcome and comparability
review of validation inspections are not acceptable as described under
Sec. 493.521 or if Washington fails to pay the required fee every 2
years as required under Sec. 493.646.
V. Laboratory Data
In accordance with Sec. 493.513(d)(2)(iii), Washington will
continue to agree to provide us with changes to a laboratory's
specialties or subspecialties based on the State's survey. Washington
also will provide us with changes in a laboratory's certification
status, such as a change from a regular certificate to a certificate of
waiver.
VI. Required Administrative Actions
CLIA is intended to be a totally user-fee funded program. The
registration fee paid by the laboratories is intended to cover the cost
of the development and administration of the program. However, when a
State's application for exemption is approved, we may not charge a fee
to laboratories in the State. The State's share of the costs associated
with CLIA must be collected from the State. 42 CFR 493.645 specifies
that HHS will assess fees such that the costs of administering the CLIA
program will be shared by all States including those that are CLIA
exempt.
Washington must pay for:
<bullet> Costs of Federal inspection of laboratories in the State
to verify that standards are enforced in an appropriate manner. The
average cost per validation survey nationally is multiplied by the
number of surveys that will be conducted.
<bullet> Costs incurred for Federal investigations and surveys
triggered by complaints that are substantiated. We will bill Washington
on an semi-annual basis.
<bullet> Washington's proportionate share of the costs associated
with establishing, maintaining, and improving the CLIA computer system,
a portion of those services from which Washington received direct
benefit or contributed to the CLIA program in the State. Thus,
Washington is being charged for a portion of HCFA's direct and indirect
costs as well as a portion of the costs incurred in Federal fiscal
years (FYs) 95-96 by the Centers for Disease Control and Prevention.
In order to estimate Washington's proportionate share of the
general overhead costs to develop and implement CLIA we determined the
ratio of laboratories in the State to the total number of laboratories
nationally. Approximately 1.6 percent of the registered laboratories
are in Washington. We determined that 1.6 percent of the applicable CDC
and HCFA costs for FY 95-96 should be borne by Washington.
Washington has agreed to pay us the State's pro rata share of the
overhead costs and anticipated costs of actual validation and complaint
investigation surveys. A final reconciliation for all laboratories and
all expenses will be made. We will reimburse the State for any
overpayment or bill it for any balance.
VII. Approval
HCFA grants continuance of the CLIA exemption for all specialties
and subspecialties to all laboratories located in and licensed by the
State of Washington effective December 23, 1994, to October 6, 1996.
VIII. Regulatory Impact Statement
We generally prepare a regulatory flexibility analysis that is
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
through 612) unless the Secretary certifies that a notice such as this
would not have a significant economic impact on a substantial number of
small entities. For purposes of the RFA, we consider all laboratories
to be small entities.
Also, section 1102(b) of the Act requires the Secretary to prepare
a regulatory impact analysis for any notice that may have a significant
impact on the operations of a substantial number of small rural
hospitals. Such an analysis must conform to the provisions of section
604 of the RFA. For purposes of section 1102(b) of the Act, we consider
a small rural hospital as a hospital that is located outside of a
Metropolitan Statistical Area and has fewer than 50 beds.
This notice announces the continuance of the exemption of
laboratories licensed by the State of Washington from the requirements
of the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The
State has established that the quality of laboratory services continues
to meet standards equivalent to or more stringent than those of the
CLIA program and also has established that it has a comparable program
to monitor and evaluate compliance with the standards. The effect of
the continued exemption from CLIA requirements is that laboratories
will remain under State, rather than Federal, regulation, with no
discernible difference in the operations of the programs. Consequently,
we anticipate that our continuation of Washington's CLIA exemption will
not affect the laboratories or the quality and availability of services
provided.
Therefore, we have determined, and the Secretary certifies, that
this notice will not result in a significant impact on a substantial
number of small entities and will not have a significant effect on the
operations of a substantial number of small rural hospitals. Therefore,
we are not preparing analyses for either the RFA or section 1102(b) of
the Act.
In accordance with the provisions of Executive Order 12866, this
notice was not reviewed by the Office of Management and Budget.
Authority: Section 353p of the Public Health Service Act (42
U.S.C. 263a).
Dated: October 12, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 94-31513 Filed 12-22-94; 8:45 am]
BILLING CODE 4120-01-P
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