[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
 CLINICAL LAB QUALITY: OVERSIGHT WEAKNESSES UNDERMINE FEDERAL STANDARDS

=======================================================================




                                HEARING

                               before the

                   SUBCOMMITTEE ON CRIMINAL JUSTICE,
                    DRUG POLICY, AND HUMAN RESOURCES

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 27, 2006

                               __________

                           Serial No. 109-221

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform



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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
------ ------

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

   Subcommittee on Criminal Justice, Drug Policy, and Human Resources

                   MARK E. SOUDER, Indiana, Chairman
PATRICK T. McHenry, North Carolina   ELIJAH E. CUMMINGS, Maryland
DAN BURTON, Indiana                  BERNARD SANDERS, Vermont
JOHN L. MICA, Florida                DANNY K. DAVIS, Illinois
GIL GUTKNECHT, Minnesota             DIANE E. WATSON, California
STEVEN C. LaTOURETTE, Ohio           LINDA T. SANCHEZ, California
CHRIS CANNON, Utah                   C.A. DUTCH RUPPERSBERGER, Maryland
CANDICE S. MILLER, Michigan          MAJOR R. OWENS, New York
VIRGINIA FOXX, North Carolina        ELEANOR HOLMES NORTON, District of 
JEAN SCHMIDT, Ohio                       Columbia

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     J. Marc Wheat, Staff Director
                        Michelle Gress, Counsel
                           Malia Holst, Clerk
                     Tony Haywood, Minority Counsel



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 27, 2006....................................     1
Statement of:
    Aronovitz, Leslie G., Director, Health Care, GAO.............    14
    Hamilton, Thomas, Director, Survey & Certification Group, 
      Centers for Medicare and Medicaid Services, U.S. Department 
      of Health and Human Services...............................    49
    O'Leary, Dennis S., M.D., president, Joint Commission on 
      Accreditation of Healthcare Organizations; Thomas Sodeman, 
      M.D., president, College of American Pathologists; and Doug 
      Beigel, chief executive officer, COLA......................    80
        Beigel, Doug.............................................    96
        O'Leary, Dennis S........................................    80
        Sodeman, Thomas..........................................    90
Letters, statements, etc., submitted for the record by:
    Aronovitz, Leslie G., Director, Health Care, GAO, prepared 
      statement of...............................................    16
    Beigel, Doug, chief executive officer, COLA, prepared 
      statement of...............................................    98
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............     9
    Hamilton, Thomas, Director, Survey & Certification Group, 
      Centers for Medicare and Medicaid Services, U.S. Department 
      of Health and Human Services, prepared statement of........    52
    O'Leary, Dennis S., M.D., president, Joint Commission on 
      Accreditation of Healthcare Organizations, prepared 
      statement of...............................................    83
    Sodeman, Thomas, M.D., president, College of American 
      Pathologists, prepared statement of........................    92
    Souder, Hon. Mark E., a Representative in Congress from the 
      State of Indiana, prepared statement of....................     4


 CLINICAL LAB QUALITY: OVERSIGHT WEAKNESSES UNDERMINE FEDERAL STANDARDS

                               ----------                              


                         TUESDAY, JUNE 27, 2006

                  House of Representatives,
Subcommittee on Criminal Justice, Drug Policy, and 
                                   Human Resources,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:06 p.m., in 
room 2247, Rayburn House Office Building, Hon. Mark E. Souder 
(chairman of the subcommittee) presiding.
    Present: Representatives Souder, Schmidt, Cummings, Davis, 
Watson and Norton.
    Staff present: Michelle Gress, counsel; Malia Holst, clerk; 
Tony Haywood, minority counsel; and Teresa Coufal, minority 
assistant clerk.
    Mr. Souder. The subcommittee will come to order.
    Good afternoon. I thank all of you for being here.
    We're here today to discuss the findings and 
recommendations of a GAO report requested by Mr. Cummings, the 
ranking member of this subcommittee, Senator Grassley and 
myself.
    We asked the GAO to investigate oversight of clinical labs 
and implementation of quality requirements imposed through the 
CLIA, the Clinical Lab Improvement Amendments of 1988. In 
particular, we requested that GAO assess quality of lab testing 
and the adequacy of CLIA oversight.
    Lab testing is a vital link in our Nation's healthcare 
system. Lab tests affect an estimated 70 percent of medical 
decisions and are one of the most frequently billed Medicare 
procedures. Accurate results are necessary for determining 
proper treatment of patients, while erroneous results can lead 
to the wrong treatment decisions with potentially detrimental 
effects for the patients, and quite possibly unnecessary mental 
anguish.
    The resulting report by the GAO, ``Clinical Lab Quality: 
CMS and Survey Organization Oversight Should Be Strengthened,'' 
is a sobering evaluation of the current state of clinical lab 
oversight and the quality assessment deficiencies that exist 
across the country for monitoring the Nation's 193,000 labs.
    Our request of the GAO was prompted by problems at the 
Maryland General Hospital that came to light in 2004. Maryland 
General Hospital's lab issued more than 450 questionable HIV 
and hepatitis test results. The College of American 
Pathologists [CAP], inspected and accredited Maryland General 
Hospital during the 14-month period that the lab was issuing 
the questionable results. CAP's inspections failed to identify 
the ongoing deficiencies in lab testing at the Maryland General 
facility.
    Maryland General's situation was compounded by numerous 
problems and deficiencies in reporting and evaluation of the 
lab, prompting this subcommittee, at the request of Mr. 
Cummings, to hold two hearings to investigate the issues that 
led to the deficiencies at Maryland General Hospital and how 
these problems went undetected and unaddressed for such a long 
period of time. The subcommittee was concerned then, as it is 
now, that a similar situation might repeat itself at other 
hospitals or labs in other parts of the country.
    Today's release of the GAO report demonstrates that there 
are several areas where clinical lab quality oversight by the 
Centers for Medicare and Medicaid Service is deficient. The 
problems flagged by the GAO show quite clearly that despite 
CMS's responsibility for overseeing the quality of our Nation's 
labs, there is insufficient data for measuring the seriousness 
or extent of the problems.
    While the responsibility for ensuring lab quality 
ultimately lies with CMS, lab survey and accreditation is 
handled largely by independent national accrediting 
organizations. Ninety-seven percent of all accredited labs are 
surveyed by three accrediting organizations, each of which has 
three representatives here today to testify, the College of 
American Pathologists [CAP]; COLA, formerly known as the 
Commission on Office Laboratory Accreditation; and the Joint 
Commission on Accreditation of Healthcare Organizations 
[JCAHO]. Two States, New York and Washington, are CLIA-exempt, 
but have State survey programs.
    Each of the survey organizations measure labs using 
standards that CMS has determined are at least equivalent to 
CLIA standards. And the survey organizations are required to 
conduct complaint investigations and monitor proficiency test 
results. In theory, this arrangement should ensure that 
accredited labs have been inspected on a reasonable periodic 
basis and found to meet CLIA standards. Nonetheless, GAO found 
that in contemporary practice, it is impossible to get a true 
picture of lab quality standards.
    Among the problems flagged by the GAO and which we will 
explore today are: Survey organization standards are not 
standardized with CLIA requirements, making it impossible to 
measure lab quality nationwide in a standardized manner; lab 
quality deficiencies may not be reported due to accrediting 
agencies' emphasis on education or enforcement; whistleblower 
protections don't exist for all survey organizations, including 
COLA, which does not have a formal whistleblower policy. Lab 
sanctions are rarely imposed; in fact, out of more than 9,000 
labs that had sanctions imposed, only 501 labs were actually 
sanctioned by CMS from 1998 to 2004.
    Despite the fact that there is a solid framework for what I 
believe should be a workable system to ensure lab quality, GAO 
has found that in current practice the oversight by CMS is 
deficient, making it impossible to accurately measure the 
effectiveness of independent survey organizations.
    Today's hearing will explore the GAO's findings and 
recommendations and give CMS and survey organizations an 
opportunity to present ways to improve the current situation so 
that what happened at Maryland General Hospital does not repeat 
itself anywhere else in the country.
    Our first witness is Leslie Aronovitz, Director of the 
Health Division, U.S. Government Accountability Office [GAO]. 
We will then hear from Mr. Thomas Hamilton, Director of the 
Survey and Certification Group at the Centers for Medicare and 
Medicaid Services.
    Our last panel will include Dennis O'Leary, M.D., president 
of the Joint Commission of Accreditation of Healthcare 
Organizations; Doug Beigel, chief executive officer of COLA; 
and Thomas Soderman, M.D., president of the College of American 
Pathologists.
    Thank you all for being here today, and we look forward to 
your testimony and insights.
    [The prepared statement of Hon. Mark E. Souder follows:]
    [GRAPHIC] [TIFF OMITTED] 33865.001
    
    [GRAPHIC] [TIFF OMITTED] 33865.002
    
    Mr. Souder. I now yield to Ranking Member Cummings.
    Mr. Cummings. Thank you very much, Mr. Chairman. And I 
thank you for holding today's hearing to examine findings and 
recommendations set forth in the GAO report entitled ``Clinical 
Lab Quality: CMS and Survey Organization Oversight Should Be 
Strengthened.''
    I want to thank Senator Grassley and you, Mr. Chairman, for 
joining me in asking GAO to conduct the investigation that led 
to this eye-opening report.
    As you know, Mr. Chairman, the GAO report that we are 
releasing today cites numerous weaknesses in the operation and 
oversight of the Federal program for ensuring quality medical 
testing and labs that seek Medicare reimbursement for 
performing medical testing.
    Enacted in 1988, the Clinical Laboratory Improvements Act 
established within the Centers for Medicare and Medicaid 
Services the program for implementing, enforcing and overseeing 
stringent Federal regulations governing the operation of these 
labs.
    The CLIA statute reflects Congress' recognition of the 
fundamental role of medical testing and the delivery of medical 
care and treatment. Plainly, physicians and patients must have 
accurate medical test results in order to make appropriate 
medical decisions.
    On March 11, 2004, an article in the Baltimore Sun broke 
the story of a lawsuit filed by Christine Turner, a young lab 
technician at Maryland General Hospital who 1 year earlier 
contracted HIV and hepatitis C when the machine used to test 
blood samples malfunctioned, spraying Ms. Turner with infected 
blood. After being terminated from employment in December 2003, 
Ms. Turner reported the matter to State health officials, 
triggering an investigation by the State health department in 
January 2004, and followup inspections involving the State 
health department, CMS and the Joint Commission on 
Accreditation of Healthcare Organizations.
    The College of American Pathologists, a private accrediting 
organization responsible for accrediting the Maryland General 
lab under the CLIA program, was not informed of the complaints 
by the other parties, and conducted a separate investigation 
after learning of the lab's problems by way of news reports. 
CAP's inspection resulted in the revocation of the lab's 
accreditation in two key testing areas. Ultimately the 
investigations established that between June 2002 and August 
2003, more than 2,000 patients were issued invalid HIV and 
hepatitis C test results by Maryland General Hospital. The 
investigative report cited numerous deficiencies, indicating 
the lab had not been in compliance with CLIA standards for a 
prolonged period of time.
    In May and July 2004, this subcommittee held hearings aimed 
at determining how the serious deficiencies at Maryland General 
Hospital could have gone undetected for so long despite the 
safeguards established by CLIA, the CLIA process, to ensure 
that patients receive accurate and reliable test results. CAP, 
after all, had conducted an accreditation survey while the 
deficiencies were ongoing, but having failed to identify the 
problems during their survey, CAP awarded Maryland General Lab 
its Accredited with Distinction certificate, certifying the lab 
as being in compliance with CLIA standards and additional 
requirements established by CAP.
    In addition, the Maryland Health Department had conducted 
an investigation in response to a July 2002 whistleblower 
complaint. Later, then-Health Secretary Nelson Sabatini stated 
that the complaint was too vague to lead inspectors to uncover 
the problems found during the inspections that followed Ms. 
Turner's complaint.
    During our hearings, witnesses cited the following factors 
as contributing to the failure of the CLIA process to detect 
serious deficiencies in Maryland General Hospital laboratory: 
One, fear of retaliation among lab workers for reporting 
problems; two, advance notice of accreditation surveys allowing 
labs to hide deficiencies; three, an emphasis on collegiality 
and education over aggressive investigation during 
accreditation surveys; and four, failure to communicate 
complaint information between the State and the private 
accreditation organization.
    Witnesses from CMS and the College of American Pathologists 
testified that they had not seen such an extreme case before, 
and that they believe that the Maryland General Hospital 
situation was an aberration. They felt this in part because of 
the lengths to which the lab had gone to purposely cover up 
problems, efforts that included falsifying quality control 
readings from a device used to test blood samples for HIV and 
hepatitis C.
    But CMS and CAP could not say with any degree of certainty 
that what occurred at Maryland General Hospital could not occur 
elsewhere. At best, Maryland General demonstrated that the CLIA 
problem was not completely foolproof. Possibly it indicated 
weaknesses in the program's overall operation and oversight.
    In order to understand the extent to which labs across the 
country were experiencing serious quality problems, Chairman 
Souder and I asked the GAO to do the following examination. We 
wanted them to examine the quality of lab testing under CLIA. 
We wanted them to examine the effectiveness of accreditation 
surveys, complaint investigations and enforcement actions in 
detecting and addressing lab problems. And we also wanted them 
to examine the adequacy of CMS's CLIA oversight.
    Disturbingly, the GAO report to Congress concludes that 
insufficient data exists to identify the extent of serious 
quality problems at labs. Effective oversight and 
accountability of any Federal program requires useful and 
reliable data. The lack of critical data found by GAO is 
distressing because it undermines the fundamental purpose of 
the CLIA problem. This is plainly unacceptable and must be 
remedied.
    In addition, GAO found numerous weaknesses in the exercise 
of oversight by CMS and State and private survey organizations 
that accredit labs under the CLIA program. According to the 
report, these shortcomings render CLIA oversight, ``inadequate 
to ensure that labs are meeting CLIA requirements.''
    In particular, the report underscores three prominent 
concerns expressed by whistleblowers during the subcommittee's 
2004 hearing, namely--and I'm about to close, just a little bit 
longer, I just want to get all this in--fear of retaliation 
among lab workers is an obstacle to the reporting of serious 
lab deficiencies by employees. The strong emphasis of 
accreditation organizations on education tends to make the 
masking of deficiencies easier, and the imposition of sanctions 
for deficiencies that are found less likely. And finally, the 
composition of CAP survey teams may undermine their 
objectivity.
    The report also notes that inconsistencies in the 
imposition of CMS sanctions make it unclear how effective CMS 
enforcement is at compelling labs to comply with the CLIA 
requirements, and that CMS is failing to ensure in a timely 
manner that updated standards by accreditation organizations 
meet requirements for equivalency with CLIA standards.
    To correct these shortcomings GAO reported that CMS take a 
number of actions including the following: standardizing the 
reporting of survey deficiencies to permit meaningful 
comparisons across survey organizations; working with survey 
organizations to ensure that educating lab workers does not 
preclude appropriate regulation, such as identifying and 
reporting deficiencies that affect lab-testing quality; and 
allowing the CLIA program to fully use revenues generated by 
the program to hire sufficient staff to fulfill its statutory 
responsibilities.
    My own proposals for congressional action are set forth in 
legislation that I introduced back in October 2004, and that I 
reintroduced, along with Congressman Ruppersberger, in the 
109th Congress. The Clinical Laboratory Compliance Improvement 
Act, H.R. 686, will establish whistleblower protections for 
employees of clinical labs; require labs to post signage to 
facilitate reporting of lab problems to CLIA entities; require 
survey organizations to report complaints of deficiencies to 
the Secretary of HHS; and require lab accreditation surveys to 
be unannounced. I believe the GAO report underscores the need 
for enactment of this legislation.
    And so, Mr. Chairman, I'm looking forward to hearing from 
our witnesses today. I think that without a doubt this is a 
very important subject for all of us. I cannot think of 
anything that is more significant when you consider that all of 
us, everybody sitting in this room, everybody sitting in this 
room has had some kind of test that determined what their 
status, health status, may have been and were treated or not 
treated according to those test results. And we in this country 
simply cannot afford to have anything but the very best in 
testing.
    And again, Mr. Chairman, I thank you for your working with 
me on this. And we will continue the fight to make sure that 
all Americans are protected. And with that, I yield back.
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]
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    Mr. Souder. Ms. Schmidt, do you have questions?
    Ms. Schmidt. No.
    Mr. Souder. Ms. Norton.
    Ms. Norton. Mr. Chairman, I just want to thank you and Mr. 
Cummings for working together on this issue, which I can only 
call frightening.
    I think this may be the third hearing we've had on this 
issue. I certainly hope it leads to action.
    I know we've been waiting for the GAO report. You know, 
when you first hear of the Maryland incident--we heard about it 
perhaps closer than some others because, of course, Baltimore 
is so close, but what bothered me was knowing Maryland to be a 
high-quality health State, I couldn't believe that this was an 
isolated incident. And we talk about life and death, that's a 
cliche when it comes to lab results.
    It does seem to me, Mr. Chairman, that we want Federal 
standards that were enforceable for the same reason that this 
committee has been pressing--not this committee, excuse me, Mr. 
Chairman, that one of the subcommittees has been pressing for, 
computerized medical records, is because this is no longer a 
matter of your local hospital. If you get, I don't know, tests 
done at Washington Hospital Center, they may be used at Johns 
Hopkins, especially in an emergency.
    So this is a real threshold issue, and yet there's been 
much more focus in the United States on mistakes made in 
hospitals. Yeah, I want to know about mistakes made in 
hospitals, but we may never know that the mistake originated in 
the hospital if we don't have a way of finding out whether the 
tests themselves, which we assumed, we all assume, have been 
correct and valid, were not part of the problem.
    I was very troubled by what I learned about the GAO report, 
but perhaps it was to be expected, and that is, you know, we 
can't even compare; we don't have any data that allows us to 
compare, much less Federal standards.
    Mr. Chairman, what is frightening about this is the only 
way this came to attention was newspaper reports--thank you, 
Baltimore Sun--and a catastrophic accident. That's liability.
    So essentially, despite all the accreditation 
paraphernalia--that's what it turned out to be--they were 
outside institutions, the courts and the newspapers, that 
alerted us to what we were told would be uncovered by various 
organizations that deal with the State and with local agencies. 
So I would think, Mr. Chairman, that at a minimum we would want 
to begin with the Cummings bill to respond to this situation. 
We may need more.
    I'm impressed--and Mr. Cummings deals in his bill with the 
whistleblowing notion. It does seem to me that's the one thing 
everybody in Congress agrees upon. Somebody ought to be able to 
step forth and tell it without fearing that he would lose his 
or her position. But it does seem to me that, given the top 
rating that the Maryland lab received, we have a serious 
problem with regulation, and we need to attend to it as soon as 
we can.
    Thank you very much for doing the work, it seems to me, 
that can lead to that kind of action and enforcement 
improvement.
    Mr. Souder. Thank you.
    I ask unanimous consent that all Members have 5 legislative 
days to submit written statements and questions for the hearing 
record, and any answers to written questions provided by the 
witnesses also be included in the record. Without objection, 
it's so ordered.
    I also ask unanimous consent that all exhibits, documents 
and other materials referred to by the Members and witnesses 
may be included in the hearing record, and that all Members be 
permitted to revise and extend their remarks. And without 
objection, so ordered.
    First panel is Leslie Aronovitz. And so if you will stand 
and raise your right hand. It's the practice of this committee 
to swear in each of our witnesses.
    [Witness sworn].
    Mr. Souder. Let the record show that the witness responded 
in the affirmative.
    Thank you for joining us and your work on this study, and 
we're looking forward to hearing your conclusions.

  STATEMENT OF LESLIE G. ARONOVITZ, DIRECTOR, HEALTH CARE, GAO

    Ms. Aronovitz. Thank you, Mr. Chairman and members of the 
committee. I'm pleased to be here today as you discuss 
oversight of clinical labs by CMS and survey organizations.
    My remarks are based on a report that was released today 
that focused on the 36,000 labs that perform moderate or high-
complexity testing. Survey organizations are responsible for 
conducting biennial lab inspections and for investigating 
complaints, and CMS's role is to ensure the thoroughness and 
consistency of such inspections, and to impose sanctions when 
it identifies poor lab performance.
    Because of inadequate CMS oversight and limited comparable 
data, too little is known about the quality of lab testing. In 
2004, CMS modified historical State survey agency findings on 
lab quality and did not maintain a backup file. Moreover, based 
on interviews with 10 State survey agencies, we found that some 
surveyors refrained from citing serious deficiencies if a lab 
worker is new or a lab has a good compliance history.
    Due to inconsistent surveys, the percentage of labs with 
serious deficiencies varied considerably across States in 2004, 
ranging from none in 6 States, to as much as 25 percent in 1 
State.
    Additionally, the lack of a straightforward method to link 
similar requirements across survey organizations makes it 
virtually impossible to assess lab quality in a standardized 
manner. Proficiency testing, which measures a lab's ability to 
consistently produce accurate test results, is the only data 
set that can be used uniformly to compare lab quality 
nationwide. Despite the importance of proficiency testing data, 
CMS requires proficiency testing for labs three times a year, 
as opposed to the statutory requirement for quarterly testing.
    We also found that educating lab workers sometimes 
precludes appropriate regulation. On more than one occasion, 
CMS has provided labs with a significant educational period of 
from 2 to 4 years before enforcing new requirements. We found 
this long educational period to be particularly troubling for 
the regulation of Pap smear testing for cervical cancer. CMS is 
letting poor performers off the hook for 2 years, even though 
labs have anticipated the new regulations for more than 13 
years.
    CMS also rarely uses sanctions to help deter noncompliance. 
For example, only 30 of the 274 labs with serious repeat 
deficiencies on consecutive surveys from 1998 to 2004 had 
sanctions imposed. We also found that there are relatively few 
complaints about lab quality problems. This may be due to 
insufficient publicity on how to file a complaint, and privacy 
complaints resulting from limited whistleblower protections for 
lab workers.
    Some survey organizations have operated without proper 
authority and have utilized requirements that were less 
stringent than CLIA because CMS has been an average of over 3 
years late in determining whether their inspection requirements 
are at least equivalent to CLIA's. Nor does CMS always review 
interim changes prior to implementation. Although officials of 
CMS attributed these delays to having too few staff, the CLIA 
program is funded by lab fees and currently has a $70 million 
surplus.
    Finally, validation reviews. One of CMS's most important 
oversight tools does not provide an independent assessment of 
the extent to which surveys identify all serious deficiencies 
because many are performed simultaneously with such surveys.
    Moreover, CMS has not required that validations occur in 
each State. From 1999 through 2003, 11 States had no validation 
reviews in multiple years. And this is particularly troubling 
to us because it is the State survey agencies that are 
responsible for conducting validation reviews of accrediting 
organization surveys.
    Mr. Chairman, this concludes my oral statement, and I'm 
happy to answer any questions you or other members of the 
subcommittee may have.
    [The prepared statement of Ms. Aronovitz follows:]
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    Mr. Souder. Before I start my questioning, I wanted to--
because these hearing records are a kind of a permanent record 
for people to go back through, and I have no prepared 
questions, I have no agenda with this, it's more of a generic 
question. And I know that you could provide more specific data 
if we want later, but I just wanted a general idea. When you do 
a study like this--you head the Health Division at GAO?
    Ms. Aronovitz. I'm one of six Directors that work with the 
Director of our Health Division.
    Mr. Souder. And then do you have--then when you decided to 
go ahead with this study, did you have some people on staff, 
and then you contracted with others? Could you kind of walk 
through a little bit what you do to prepare a survey like that?
    Ms. Aronovitz. Sure. We sometimes do use contractors or 
other experts when we do a study of this enormity, but we 
actually did this study in house. We used experts to consult 
with to make sure we understood the meaning of different terms 
and terminologies, but because we were looking at oversight 
mechanisms and different administrative and other types of 
logistical and regulatory requirements, which is more within 
our bailiwick, and not scientific or clinical requirements, we 
did not need, in our minds, to go with specific medical or 
clinical experts. In other words, we did not independently 
assess the quality of any labs. That would have been well 
beyond our expertise. What we did is try to see who is 
responsible for overseeing the quality of labs and what types 
of activities they were involved in.
    Mr. Souder. So in the process here you would have talked 
with each of the individual groups?
    Ms. Aronovitz. Absolutely. We spent quite a bit of time 
working with CMS, the two exempt State CLIA program 
representatives, and the accrediting organization 
representatives.
    Mr. Souder. And with CMS themselves?
    Ms. Aronovitz. Absolutely, extensively with CMS.
    Mr. Souder. And you referred to--did you say you had 10 
States respond in a survey?
    Ms. Aronovitz. What we did is, in addition to working with 
CMS, we also separately, independently interviewed 10 State 
survey agencies to get their perspective.
    Mr. Souder. Did you see anything as glaring as what we saw 
in the Maryland General Hospital or cases like that?
    Ms. Aronovitz. No. I think a lot of what we saw really has 
to do with the regulatory structure and also the potential for 
problems to occur. But we saw no specific cases that were 
quite--that came to us.
    Mr. Souder. When we look at the national CLIA requirements, 
do you think there is an efficient and effective way to have 
some sort of a national standard that would give us a clearer 
picture and at the same time allow these different 
organizations to have additive standards? One of the problems 
we have in housing in all sorts of flood standards and 
everything else is the Federal standards become the minimum--I 
should say they become the maximum and drive everybody to one 
standard which is not necessarily as high as some. Do you see 
how to reconcile that question?
    Ms. Aronovitz. It's a difficult one to reconcile. We think 
the fact that the CLIA requirements give the accrediting 
organizations the opportunity to have requirements that are 
equivalent or even more stringent really goes far to really 
push labs to try to have high quality. We're impressed with how 
hard the accrediting organizations work, and the State exempt 
programs, to develop standards that they feel, based on their 
own clinical knowledge, are needed and required to do a good 
job in a lab.
    The problem we have is not with the types of requirements 
that accrediting organizations develop, but the fact that when 
they develop their own set of requirements, it becomes very 
difficult for CMS to translate their findings and State 
findings into one common language, and therefore it becomes 
very difficult to look at the quality of labs across different 
types of survey organizations. We think there has to be a 
solution of some way that all the different organizations that 
are serving labs could come to some type of language where they 
could communicate to CMS what the serious deficiencies they're 
finding are and how they translate.
    For example, we actually asked the accrediting 
organizations to supply us with a crosswalk to say if you find 
serious deficiencies based on your requirements, how does that 
translate to CLIA requirements? And COLA and CAP spent an 
enormous amount of effort to try to provide us with a 
crosswalk, which ended up really not being a good enough common 
language. And JCAHO tried very hard to do that, but it would 
have had to go through each individual case file to come up 
with that information, which we thought was not fair to that 
organization to have to do that. So right now it really leaves 
CMS in a position where it cannot look at lab quality in terms 
of the findings of these different survey organizations across 
organizations.
    Mr. Souder. One other question I wanted to raise. When I 
was first elected to Congress and served on one of the 
oversight committees, we were spending a lot of time with OSHA. 
And one of the concerns in OSHA was how much they played 
gotcha, put fines on, versus how much they spent educating and 
working with different companies.
    Here we have kind of the reverse question going on, and 
it's a struggle of how we do this in government, because, in 
fact, the oversight process, if it's not an egregious risk, I 
think the way we worked through it in OSHA is now more than 
half the funding they're to be given time to work through 
something and educate through the process unless there is an 
imminent health and life question.
    Could something be worked through here? Because, in fact, a 
lot of the oversight should be an education process, not a 
gotcha process, because, in fact, often that drives more 
complaints underground, less whistleblower because of fear of 
retribution as opposed to cooperation; yet at the same time if 
it's all just talk and nobody--there is never a sanction, it 
doesn't leave much leverage either.
    Do you have, as we work through this, a refined suggestion 
of how we might balance this education and penalty sanction 
question? And maybe it's pointed to by your just previous 
answer, which is if it's egregious, it's one thing; if it's not 
egregious, it's another; if we can agree on what's egregious.
    Ms. Aronovitz. I think that's true, if we could agree on 
what is egregious. The languages that different organizations 
use really look at serious deficiencies, but their definition 
of serious doesn't also translate to a CLIA definition of a 
serious deficiency, so from that standpoint we still need a 
common language.
    But we've been wrestling a lot with this whole issue of 
education versus regulation, and we in no way discount the 
importance of having an educational component. What we worry 
about is that an educational component, if it precludes a 
regulatory one, and there is a slippery slope, there would come 
to a point where you would never really know what the state of 
lab quality is, and that's what really concerned us. 
Specifically in certain cases where there were deficiencies in 
consecutive surveys and the lab wasn't sanctioned, or in a case 
where the quality control standards that CMS applied in 2003 
that became effective in 2004, the labs had 2 years before a 
deficiency would be noted, and now that has been extended 2 
more years.
    So what we worry about is by giving the labs every benefit 
of the doubt and to try to train them and to try to make sure 
that lab workers understand the requirements, we might be 
leaning over so far to give them every educational opportunity 
that we're really losing track of what the quality of labs are 
so that we could react when there are serious deficiencies 
noted.
    Mr. Souder. Thank you.
    Mr. Cummings.
    Mr. Cummings. Yes. First of all, I want to thank you very 
much for a very thorough report. And we truly appreciate the 
role that GAO plays in providing us with the information we 
need to do our jobs.
    I want to just kind of go back just a moment. I know that 
was not your focus, necessarily, the Maryland General case, but 
it had some elements in it that I would just like for you to 
comment on.
    The chairman and I mentioned--and I think it was Ms. 
Norton, too--the whole idea of the whistleblower and the 
significance of the whistleblower. In your findings there was 
some findings, if I recall--as I recall that there was an issue 
of whether there was an open environment for people to feel 
comfortable telling about what they see in these labs. And I 
just want you to comment, if you can, on the significance of 
the whistleblower and how that might--having a kind of closed 
environment might hurt our efforts to make sure that our labs 
are doing what they're posed to do.
    Ms. Aronovitz. Yes. We did talk to several surveyors and 
some lab workers, and also the 10 survey agencies at the State 
level, and we heard that it was not that uncommon for two 
things to happen, for lab workers not to be aware of how to 
file a complaint, and also, when they were aware, that they 
were worried about retaliation to the extent that the law or 
the legal structure didn't really protect them or their 
privacy.
    It became very clear to us that a lab worker who would file 
a complaint would probably have the best information and the 
most specific information for an oversight entity to decide 
whether this was a serious complaint and whether it warranted 
further investigation. On the other hand, lab workers felt that 
if they gave very specific information, they could easily be 
associated with the labor, the type of equipment or the 
department where the complaint came from, and therefore, 
without very strong protections, and a really good 
understanding of how to file a complaint, they were very 
reluctant to do so, at least among the people we talked with.
    When we went to the State survey agencies, we found that 
some States possibly have whistleblower protections that would 
protect lab workers, but many States said that they did not 
have, even at the State level, the kind of protections that lab 
workers would need. Obviously you know that at the Federal 
level, there is no Federal statute, whistleblower statute, that 
protects lab workers that are covered under CLIA, and not all 
accrediting organizations have that either.
    Mr. Cummings. And I would take it that, when you have a 
situation where--when you answered Mr. Souder's questions about 
how to--this fact that we have insufficient information to 
accomplish what we need to accomplish here, I would take it 
that the whistleblower, under those circumstances, becomes even 
more significant, although we don't know, once they blow the 
whistle, exactly what standards they might be using; is that a 
fair statement?
    Ms. Aronovitz. Right. I think once they would have to--once 
they would file a complaint, it would have to be investigated 
immediately--well, actually there would be a consideration as 
to whether the complaint warranted an investigation, and then 
it would have to be investigated, and the standards or the CLIA 
requirements that would apply would then be looked at very, 
very closely.
    Mr. Cummings. Going back to the Maryland General case, one 
of the problems was that there was a lack of sharing of 
information. You could have one organization come in and say, 
we've got problems; you could have a whistleblower out there 
saying there are problems; then you have another organization 
that comes in and says, my, you're doing a great job.
    Can you comment on the sharing of information? Because I 
think that's a very significant thing that has not been 
happening, but I'm sure we'll hear from some of our 
representatives on things they may be doing now.
    Ms. Aronovitz. Yeah, I think you will. I think--this is--
excuse me, this is one of the areas that--another area that's a 
very, very critical one, and one we're just beginning to see 
some progress.
    CMS has mentioned that it is establishing something called 
performance reviews both with State agencies, but also with the 
accrediting organizations. And with the accrediting 
organizations, one of the most important performance areas will 
be the extent to which accrediting organizations are able to 
communicate with CMS and within its organization to make sure 
that it understands what types of complaints and results of 
proficiency testing have occurred, and to make sure that CMS is 
aware of that also. So communication among entities is 
critical, and it's one of the areas that CMS is going to be 
focused on.
    Mr. Cummings. Now, under these circumstances, going back to 
the--one of the things that you have said in your report is 
that even when CMS has the information, that they are not 
necessarily effectively using the information that they have; 
is that correct? Is that what you said?
    Ms. Aronovitz. That is correct.
    Mr. Cummings. Do you want to get some water?
    Ms. Aronovitz. No, I'm fine. Thanks.
    Mr. Cummings. All right. Can you explain that for us, 
please? I mean, so they get the information, they get 
information--maybe not all the information that they should 
have, but they get it. But then the information that they do 
have is not used effectively and efficiently.
    Ms. Aronovitz. Well, this information is in several 
different areas. One of the areas has to do with proficiency 
testing. First of all, CMS requires proficiency testing for 
every lab three times a year. We think the statute really 
requires four times a year. So they're getting less information 
than they should. And CMS justifies this and feels very 
strongly that they have followed the law. And I could elaborate 
on that if you'd like. I don't want to get into too much detail 
if it's not relevant here.
    But also on sanctions, for instance, as the chairman was 
saying, there should be an ability for labs to be able to take 
corrective action. There is a grace period for a lot of labs to 
fix the problems that are noted in surveys; however, CMS has 
sometimes bent over backward to give labs an opportunity to fix 
problems where they just crop up again at the next survey, and 
nothing more than that has happened.
    So in some cases where there have been serious 
deficiencies, there have not been sanctions, and it's because 
the labs have been given an opportunity to correct the problem 
without it really being noted.
    Mr. Cummings. Speaking of correcting problems, I heard just 
an incredible argument when we held hearings before with regard 
to why unannounced visits would be a problem; it was almost 
shocking to the conscience.
    What we were told was that if there were unannounced 
visits, they would be so disruptive to the lab that it would 
just--the benefit just far outweighs the disruption. Did you 
hear any of that as you talked to folks?
    Ms. Aronovitz. We actually did hear that. We feel very 
strongly that, to the extent possible, surveys should be 
unannounced. Now, we do note that in small physician labs where 
patients are coming in and seeing the doctor and getting lab 
tests during those visits, it could be somewhat disruptive if 
you have a team come in and pretty much take over the lab. So 
we do understand that. We would expect some smaller labs to, in 
fact, need an announced survey. However, the hospital labs 
where there's people, there is many people that could work with 
the surveyors, and there's always people onsite, it would be 
much less necessary. And, in fact, some of the accrediting 
organizations are beginning to do unannounced surveys.
    The big issue that we have really has to do with the amount 
of time that accrediting organizations or different survey 
organizations are giving in terms of notifying labs ahead of 
time. CMS's policy, when State survey organizations notify 
labs, their policy is to give labs 2 weeks' notice. They feel 
that's the right amount of time for a lab not to be able to go 
back and react and change everything or fix everything, but, at 
the same time, make sure that the proper people are there and 
that it won't be too disruptive. On the other hand, there are 
some survey organizations that give up to 12 weeks' notice. We 
think this is excessive, and we think it's unnecessary.
    So if, in fact, it's necessary to give labs some notice, we 
think a 2-week unannounced--a 2-week notice period in 
conformance with CMS's guidelines would be much more 
appropriate.
    Mr. Cummings. I'm just going to ask you a few more 
questions because I know we've got to move on. But I want to 
just go to the College of American Pathologists and some of the 
things that they're trying to do. And the more I look at some 
of the things that they're trying to do, the more I'm convinced 
that maybe they--first of all, I believe they've apparently 
seen the light, and the light is shining brightly, and that 
perhaps it can shed some role modeling, at least so far, for 
some of the other survey organizations. But I just want to get 
your comments on some of the things that they're doing and how 
what they are doing there fits into what you all found and what 
you all are recommending, OK?
    One of the things that they have moved to are these 
unannounced visit surveys, so I take it that's something that 
you think is very good?
    Ms. Aronovitz. Yes. I'm wondering if I could just make a 
comment before we do.
    Mr. Cummings. Please, please.
    Ms. Aronovitz. We worked extensively with the accrediting 
organizations, and we are absolutely convinced that they are 
doing a lot to try to improve the quality of lab testing. We 
think that each of the accrediting organizations have a lot of 
strengths and areas of improvement. So while we do applaud CAP 
for some of the things it's doing, we also note that there are 
other areas where it really is working to improve and maybe is 
even as up to speed as some of the other accrediting 
organizations.
    So we're very proud of how all of the organizations are 
moving forward, but we think all of them have their strengths 
and weaknesses. I just wanted to say that because I think that 
we all can learn from each other from that standpoint.
    The unannounced surveys we think are very much a definite 
positive step, and I believe JCAHO is also going toward 
unannounced surveys.
    Mr. Cummings. And I just to want go through a few things--
--
    Mr. Souder. Can I ask something? By unannounced, do you 
mean 2 weeks, or just completely unannounced?
    Ms. Aronovitz. In some cases completely unannounced, maybe 
a day or two, or just enough in terms of logistics, but at a 
maximum we're hoping it will be 2 weeks.
    Mr. Cummings. And I'm not just highlighting CAP, it's just 
that I'm more familiar with what they're doing than other 
organizations. I'm sure you're going to tell us about them, but 
we won't hear from you, they're going to come up, and I just 
want to get your comments, that's all.
    Ms. Aronovitz. Absolutely.
    Mr. Cummings. And if there are things that really impress 
you about some of the things that they're doing, please let us 
know.
    Ms. Aronovitz. OK.
    Mr. Cummings. One of the things I know CAP is doing or 
moving to do is having an organization--the group of 
pathologists who actually do the examination of the lab present 
their findings, and then another group, totally independent 
group, then does the accreditation issue, deals with that. What 
do you think of that? I mean, is that significant?
    Ms. Aronovitz. Sure. Any time you have a separate 
independent group overseeing the work of a different group, 
you're getting another set of expertise, and we think that's 
very positive.
    Mr. Cummings. OK. And with regard to whistleblowers, the 
fact that they're having these signs put up in the lab to 
encourage people to call in to our hotline number, and it 
sounds like they are maintaining some kind of high level of 
confidentiality so that we don't have a situation where the 
whistleblower feels as if they are going to get in trouble with 
their employers, because that was a big deal at the Maryland 
General Hospital case. In that case, as a matter of fact, there 
were two whistleblowers, both of whom--one of whom I had met in 
my office, and literally she just broke down in tears because 
she was so fearful. And sadly, a lot of the things that she 
feared came to be true. So how is--you go ahead.
    Ms. Aronovitz. No, I'm sorry.
    Mr. Cummings. No, you go ahead.
    Ms. Aronovitz. I think any effort to try to educate lab 
workers on how to file complaints is very, very positive. CAP, 
when it started requiring posters to be placed in labs to 
explain just that, found that it had, instead of about an 
average of 11 complaints a month, had about 22 complaints per 
month for the 3 months after it started putting up posters.
    Now, JCAHO, in responding to our report, thought that while 
that might be a good idea for us being so proscriptive, it 
could limit what other ideas accrediting organizations had to 
maybe encourage lab workers to report complaints.
    We think what CAP did was an excellent effort, and we think 
that it really paid off. If accrediting organizations have 
different approaches, as long as the principle of making sure 
that lab workers feel like they know where to go and also they 
feel protected, that's really all we care about.
    Mr. Cummings. And finally, the collegiality issue. You 
know, a lot of people were concerned--are concerned that when 
people are in the same region or they know each other, it's--
you know, you scratch my back, I scratch yours. Maybe we were 
just playing golf last week, and I'm going to run in and take a 
look at your lab. And I think a lot of what we deal with here 
is not only the actual validity of a testing process, but even 
the appearance of the fairness and impartiality of the testing 
process. And so I understand that CAP is moving toward more of 
a regional kind of a situation, and I'm just wondering, trying 
to get it so that we neighbors are not looking at each other's 
labs.
    Ms. Aronovitz. Yeah, I think that is an area that we have 
been talking to CAP about. It pointed out that about 42 
percent--and I might have that number wrong, but it's about 
half of the surveys that it actually does is someone has to go 
on an airplane, so there wouldn't be people who were at the 
next lab.
    But the other half really do look at labs that are in the 
community, if not right next door. We worry a little bit about 
that. We think that any type of structure you could put in 
place where there would be not just a perception, but a real 
sense, of independence is very, very important.
    Along that line, we've been talking to CAP about the 
construction of their--or the structure of their survey teams. 
Right now they have a volunteer program where lab workers and 
supervisors in one lab would actually look at a different lab. 
And the structure of those teams usually include the supervisor 
and the team that work in a particular lab because they work 
well together, and they could accomplish a lot together.
    The thing we do worry about in that structure is if you're 
my boss in my real job, and you're telling me that we should 
downgrade or we should, in fact, not write up a deficiency, and 
I have a different judgment, and I think it's serious enough to 
write up, we do have a question. And we don't have any evidence 
that this has happened, but we do have a strong perception that 
this could be a real dilemma for a lab surveyor. So we're 
working with CAP to try to figure out how they could construct 
their teams, but write their conflict of interests and 
independent standards so that lab workers feel like they do 
have a way out or they have a place to go if they don't agree 
with their supervisor in a particular situation.
    Mr. Cummings. A little bit earlier at a press conference we 
were talking about this, and Mr. Souder and I answered a 
question with regard to legislation, and this is the reason why 
I spent so much time on this part. So often it's hard to get 
the legislation that we want through here on the Hill, but you 
said something that was very interesting. You said that you 
were very encouraged and very impressed with the efforts that 
the agencies have been making. And I've mentioned a few things. 
Are there other things that you see that you would like to see 
continue? In other words, there is more than one way to skin a 
cat sometimes, so we're trying to figure out how do we make 
sure that we get to the result that we want, because we don't 
like the way it is right now.
    Ms. Aronovitz. Right. I should, unfortunately, qualify what 
I said just a little bit. We've had great discussions with CMS 
and two exempt--CLIA-exempt States, and also the accrediting 
organizations, they all do seem to be very anxious to move 
forward, but that's just the first step. We have 13 
recommendations, and that doesn't even include your 
legislation, which we think is important, and we would like to 
see how CMS responds to our recommendations.
    We have a provision in GAO where we followup on open 
recommendations, and it's on our Web site, where anyone in the 
public could see what recommendations--what the agency has done 
to take action on our recommendations. So while I'm very 
encouraged in terms of our conversations, there have been quite 
a few disagreements with some of the things we've said along 
the way. We're hoping that we'll be able to negotiate or come 
to terms on some of these. But ultimately it's the actions that 
CMS takes that will really tell whether we're going to have 
improvements in this area.
    Mr. Cummings. Do you feel comfortable whether a person in 
Mr. Souder's district, a rural district, going into a hospital 
lab today can feel comfortable that they are getting accurate 
results with regard to tests that might be lifesaving, 
determine what kind of treatment they get? I mean, do you feel 
comfortable based upon what you've seen?
    Ms. Aronovitz. I think that the CLIA amendments have been 
one of the most important positive approaches to getting us 
closer to ultimately where we want to be, and I'd rather be 
getting a lab test now than maybe even 5 years ago. However, 
until it's airtight, until it will be 100 percent, I would not 
feel comfortable if it were someone in my family.
    So, no, I think we all need to keep working very, very hard 
to get even better. We're not there yet.
    Mr. Cummings. Thank you very much.
    Mr. Souder. Ms. Watson, do you have any questions?
    Ms. Watson. I really want to thank the Chair for this 
hearing, and I believe you probably have responded to my query.
    I do know mistakes and inaccuracies happen--it's a whole 
movie I just saw recently starring Queen Latifah that 
illustrates that; and I think what you're doing is right.
    You know, I think all inspections ought to be unannounced. 
We ought to say the year of 2007 is a year that we might happen 
into your laboratory, because as I read the summary of what 
happened at the Maryland General Hospital, most everybody 
involved was fired. So we don't know if the problem rests with 
the personnel, we don't know if it's cronyism, we don't really 
know. So I would think that you would want to pick a period of 
time and see if you can get to the factors and offer dissenting 
reports so we can pin down what happens in these laboratories. 
Are the pathologists moonlighting? Are they doing other things, 
they're not really focusing? And what is the background 
experience of the lab technicians and so on?
    I think this is a serious problem. It affects all humanity, 
particularly here in this country, and I think that maybe you 
want to do a study in a given year to find out where the 
problems really are. That's a comment, and you can respond.
    Ms. Aronovitz. Yeah, I think that's a really important 
comment. And I think you hit on some of the very essence of 
what a survey really involves. It really looks at the quality 
of the personnel, and the qualifications of the personnel, and 
the quality assurance system, and the quality control systems 
that are in labs, and how a lab monitors itself, and how it 
makes sure that it fixes some of the problems that are 
identified.
    Right now I think that the structure, the framework, exists 
for us to go into a lab--not us personally, but accrediting 
organizations and other survey organizations--to go into a lab 
and identify problems. It's what happens when those data are 
then communicated or not communicated in the aggregate to other 
oversight organizations where things could break down.
    Mr. Watson. Let me just probe that a bit. Let me just probe 
that a bit. After you go in, and you get--and you do a report, 
is there another step that could be taken, you know, it's like 
getting multiple opinions. Is there another step that could be 
taken to be assured of the accuracy?
    Ms. Aronovitz. When lab surveys are finished, the survey 
organizations do discuss and make sure that they were done 
properly, but in addition to that CMS has a very important 
tool. It's called a validation survey, and the validation 
survey really goes in behind the survey organization to make 
sure that those surveyors did a good job and reported all 
condition level deficiencies. Now, we do have some concerns 
about the way validation surveys happen because we think too 
many of them happen simultaneously instead of independently. 
But the validation survey I think is the quality step that you 
are referring to.
    Ms. Watson. Thank you so much, and I yield back the rest of 
my time.
    Mr. Souder. I wanted to ask you briefly a clarification 
question. My impression is that, how the labs--who owns the 
labs and how they're managed is not uniform. Could you kind of 
just give me a brief snapshot, are most of these labs owned by 
a private entity, are they owned by the hospital? Are they 
owned by a group of doctors? And I have a followup question to 
that.
    Ms. Aronovitz. I don't know exactly what the breakdown is. 
I do know that there are hospital labs that do millions of 
tests a year and then there are also on the other end labs that 
get CLIA certificates that are physician labs that also do 
2,000 tests in a year that would be owned by the physicians 
themselves. We could get you a breakdown, which would be much 
more appropriate than for me to try to estimate.
    Mr. Souder. I'd appreciate at least some kind of a rough--
because in any kind of review strategy, if the primary reviewer 
isn't going to be a uniform--single, uniform organization, and 
I myself would like to see how to make a flexible system work, 
but one thing in limiting conflict of interest is it's 
important to know who the ownership groups are. In other words, 
part of this, if you're not going to say, you have to be so far 
away to be a reviewer, that you have to get on an airplane, I 
think that was one standard that you put forth that 40 percent 
had to fly in or something in that order, 40 percent didn't, 
would be to say that certainly you don't want a doctor who's a 
partner, who may have another lab at another unit be the 
reviewer. You don't want a hospital who has a hospital system 
be a reviewer of their own hospital system and that would be a 
start, would it not, for some sort of conflict of interest? 
Does that exist currently?
    Ms. Aronovitz. I'm not sure. I don't know, and I think we 
could find out for you and supply you with a breakdown and more 
of a rationale.
    Mr. Souder. Because nobody who I would think at minimum 
reviewers, nobody that has a financial stake that overlaps with 
the person they're reviewing should be doing the reviewing.
    Ms. Aronovitz. I know that each survey organization does 
have certain conflict of interest requirements and standards, 
but to the extent that they would cover or be sufficient, we 
would have some questions.
    Mr. Souder. Thank you.
    Mr. Cummings. I have just one question. You know, I'm just 
curious, you made throughout your testimony, you have talked 
about how you interacted with all--interacted with the various 
agencies and whatever. And I'm just wondering, have you seen--
is there--can you see a difference that has been made as a 
result of the Maryland General case? Are you following what I'm 
saying?
    Ms. Aronovitz. Yes.
    Mr. Cummings. In your discussions with folks, in this case, 
is this a major incident that happened? And if so, if it's a 
major incident, how has it affected, from what you could see, 
other labs and enforcement of the CLIA policies or what have 
you?
    Ms. Aronovitz. Yeah. I think we believe that the Maryland 
General situation did have a traumatic effect on making labs 
and survey organizations understand again how important it was 
to do the kinds of things we're talking about today and to 
assure lab quality. Given that, though, I personally was 
surprised at how much still needs to go to happen, that we 
found some of the things we did that the communication lines 
aren't as strong as they should be, that the sanctions aren't 
used as much as they could be, that proficiency testing 
failures occur without a whole--often without a lot of 
sanctions or followup occurring. We were surprised that CMS 
still doesn't have a way to understand across survey 
organizations the extent to which condition-level deficiencies 
occur in the aggregate. We think it's so important because then 
you could look at trend data and you could look and you could 
answer the question that you're asking, not what kind of 
impression I have, but with real hard data, and that's where we 
think we need to be, and we're surprised that we're not there.
    Mr. Cummings. Do you believe from what you have seen that 
Maryland General is an aberration?
    Ms. Aronovitz. I can't answer that. I don't know, but I do 
know that it's important that labs have the potential for 
having problems if they're not well overseen, and we think that 
there are still gaps in the oversight process. So we worry 
about the potential. We don't know whether there's a lab out 
there right now that's on the verge.
    Mr. Cummings. Right. Thank you. Thank you very much.
    Mr. Souder. I thank you for your testimony and appreciate 
your report, and we'll be looking forward to additional 
followups.
    Ms. Aronovitz. Thanks very much.
    Mr. Souder. Our next panel is Mr. Thomas Hamilton. If you 
will come forward and remain standing, I will give you the 
oath. Mr. Hamilton is the Director of Survey & Certification 
Group, the Centers for Medicare and Medicaid Services, U.S. 
Department of Health and Human Services. Raise your right hand.
    [Witness sworn.]
    Mr. Souder. Thank you. Let the record show that the witness 
responded positively. I thank you for coming today and we look 
forward to your testimony.

STATEMENT OF THOMAS HAMILTON, DIRECTOR, SURVEY & CERTIFICATION 
    GROUP, CENTERS FOR MEDICARE AND MEDICAID SERVICES, U.S. 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Mr. Hamilton. Thank you. Chairman Souder, Representative 
Cummings, Representative Watson, distinguished members of the 
subcommittee who may appear yet, thank you for the opportunity 
to discuss CMS's efforts to assure quality testing in all 
laboratories in the United States as required under the 
clinical laboratory improvement amendments. Thank you.
    CLIA established nationally uniform quality standards for 
all clinical laboratory testing to ensure the accuracy, 
reliability and timeliness of patient test results regardless 
of the setting in which the test was performed. Under CLIA, 
three categories of laboratory tests have been established, 
waived tests, tests of moderate complexity, including the 
subcategory of provider-performed microscopy, and tests of high 
complexity. CLIA specified detailed quality standards for the 
latter two categories.
    For laboratories that perform moderate or high-complexity 
tests, those laboratories must be surveyed biannually to 
maintain certification. They may choose whether they wish to be 
surveyed by CMS or by a private CMS-approved accrediting 
organization. Laboratories that conduct only waived tests are 
subject to surveys if a complaint is alleged.
    The CMS survey process focuses on outcomes. That is, we 
focus on the test results in the actual or the potential harm 
that may be caused to patients due to inaccurate testing. 
Education and enforcement are both used and both are important. 
An educational approach permits a surveyor to provide resources 
and an explanation of the applicable requirements to the 
laboratory. This facilitates the laboratory's ability to 
correct deficiencies prior to the imposition of enforcement 
actions.
    However, if the laboratory cannot or will not correct the 
problems within a reasonable and specified amount of time, 
sanctions are imposed that are commensurate with the history, 
seriousness, and pervasiveness of the deficiencies.
    Fulfillment and enforcement of CLIA standards is CMS's 
primary focus. When CMS finds problems during a survey, the lab 
is generally provided an opportunity to correct those problems 
prior to enforcement actions unless there is actual or 
potential harm to patient safety or there are recurring 
deficiencies. Over the past 5 years CMS has initiated 
enforcement action in more than 5,000 cases. These proposed 
sanctions carry a clear communication, problems must be fixed 
promptly and effectively. I am pleased to say that in 
approximately less than 10 percent of the time have we needed 
to implement the sanctions because of laboratory failure to 
take effective and timely remedial action.
    In a moment I will discuss the challenges that we face, and 
Ms. Aronovitz did an excellent job describing the findings of 
the GAO and some of those challenges. But first I wish to 
emphasize that the Clinical Laboratory Improvement Amendment 
enacted by Congress and faithfully implemented by CMS has 
substantially improved the reliability and accuracy of 
laboratory testing in this country. The first onsite surveys of 
laboratories conducted right after CLIA implementation in 1992, 
for example, revealed that up to 35 percent of laboratories had 
significant quality control and quality assurance problems. 
Currently less than 7 percent of the laboratories surveyed by 
CMS each year evidence such quality control problems. More 
recently, the percentage of laboratories that meet our 
proficiency testing standard has increased from about 88 
percent in 1998 to about 93 percent in 2003.
    CMS continues to improve our survey and certification 
system. For example, in 2003 we strengthened quality control 
standards through new regulations. In 2004, we established 
performance standards for State organizations. Also in 2004, we 
initiated national meetings with all accrediting organizations 
to strengthen the national system and enter into better 
information sharing agreements, as Representative Cummings has 
so eloquently described is needed.
    In 2005, we implemented national annual cytology 
proficiency testing for all people who examine pap smears. For 
the first time, more than 12,000 people took individual exams 
to test and demonstrate their ability to make accurate readings 
of pap smears.
    In 2006, we implemented a national electronic tracking 
system for all complaints and all complaint investigations 
received by CMS and State survey agencies. These advances, 
however, do not mean that further improvements are not possible 
or desired. They are. To such an end, we appreciate the 
subcommittee action to make resources of the Government 
Accountability Office available to study what we are doing and 
make a number of very useful recommendations.
    The GAO made 13 recommendations. We committed ourselves to 
21 action steps in response to those 13 recommendations from 
GAO, and we are putting in place the plans necessary to do even 
more. For example, the GAO recommended that CMS standardize 
criteria used by accrediting organizations. Recognizing that 
the law permits accrediting organizations to have standards 
that are different than CMS's standards so long as they are 
equivalent, we will improve the crosswalks of our different 
standards to make them more comparable. But in addition, we 
will work with the accrediting organizations to create a 
taxonomy of deficiency findings to promote consistent 
enforcement of standards on the back end.
    We've also convened a work group of accrediting 
organizations and CMS representatives to develop data-driven 
performance indicators similar to those used to monitor State 
survey agencies' performance, as Ms. Aronovitz described. These 
performance measures will complement the validation surveys 
that we now conduct to check on the accuracy of accrediting 
organization surveys. The GAO also recommended that we ensure 
that lab workers know how to submit a complaint to the proper 
entity. We will do so. Complaints from lab workers represent an 
important source of information about potential problems. We 
are working with surveying entities to increase awareness of 
the ways of lab workers and others may submit complaints, 
including how to get their complaints to the right place 
confidentially.
    In addition, in March 2006 we implemented a new, more 
sophisticated data system to receive and track such complaints. 
This tracking system will enable all surveying entities 
eventually to submit access information that is collected on 
any lab. The GAO also recommended that CMS establish an 
enforcement data base to monitor actions taken by State survey 
agencies. We will definitely do so. We have developed such a 
data base for nursing homes and other providers, and it has 
been extremely useful. I have directed that the timetable for 
inclusion of clinical laboratories in this data base and 
electronic system be moved up as soon as possible.
    In conclusion, we in CMS are dedicated to ensuring the 
accuracy of test results from our Nation's laboratories. I 
thank the subcommittee for your interest in improving clinical 
laboratory testing in the United States. There is no substitute 
for objective, trained personnel examining the quality of 
health care. That is the purpose of CMS's survey and 
certification system, and that is the function served by GAO in 
examining CMS's oversight.
    We are putting the results of the GAO study to good and 
prompt use, and I thank you for directing their energies toward 
our common purpose of improving the quality of health care in 
the United States. I look forward to answering any questions 
you may have about our efforts.
    [The prepared statement of Mr. Hamilton follows:]
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    Mr. Souder. On the GAO recommendation No. 9, that you 
utilize your revenues generated by the program to hire 
sufficient staff to fulfill its statutory responsibilities, 
your response was CMS is fulfilling its statutory 
responsibilities. My understanding was--is that the fees 
collected, that you've had a reduction in staff from 29 to 22 
and you have carryover balances of $70 million. What happens to 
that $70 million? Does that go to other agencies to use as a 
cash-flow? Why would you have reduced your staff from 29 to 22? 
Have the number of labs reduced? What would be the reason?
    Mr. Hamilton. CMS has been very careful to ensure that the 
burden placed on laboratories through the user fees are managed 
very conservatively. Those lab fees are set in advance and only 
infrequently adjusted, and what happens in the early years is 
that there is a surplus and then over time expenditures exceed 
the revenues that are generated and that surplus is diminished 
to the point where the fees then need to be raised again. We 
are over the tipping point, so at the current point the 
expenditures for the Centers for Disease Control, for the 
States, for CMS and the FDA, who all work in combination to 
achieve the results of CLIA, the expenditures at this point in 
time are just beginning to exceed the incoming revenue. So that 
$70 million is going down.
    What has happened overall in CMS in terms of the staffing 
is that as the agency diminished staffing somewhat, the CLIA 
staff had been subjected to that diminishment as well. And we 
have had a request in to re-examine that practice, and that 
examination has been completed, and I am pleased to say that we 
are in the process of separating out the CLIA staffing into its 
own set of controls where the staffing will be governed not so 
much by what's happening in the rest of the agency but what's 
happening precisely in the way of the CLIA workload and the 
user fees.
    Mr. Souder. Yeah. Because you're different than the rest of 
the agency. In a sense, you have a fee that's collected to do 
the enforcement. Is that correct?
    Mr. Hamilton. That is correct.
    Mr. Souder. How is the $70 million counted in the budget? 
Do you automatically--are you automatically guaranteed what is 
at a maintenance level? I mean, it's like a postage stamp. In 
other words, we always have more income at the beginning of the 
postage stamp than we do at the end and then you raise the 
fees. That's basically what you describe there, but you are not 
a frozen agency. In other words, HHS, is this fund subject to 
the general HHS appropriations?
    Mr. Hamilton. It is. Your analogy is perfect in terms of 
postage stamps. Those funds that are received from the user 
fees are held in trust and used exclusively for the Clinical 
Laboratory Improvement Act amendments.
    Mr. Souder. Wouldn't you have been able then to hire, not 
reduce, staff if you had the funding and in fact if you had 29 
and you said we wanted to keep 29 because it's necessary for 
our mission, that would have meant you would have raised the 
fees?
    Mr. Hamilton. That is the way it could work in the future. 
In the past, the overall personnel controls in terms of the 
number of people that could be devoted to this function have 
been treated separately without regard to budget. Now we're 
separating those out.
    Mr. Souder. In the sanctions question, in one of your 
responses you said that in fact a lab--part of the reason you 
didn't agree that if you had multiple failures that they would 
automatically be sanctioned was--is that it could be in 
different subsections of the same lab for a different task. 
That implies that you believe the reasons for failure are 
specific as opposed to generic. In other words, that a lab is 
lax in their processes, therefore if they have a failure in one 
area, then they have a failure in another area. It isn't a 
failure of the management or the general commitment. It's a 
failure of whatever happened in that particular area. Am I 
correct in articulating that and why would such an assumption 
be made? And let me make one other followup with that. In the 
sanctions process, I mentioned in the first panel about 
egregiousness. I kind of look at this as a little bit like 
restaurant violations. In other words, it's one thing if you 
don't have the ketchup bottle top on. It's another if you have 
salmonella in your meat. Do you have some sort of a standard 
here that dependent on the egregiousness there's an immediate 
automatic sanction? Do you have tiered levels in that--how are 
you dealing with this? Because one type might just be a lax 
management that's why you would have repeated areas of 
different departments or more staff turnover than would be 
normal so staffers weren't as highly educated, therefore 
they're more likely to make an error, which is once again a 
management question, to some degree a pay question, to some 
degree whatever other management questions there is, and some 
are just like making an error, some which we've heard in 
Maryland General are just catastrophic, putting pressure on the 
process where somebody gets AIDS and is fired, and then you 
have others that they couldn't for a fairly long period of time 
even tell us whether they had misidentified whether somebody 
had AIDS or not. So you have a whole bunch of people hanging in 
balance as to whether they have AIDS or not or whether the 
surveys are accurate. That seems to be fairly egregious, that 
kind of--how do you work through that sanctions standard?
    Mr. Hamilton. The problems in Maryland General were indeed 
egregious, and in that kind of situation we need very prompt 
sanctions and very effective remedy. We need also the ability 
to distinguish that kind of situation from minor problems, and 
our point in our reply was simply to say if we found, for 
example, a problem in proficiency testing in general, then we 
need to look beneath the surface to discern whether or not this 
is a systemic problem of the overall management or is isolated.
    We have found situations, for example, where the problem 
was concentrated in a neonatal testing area of the laboratory 
and not generalized to other parts of the laboratory. In that 
case we really need to focus on what's happening in the 
neonatal testing area. Now, if we looked back and saw that the 
previous year that the proficiency--the lab had a proficiency 
testing problem, but that it was in a completely different area 
and there seemed to be no common systemic problems, then we 
need the ability to make appropriate judgments with regard to 
the strength of the sanctioning and enforcement action.
    So that was the only point we were trying to make there. We 
may need to make refinements in our data system to be able to 
pick up on some of these nuances because when we run the 
reports we might just find that the data indicate the frequency 
of problems in the overall deficiency area rather than getting 
beneath the surface. So for us to do effective monitoring of 
our States and accrediting organizations, we may need to adjust 
the data base to be able to do so.
    Mr. Souder. I have one more question, and I ask this 
somewhat with fear and trembling that in the--because in 
listening to the doctors of our areas and Medicare-Medicaid 
reimbursement questions all the time, when we charge a fee for 
these labs, for the oversight, if that goes up, how is that 
factored in in reimbursement questions in Medicare and 
Medicaid? Is it irrelevant? Do they just have to absorb it?
    Mr. Hamilton. The fees range from a low of $150 for say a 
physician office lab that's doing a few tests to on the other 
extreme $8,000 for a lab that may do a million or more tests a 
year.
    Mr. Souder. So if it went from $150 to $170, it's not going 
to have a huge impact?
    Mr. Hamilton. [Yes indicated.]
    Mr. Souder. OK. Thank you. Mr. Cummings.
    Mr. Cummings. The GAO found that CMS is not meeting its 
requirements to determine in a timely manner the--continue the 
equivalency of accrediting organization and exempts States 
inspection requirements between periodic equivalency 
determinations before it reviews the proposed changes. And I 
was wondering, what was your opinion on that? Because 
apparently there's a time when you all are trying to figure out 
whether the surveyors' standards meet CLIA standards, and one 
of the complaints has been--and you heard it, you heard it a 
few minutes ago--that there sometimes has been a kind of long 
delay. What is that about? Is that a personnel issue?
    Mr. Hamilton. It has been primarily a personnel issue and a 
prioritization issue. But let me first clarify the 
circumstance. Let us take, for example, the situation where an 
accrediting organization changes its standards. The accrediting 
organization is obliged to notify us of the changes. What 
hasn't been happening in a timely manner is our formal response 
back to the accrediting organization. That's not to say we 
don't take a look at the change. We do take a look at the 
change as it comes in and make a triage decision as to whether 
or not this seems to be a significant change, serious change, 
or it could be an accrediting organization adopting something 
that is more stringent than the minimum requirements that are 
specified in law and regulation.
    So we make that initial review. What we haven't been doing 
is making the formal determination, sending the letter back to 
the accrediting organization, saying this is a problem or not a 
problem because generally we haven't found that those changes 
have been problems. The priority decision has been--as we look 
at all of the work that we've had to do, some things are much 
more important than others, and frankly, during the past year 
one of the most important things we have done, I think, 
believe, is to implement the cytology proficiency testing 
requirement. And that has been a major accomplishment, and we 
devote considerable energies to that effort and to responding 
to the concerns from the field that we have had about that 
testing.
    So in light of that kind of priority comparison, we have 
elected in the past to simply take a look at the accrediting 
organization changes to their standards, but not immediately 
issue a response back. We're going to respond in a more timely 
manner in the future, but we will always need to take a look at 
our workload and make determinations with regard to priorities, 
some things being more important than others.
    Mr. Cummings. Going back to the Maryland General situation, 
how has that affected your agency? I mean, I know it's affected 
the people who are sitting right behind you, but I'm wondering 
how has that affected you all because basically while they are 
the folks who do the surveys, you are the folks who kind of 
oversee them. So what if any--effect has it had?
    Mr. Hamilton. I would say for CMS its effect was similar to 
the effect of Hurricane Katrina. I think only Rip Van Winkle 
could have slept through the wake-up call that was presented by 
the Maryland General situation.
    Mr. Cummings. So this is major stuff, huh?
    Mr. Hamilton. It was of significant concern to us not only 
in terms of the immediate events and findings but also of great 
concern to us in terms of how long it took the hospital system 
to accept the problems that it had and engender systemic 
corrections, and so there were two aspects to that problem, and 
I think, as Representative Watson pointed out, there were 
significant personnel changes subsequent to that, and I think 
those personnel changes had more to do with the slowness of the 
response and not just the immediate problems that they faced.
    Mr. Cummings. Now, the recommendations that were made by 
the GAO, you talked about things that you felt pretty good 
about. I was just reviewing some of your, you know, responses 
and what have you. What did you disagree with?
    Mr. Hamilton. We appreciate the caution that GAO 
communicated with regard to ensuring that we have a balanced 
approach between education and enforcement, and we appreciated 
their worry because we worry about it in terms of constant 
vigilance. However, the two instances that they cite we very 
much disagree with. Consider, for example, the cytology 
proficiency testing. This was a new requirement. While the law 
had been passed by Congress some time ago, the conditions 
requiring laboratories to ensure that all of their affected 
workers were individually tested did not apply until 2005. That 
was a new requirement for the laboratories. We told the 
laboratories that if they failed to enroll all of their 
affected workers in the testing, we would provide sanctions. We 
told them that if they failed to ensure that their workers were 
retested should they fail, we would apply sanctions. The only 
thing that we said that we wouldn't do is to levy sanctions if 
a laboratory had failed to ensure that 100 percent of its 
workers in that year achieved a passing score. So we think that 
we did a very responsible job.
    On the other hand, I appreciate the GAO concern because on 
one hand while they're saying that we've been too lenient, I 
have stacks of correspondence from professional societies and 
others saying that we were too stringent and that we ought to 
slow things down.
    So we think that we have crafted and implemented the 
perfect Goldie Locks solution, something neither too lenient 
nor too stringent but one that got the job done, and the end 
result is that 100 percent of the pertinent labs participated 
in the proficiency testing and ensured that their workers were 
tested. So the American public has a much greater assurance 
today that the people who are reading pap smears are doing so 
accurately and reliably.
    Mr. Cummings. Did you listen to--I'm sure you did--to the 
previous witness and particularly the last question that may 
have been next to the last question that I asked her, whether 
she would feel comfortable with labs, and did you hear what she 
said?
    Mr. Hamilton. I believe she didn't give you a direct reply 
but expressed her concern. I thought it was a very good answer. 
We likewise are concerned about any lapse in the accuracy, 
reliability or timeliness of testing, and we would like to see 
continuous improvement in all laboratories in such testing. To 
that end, we dedicate ourselves and will use the GAO report as 
effectively as possible to make those improvements.
    Mr. Cummings. You said a little bit earlier that you all 
were working on trying to bring all these standards together so 
you have--everybody's pretty much reading from the same page in 
the same handbook. Is that pretty much accurate?
    Mr. Hamilton. That is correct.
    Mr. Cummings. What is your timetable with regard to that?
    Mr. Hamilton. We will accomplish that in the next calendar 
year. I asked before coming here for one of our staff to bring 
me the latest set of standards and correspondence back and 
forth between one of the accrediting organizations, and they 
wheeled in a very large cart, and I can tell you that when 
we've got not just one accrediting organization but multiple 
accrediting organizations, each of which has a different 
process instead of criteria, it's a substantial undertaking, 
but it is high on our agenda, and we are regularly meeting now 
with all of the accrediting organizations to figure out ways in 
which we can improve our information sharing, our red alerts, 
our communications and our compatibility in our processes. But 
I would point out that GAO recommendation pertained to the 
front end; that is, are the standards comparable? We are 
perhaps even more concerned with making further improvements on 
the back end, which is after the survey is done, are we able to 
agree on what the most serious findings are and ensure that 
there is appropriate followup action and correction for any 
problems that are identified. To that purpose, we would like to 
construct with the accrediting organizations a taxonomy of 
deficiency findings so that we can have greater comparability 
and followup to ensure that remedial action is promptly and 
effectively made when such action is called for.
    Mr. Cummings. Now, see, you are taking me back to my days 
as a lawyer. Did you answer my question?
    Mr. Hamilton. I don't know if that was a compliment or not.
    Mr. Cummings. Sounded nice, but I mean it----
    Mr. Hamilton. I was--your question had to do----
    Mr. Cummings. With timetable. I said----
    Mr. Hamilton. In the next year, yes.
    Mr. Cummings. Is it next year?
    Mr. Hamilton. Yes.
    Mr. Cummings. Oh, OK, next year.
    Mr. Hamilton. Perhaps I said it under my breath.
    Mr. Cummings. I missed it. Did you actually say that?
    Mr. Souder. Yeah, he said it. He explained why it was going 
to take him a year.
    Mr. Cummings. OK. Just one other question, Mr. Chairman. I 
want to go back to some questions that the chairman asked about 
the $70 million. And I'm trying to figure out, if you have a 
Maryland General situation, and let's say you had--you felt 
that the problem was just there were probably maybe a lot of 
Maryland Generals out there, and you said, wait a minute, we've 
really got to do something different here. In other words, had 
you had a true emergency, what happens then? And you know you 
need more personnel, you know it. You just can't get around it, 
and it would be almost negligent if you failed to take money 
that you have to deal with the emergency and then figure out 
how to collect more dues in the future or whatever. I mean, 
what happens under that circumstance?
    Mr. Hamilton. Under a circumstance such as the one that you 
described, we would mobilize national resources to make them 
available and we would deal with the fiscal consequences later, 
whether or not that meant that we needed to increase the 
table--timetable or speed up the timetable for fees or 
whatever.
    Mr. Cummings. All right. I don't have anything else.
    Mr. Souder. Ms. Watson.
    Ms. Watson. Thank you.
    Mr. Souder. Let me briefly followup because my 
understanding to your first answer when we compared to postage 
stamp revenue and the latter part you draw down, now my 
understanding was, as you said, HHS will no longer put you 
under an arbitrary uniform shared cost reduction if budgets are 
squeezed, which they are everywhere in personnel because of our 
increases, aren't meeting the increased cost of living demands 
is the bottom line. Do you have control over--does your 
subagency have control over your revenue that comes in 
independently or is that decided by OMB or HHS headquarters?
    Mr. Hamilton. The fees are established through the 
publication and the Federal Register process pursuant to the 
regulations that have been previously established. So we go 
through a process of publishing any change in the fees.
    Mr. Souder. So that generates the revenue. Who controls the 
expense side?
    Mr. Hamilton. The expense side, CMS controls. From the user 
fees then we work out a budget for the Centers for Disease 
Control, one of our partners in this effort, and the budget for 
the Food and Drug Administration, and then ourselves.
    Mr. Souder. So do you have an internal--like for the 
postage stamp, would you have projections and say when we 
increase it to 39 cents we will have this much revenue at the 
beginning, making these assumptions, and then it will draw down 
by X year? Do you have an internal budget like that?
    Mr. Hamilton. Yes. We have internal budget controls and as 
we look at the personnel needs here, we are going through our 
own process of examining the workload and then ensuring that 
any position that we have is fully justified in terms of the 
priority and the workload.
    Mr. Souder. Would you have the flexibility if you felt an 
increased workload to accelerate that plan and kick in an 
increase earlier? Would that be something your department 
would--would you have automatic flexibility? Would you have to 
run that up through the Secretary and then through OMB?
    Mr. Hamilton. Definitely. We would go through the Federal 
Register process with Health and Human Services and OMB.
    Mr. Souder. So it's not a dedicated fund per se like the 
gas tax or the inland waterway, airport tax where those 
agencies would have control over their budget; they would still 
have to have it reviewed. You, while you have a dedicated fee, 
in fact have to go through traditional budgeting inside the----
    Mr. Hamilton. Inside the agency and within the executive 
branch. That is correct, and through the Federal Register 
process. But it is a dedicated fund in the sense that it cannot 
be used for any purpose other than CLIA.
    Mr. Souder. Well, thank you very much for your testimony, 
and we're looking forward to hearing how the followup goes over 
the next year and the implemented standards. Thank you for 
coming today.
    Mr. Hamilton. Thank you very much, and thank you for all 
the time that you have put into this issue.
    Mr. Souder. Our third panel could come forward and remain 
standing for the oath.
    Dr. Dennis O'Leary, president of the Joint Commission on 
Accreditation of Healthcare Organizations; Dr. Thomas Sodeman 
president, College of American Pathologists; and Mr. Beigel, 
chief executive officer of COLA.
    It is the practice of this committee to swear in all 
witnesses.
    [Witnesses sworn.]
    Mr. Souder. Let the record show that all the witnesses 
responded in the affirmative. We thank you for participating in 
the hearing today. And we'll start with Dr. O'Leary.

    STATEMENTS OF DENNIS S. O'LEARY, M.D., PRESIDENT, JOINT 
COMMISSION ON ACCREDITATION OF HEALTHCARE ORGANIZATIONS; THOMAS 
SODEMAN, M.D., PRESIDENT, COLLEGE OF AMERICAN PATHOLOGISTS; AND 
           DOUG BEIGEL, CHIEF EXECUTIVE OFFICER, COLA

              STATEMENT OF DENNIS S. O'LEARY, M.D.

    Dr. O'Leary. Thank you. Good afternoon. I'm Dr. Dennis 
O'Leary, president of the Joint Commission on Accreditation of 
Healthcare Organizations. We thank the subcommittee for taking 
a leadership role and urging improvements on laboratory 
services in this country. We would also like to commend the GAO 
for its detailed review of the quality of testing in our 
Nation's clinical laboratories.
    The Joint Commission accredits more than 3,000 laboratories 
that hold varying numbers of CLIA certificates. Some of these 
laboratories are hospital based while others are independent. 
Assuring that accredited laboratories are providing safe, high-
quality services is one of the Joint Commission's highest 
priorities. Joint Commission laboratory surveys are conducted 
by experienced medical technologists and pathologists who have 
passed a rigorous certification examination and participate in 
training exercises on an ongoing basis.
    Recognizing the critical importance of laboratory services, 
the Joint Commission has designated the laboratory as an 
essential hospital service. This designation has elevated the 
importance of the laboratory's compliance with established 
requirements in determining the overall accreditation status of 
the hospital that it serves. This policy underscores the 
patient care implications of laboratory quality and the need 
for hospital leaders to pay particular attention to laboratory 
performance.
    The Joint Commission's close working relationship with CMS 
on laboratory issues demonstrates the value of public-private 
sector partnerships in improving health care and to serve 
laboratories and Medicare beneficiaries well. The Joint 
Commission makes a special effort to assure open communications 
and coordination of efforts with the State and Federal agencies 
and other private accrediting bodies responsible for the 
quality oversight of laboratory services.
    The Joint Commission welcomes the GAO report on the 
oversight of quality in laboratories. We emphasize, however, 
the need to strike a balance between timely identification and 
resolution of performance issues and laboratories and the 
education and improvement objectives inherent in the 
accreditation process. Simply pointing out deficiencies in 
laboratory performance does not automatically translate to 
effective resolution of those identified problems.
    While the Joint Commission generally concurs with the GAO 
findings and conclusions in this report, we wish to highlight 
several areas of concern with respect to its recommendations. 
First, while the GAO recommendation that CMS standardize the 
categorization reporting of survey findings may simplify 
administrative oversight of the laboratory program, it may also 
stifle innovation in evaluation approaches and thereby 
ultimately compromise the safety of patient care. This 
recommendation assumes that CLIA requirements and 
categorizations are a gold standard rather than a set of basic 
expectations for laboratories and that more advanced 
performance standards do not exist. In fact, the rationale for 
relying on private sector accreditation is that this makes 
possible the timely setting of higher standards on an ongoing 
basis. This GAO recommendation basically fails to acknowledge 
that the Joint Commission and others use different contemporary 
approaches to assessing laboratory performance. We suggested 
the recommendation to standardize a categorization and 
reporting a survey findings be set aside in the favor of 
directing CMS to develop a common taxonomy that could be used 
by all laboratory quality oversight bodies that would track 
serious deficiencies.
    Second, the Joint Commission believes that GAO has 
misinterpreted its validation of survey data. Based on this 
analysis, the GAO concludes that independent surveys are more 
effective than simultaneous surveys in identifying condition 
level deficiencies that were missed by accrediting bodies. 
However, the data presented in the report do not support this 
assertion. In fact, the proportion of condition level findings 
was generally equivalent in both types of surveys. Further, 
there are significant benefits to simultaneous surveys because 
they allow dialog between CMS and Joint Commission evaluators 
and staff that leads to enhanced understanding of how each 
entity conducts its evaluation process.
    Finally, while GAO's detailed review addresses a number of 
laboratory quality issues, it does not address a long-
acknowledged shortcoming of CLIA requirements, the 
qualifications of laboratory personnel. We believe that the 
personnel standards currently required by CLIA are insufficient 
to adequately protect patients in the public health. Today the 
problems underlying failures in laboratory performance are the 
growing shortage of laboratory technologists and the inadequacy 
of their training. These shortcomings become especially glaring 
in the face of the expanding array and increasing complexity of 
laboratory tests in hospitals today.
    In conclusion, the longstanding positive working 
relationships among CMS, the Joint Commission and its colleague 
accrediting bodies has benefited the public through assuring 
continuous access to and application of state-of-the-art 
methods for evaluating quality and safety in laboratories. The 
Joint Commission remains firmly committed to working with all 
of its partners in both the public and private sectors to 
ensure continuous improvement of laboratory services.
    Thank you.
    [The prepared statement of Dr. O'Leary follows:]
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    Mr. Souder. Thank you for your testimony. Dr.--is it 
Sodeman?

               STATEMENT OF THOMAS SODEMAN, M.D.

    Dr. Sodeman. Sodeman, yes.
    The College of American Pathologists is pleased to appear 
before the subcommittee for this hearing of issues related to 
the GAO report on clinical laboratory quality. I am Dr. Thomas 
Sodeman, president of the CAP, a medical specialty society of 
nearly 16,000 board certified pathologists who practice 
clinical and anatomical pathology.
    The CAP inspects and accredits more than 6,000 laboratories 
worldwide under its laboratory accreditation program. I am here 
today to provide our perspective on the GAO report and to 
update the committee on CAP's recent initiatives to improve its 
laboratory accreditation program. We are pleased to work with 
the GAO on this report and appreciated the opportunity to 
provide comments and testify before this subcommittee.
    As an organization dedicated to improving laboratory 
medicine and patient care, we take seriously the findings and 
recommendations of the GAO. The CAP will analyze the report to 
assess if there are additional steps that CAP needs to take to 
address the issues identified as areas of concern regarding our 
accreditation program.
    Beginning in 2004, the CAP initiated its own evaluation of 
its laboratory accreditation program. The testimony we 
presented to this committee on May 18th and July 7, 2004 
included information on changes that we implemented. Since 
those hearings, the CAP has announced and implemented 
additional initiatives designed to strengthen our program. In 
its report the GAO acknowledges many of the new initiatives, 
including moving to unannounced inspections by July 3rd, nearly 
100 percent of all CAP inspections will be unannounced.
    We enhanced and require training for all CAP inspectors. 
This training will supplement the inspectors' years of 
professional experience with specific guidance on inspection 
techniques.
    We implemented mandatory signage to facilitate the 
reporting of quality complaints. The CAP policy also includes 
whistleblower protections that shield the reporting laboratory 
worker from employee retaliation.
    We strengthen conflict of interest policies by making the 
policies more comprehensive and explicit.
    We are spending $9 million on the development of integrated 
data systems to better assess laboratory quality that will 
provide early detection of potential problems in our accredited 
laboratories.
    The GAO report provides valuable insight for the College to 
consider as it strives to continuously improve its program. 
There are also portions of the report that we have a different 
perspective. The CAP believes that the GAO underestimates the 
value of utilizing laboratory professionals in the inspection 
process. We believe the combination of current professional 
experience in the laboratory and training in advanced 
inspection technique make the CAP inspectors uniquely qualified 
to ensure compliance with the CLIA standards. Proficiency 
testing data indicates that the CAP system is comparable to 
other models. We also have to keep in mind that CAP accredited 
laboratories voluntarily choose CAP accreditation, which 
includes requirements that are more stringent than CLIA. We 
believe this dedication to enhanced quality by laboratory 
professionals demonstrates a commitment to the quality of 
patient care that goes beyond that is required by CLIA.
    With respect to the regulatory and educational functions of 
CLIA, the CAP believes that these dual objectives are not 
mutually exclusive and that education is an inherent and 
important outcome to the inspection process of identifying and 
correcting deficiencies. The CAP believes that the dual 
objectives should be complementary. However, we recognize the 
primary purpose of the CLIA statutes are to ensure minimum 
standards.
    The GAO also was charged with examining the quality of 
laboratory testing and was unable to make a determination about 
this issue. Proficiency testing is one of the areas for which 
there is a dated measure of quality. Laboratory quality as 
measured by the CMS aggregate PT data for all enrolled 
laboratories showed mark improvement in performance since 1996. 
Much of the report is devoted to examining Federal oversight of 
CLIA. In general, we believe that CLIA provides appropriate 
Federal oversight for ensuring accuracy of laboratory testing 
and promoting ongoing quality improvement.
    We are pleased with the CMS partner initiative, which 
provides a forum for sharing information among all accrediting 
entities and provides a forum for discussion of best practices 
in the laboratory inspection and accreditation. We believe this 
enhanced CMS initiative is a strong indication of the 
commitment of the agency and all of the accrediting and 
oversight entities to improve our communication and strengthens 
the collaboration necessary to ensure laboratory quality.
    CAP thanks the subcommittee for its interest in assuring 
the highest quality laboratory testing and is firmly committed 
to working with Congress, CMS and other oversight entities and 
accreditation organizations on a way to ensure laboratory 
quality.
    Thank you, sir.
    [The prepared statement of Dr. Sodeman follows:]
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    Mr. Souder. Thank you. We finish with--is it Beigel, 
correct?
    Mr. Beigel. Yes, sir.
    Mr. Souder. Mr. Doug Beigel, the chief executive officer of 
COLA.

                    STATEMENT OF DOUG BEIGEL

    Mr. Beigel. Mr. Chairman, members of the committee, I am 
Douglas Beigel, chief executive officer of a nonprofit 
organization whose purpose is to promote excellence in 
laboratory medicine and patient care through a program of 
voluntary education, consultation and accreditation. COLA 
appreciates the opportunity to speak to you today about the 
findings and recommendations contained in the GAO report.
    The COLA accreditation standards and methodologies were 
developed by internists, family physicians and pathologists to 
be practical and meaningful to the laboratory. The requirements 
have a positive and immediate impact on patient care. We are in 
the quality improvement business, and we expect our clients and 
ourselves to commit to continuous quality improvement. However, 
we must be vigilant to ensure that we do not disrupt patient 
care and that we maintain access to critical laboratory 
services that are convenient and important.
    During the course of this study we responded to numerous 
written and verbal inquiries from the GAO and performed several 
in-depth data analyses. I'm pleased to share with you that we 
agree with the number of the GAO findings and recommendations, 
and I look forward to discussing those with you now. I will 
also touch on a few areas of the report that we found 
troubling.
    We wholeheartedly agree that education to improve lab 
quality should not preclude identification and reporting of 
deficiencies that affect lab testing quality. We also believe 
that phase-in requirements are absolutely appropriate. 
Education is a critical component to the reasonable and 
appropriate implementation and enforcement of laboratory 
performance requirements. COLA takes its enforcement 
responsibilities very seriously, and we are proud of our 
consistent track record and the appropriate enforcement of 
CLIA.
    We agree that laboratories should provide lab workers with 
instructions on how to follow anonymous complaints. And as an 
approved survey organization, we expect laboratories to act 
accordingly. We take complaints very seriously, and actively 
investigate all complaints. We require laboratories to post 
instructions to lab workers on how to file anonymous 
complaints. We agree that unannounced inspections in a smaller 
laboratory are destructive and unworkable.
    The GAO is correct in concluding that unannounced 
inspections for the smaller laboratory will not be appropriate 
because these laboratories are so small, and because the 
medical and laboratory directors are often wearing many hats, 
and arriving unannounced causes disruption to the laboratory 
work, which, in turn, reduces the quality of patient care. We 
agree that CMS should be appropriately resourced and organized 
so that they can review and approve survey organization 
programs in a timely manner.
    We have long appreciated the dedication and commitment with 
the CMS staff with whom we have worked so closely over the 
years. We agree that where possible, CMS should make whatever 
structural change is necessary to ensure that survey 
organization programs and requirements are approved 
expeditiously and prior to the expiration date of the current 
approval.
    And most importantly, we agree with the assertion that 
survey organizations, including CMS, should employ trained 
surveyors and assessors who perform consistent surveys. The 
report specifically mentions surveyor training and consistency 
assessments as key factors to a strengthened laboratory 
oversight system.
    COLA is proud of its significant and extensive surveyor 
training program and our high level of consistency between 
surveyors. This means that COLA effects the same survey, 
whether the lab is located in Alaska, Maryland or Indiana. We 
utilize results of validation surveys to see if citations given 
by our survey match those of another. We look for patterns of 
validations that may indicate weaknesses in a particular area. 
We are proud that the GAO recognized these items already 
implemented by COLA as best practices for the industry.
    We disagree, however, with the GAO's assertion that 
laboratory quality may not have been improved. COLA now 
accredits more laboratories than it has in the past 10 years. 
Data that COLA provided to GAO but was not used in the draft 
report shows that, in general, condition level deficiencies 
declined in laboratories that have been surveyed over multiple 
years.
    Also, the percentage of COLA laboratories that fail 
proficiency testing has decreased. COLA is proud of the fact 
that our program is having a positive impact on laboratories 
and patient care.
    We disagree with the GAO's assertion that education and 
enforcement are mutually exclusive. While COLA laboratory 
inspections are highly educational, we enforce 100 percent of 
our CMS approved accreditation requirements.
    We disagree with the GAO's assertion that allowing a 
laboratory to prepare for a survey masks the discovery of 
laboratory problems. We know of no research that would support 
such a conclusion.
    While much of the laboratory's evidence of compliance is 
documented, there is little of this evidence that can be 
fabricated in a short period of time. More importantly, 
however, the vast majority of laboratory professionals are 
dedicated to providing the highest quality of patient care 
possible, and therefore generally would not falsify records.
    A qualitative interactive assessment of a laboratory, 
coupled with the ongoing participation in proficiency testing 
provides COLA with a more accurate picture of the overall 
quality of a laboratory. We have seen improvement and are proud 
of the strides we have made, but that doesn't mean we don't 
look ahead and raise the bar. Our paramount concern is 
provision or excellent patient care through meaningful 
standards and quality improvements. Thank you for inviting me 
to share my insights with you today.
    [The prepared statement of Mr. Beigel follows:]
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    Mr. Souder. Dr. O'Leary, in his statement, said that one 
thing he believed that GAO overlooked was the pressures on kind 
of the increasing sophistication of what is needed in lab 
technicians and the supply of well-trained people. Do you--Dr. 
Soderman and Mr. Beigel, do you agree with that?
    Dr. Soderman. There is a shortage of medical technologists, 
and there has been a decreasing number of training programs in 
medical technology for a number of years that, in fact, is 
resulting in a decreasing pool.
    I would certainly agree with Dr. O'Leary in terms of the 
complexity of laboratory testing is certainly increasing and 
requires additional skills; however, built into the CLIA laws 
are very extensive competency testing requirements that through 
the accreditation program, we assure that those laboratories 
are completing that competency testing on individuals. And we 
think that supports the fact that the work force out there is a 
good work force, they know what they're doing, and they are 
getting the proper oversight to assure that they are performing 
appropriately.
    Mr. Souder. Mr. Beigel.
    Mr. Beigel. Yes. I agree with Dr. Soderman. Essentially, 80 
percent of the laboratories, maybe a little bit more than 80 
percent of our laboratories that we accredit are smaller 
laboratories, more in the physician office laboratory 
environment, one or two, three physician offices service that 
office. They are allowed, under CLIA, to have individuals that 
may not be medical technologists, depending upon the complexity 
of the testing conducted. So far, we have not seen a direct 
impact on the quality of laboratory testing, but this is a 
significant shortage. And we are projecting that shortage will 
have a significant impact in the years to come.
    Mr. Souder. Is part of the shortage--I assume you haven't 
seen increases in Medicaid and Medicare reimbursement. Could 
you discuss what kind of--in these labs, what percentage of 
this is paid for by the government, and how does the tightness 
of and the pressures from private sector and insurance 
companies as well as the Federal Government on the cost 
pressures intersect with what you just described as the 
potential shortage or declining number of people at the entry 
level to the testing system?
    Dr. O'Leary.
    Dr. O'Leary. Well, this is primarily a pipeline problem. 
You know, you have seen large numbers of 4-year med tech 
schools close. And so you have an aging work force of people, 
and now that gap is filled with 2-year tech trainees. And the 
CLIA requirements are not very stringent. In fact, if you want 
to perform waived testing, you just need to be a high school 
graduate or less. And I think that is where we have pipeline 
problems on the one hand, and now the inability to get the 
people, the temptation is going to be to get anybody who you 
can. And I think all of us, the fact is we are dealing with 
more complex testing generally in a wider array of tests. And 
if you match that against people of, you know, lesser training 
and, you know, competency, I think that is probably a disaster 
waiting to happen.
    I'll just comment that when I went to the IQLM meeting 
about, I guess, 2 years ago, I raised a concern because we, for 
the first time, were seeing laboratories conditionally 
accredited or losing their accreditation or bringing their 
hospitals down, I had never seen that before. And in the past 2 
years, we have had nine hospitals go down because their 
laboratories lost their accreditation. And we have this 42 
laboratories and hospitals conditionally accredited, we have 
never seen that before.
    When I raised that question, all the people I talked to 
traced that to the quality of personnel issue. There wasn't 
even anything in second place. I think we've got a problem.
    Mr. Souder. I don't want to jump to a conclusion, but 
probably not a lot of these were suburban hospitals?
    Dr. O'Leary. They were all kinds.
    Mr. Souder. So this pressure wouldn't be just urban or 
rural, it is everywhere?
    Dr. O'Leary. It is everywhere.
    Mr. Souder. Because one of the things that keeps many 
hospitals floating are private pay patients where they can be 
charged more. And to the degree you have HMOs, to the degree 
you have insurance plans and to the degree you have Medicaid 
and Medicare, I am trying to sort out how much of this is a 
reimbursement question.
    Dr. O'Leary. I don't think it is.
    Mr. Souder. Why would the pipeline then be declining if 
there was adequate pay incentive for people to enter into the 
field? Has there been some kind of a shift?
    Dr. O'Leary. I don't know why this has become a less 
attractive profession. There are a lot of other dynamics going 
on in our society that people that didn't used to go into 
healthcare that go on to other walks of life today, and I think 
that is very real. So I cannot explain why we have seen this 
shrinkage in the medical technology field, but we do observe 
that it exists.
    Mr. Souder. Because almost every medical group that comes 
into my office will tell me that they are looking at a decline 
in their field because of----
    Dr. O'Leary. Right, I understand that.
    Mr. Souder [continuing]. Because the declining rate of 
income is what the general argument is.
    Now, the nursing profession is slightly different because 
there is also shifting of opportunities for women, for example, 
historically that haven't been there in addition to the cost 
pressures and the other types of pressures on the system, and I 
was trying to sort out where the technicians are here.
    Part of this whole decision here--I always think of the--
Bill Cosby did a routine years ago--in fact, it was on an LP, 
which shows you how long ago it was that I heard this--about 
that he is in an operation and the doctor goes woops. And he 
goes, wait a minute; I know what it means when I say woops, 
what does it mean when the doctor says woops? And this is 
ultimately so critical in your area. We can't have really woops 
in a diagnosis of whether you have HIV, whether you have 
cancer, whether you have any one of any number of diseases, 
whether you are diabetic, oh, nope, you're not. Oh yeah, you 
are, that we can't have this kind of--this is the fundamental 
entry point of really everything else in medicine.
    Dr. O'Leary. I totally agree.
    Mr. Souder. And the question is, if a fundamental problem 
here is the quality of service and trying to measure the 
quality of service, then in looking at the quality of service, 
we have kind of egregious errors and kind of second tier 
errors. And as I used the example earlier of restaurants, it's 
one thing if you don't have the ketchup bottle top on and it's 
another if you have meat that's been exposed and you get 
poisoning from it.
    In the pipeline that you're talking about, if there is a 
shortage of people and you start bringing in people, which type 
of errors are you getting? Both. Is there a way for us to--and 
this gets to the education question, because if you are 
accelerating people coming into the system and you don't have a 
sufficient supply, the education component almost becomes on 
the oversight function, which isn't necessarily where you want 
it to be. And at the very least, we would hope that the 
oversight function would be kind of the ketchup-bottle type 
questions, not on whether you have turned the labeled around or 
whether you have mishandled the labels or got kind of 
fundamental errors in diagnosis or exposure of what was a lab 
test.
    And in trying to sort through, that's kind of what was 
behind my question of starting out with the supply question, 
because how we deal at the end of the day with the bigger 
questions here of how much is education, how much is 
enforcement, how common can you have the standards, how do we 
determine what's egregious is really an underlying assumption 
of your work force.
    Dr. O'Leary. Let me just comment. First of all, I would be 
surprised if this is strictly a salary issue. I will tell you, 
in the nursing arena, if you don't fix that working 
environment, you are not going to have any nurses. And that has 
been studied----
    Mr. Souder. Mandatory overtime.
    Dr. O'Leary. Right, mandatory overtime is a great case in 
point. So I think we need to get underneath this problem and 
figure out exactly what is going on. In the data base that we 
maintain, there are clear correlations between numbers of staff 
and competency of staff and the frequency of adverse events. 
There's no question about that. We don't have a lot of 
laboratory events in our data base, but just across the general 
hospital, if you don't have enough people and they are not 
properly trained, you get bad accidents.
    Dr. Soderman. The problem that exists, Mr. Chairman, is the 
problem between regulatory and individuals to do the testing. 
If we tighten the regulations very high, we drive individuals 
out of the process. If we implement very strict licensing 
requirements within the States and control of how those 
individuals are used, we reduce the manpower that's the work. 
We have to utilize the tools that we have.
    Yes, we need more medical technology schools, we need a 
greater investment by the Federal Government in those schools 
to allow that to develop to give us the personnel. In that 
interim, filling that pipeline is going to take years because 
it's taken years to close it, it's going to take years to open 
it. We have to find tools that we can use the individuals that 
are already in our laboratories to successfully do the testing 
and assure the competency that they have. I am not sure that 
can be--needs to be regulated more than it is regulated under 
the CLIA rules already.
    Mr. Souder. Mr. Beigel, do you have any comments?
    Mr. Beigel. I will speak maybe to the smaller laboratory 
environment.
    I think that it's a real different situation that's being 
posed in the small laboratories. And it may affect patient care 
in some degree. Certainly, laboratory manufacturers have 
recognized the fact that labor shortages are going to come down 
the pike. I think the issue that they have done, then, is 
created a lot more instrumentation that will go under the waive 
category, so the laboratory test that you may see now at your 
point of care sight at your doctor's office, you may need to go 
to a reference lab to get your test done. So I think it will 
eventually have that kind of effect. We are seeing that now. 
Certainly in the CLIA data, you will see that a percentage of 
waived testing has significantly increased over the last 10 
years, and I believe that is going to--that trend is going to 
continue, primarily driven by the fact there won't be qualified 
personnel in the physician office to be able to conduct the 
test appropriately.
    Mr. Souder. Mr. Cummings.
    Mr. Cummings. Dr. Soderman, initially I think CAP expressed 
some concerns about the unannounced visits. And apparently it 
sounds like there may have been a change of heart here. Can you 
explain to me, and I may be inaccurate, but what is your--how 
did you come to the conclusion that unannounced visits might 
not be a bad idea?
    Dr. Soderman. Our reservations were mostly how we were 
going to implement the process. It is not easy to take the 
number of labs that we accredit and assign teams to do that and 
turn it into an unannounced process. And I think our initial 
concerns were, how are we going to do this? Over this last 
year, we have worked at developing the policies in our 
accreditation program that will allow us to do that. With the 
implementation--final implementation in July, almost 100 
percent of the laboratories will be unannounced.
    Now, if you think about what it takes, it means that an 
accreditation team has to be put together, they have to be 
moved to that community. So you have to have hotels, motels, 
you have to let that team know what the expectations are at 
that site, and you have to assure that nobody on that team 
makes any contact whatsoever with the site that they are being 
inspected.
    Our unannounced process does not allow a 2-week notice, it 
does not allow a 1-hour notice, we walk in unannounced. And it 
is the orchestration of that process that has taken us this 
last year to try to get implemented. We believe we have it in 
place now. We've been doing some pilot unannounced 
accreditation inspections over this last year to test this out, 
and we are ready to march ahead.
    Mr. Cummings. The whole issue of whistleblowers, Mr. 
O'Leary, do you think whistleblowers are very important in your 
industry?
    Dr. O'Leary. They sure are. We actually have a 
whistleblower protection provision in our requirements.
    Mr. Cummings. And how does that work?
    Dr. O'Leary. Well, if there is any evidence of--this is 
what we call a condition of participating in the accreditation 
process. So it's as bad as falsifying information. So if 
somebody blows the whistle and there is evidence of 
retaliation, they can lose their accreditation just flat out on 
that basis.
    Mr. Cummings. And what about you, Dr. Soderman?
    Dr. Soderman. The college has the same policy, in fact. If 
there is any retaliation against a whistleblower, their 
accreditation is immediately pulled.
    We do believe in the whistleblower. We have developed 
posters, we have developed a route in which only two 
individuals at the college know the individual that calls in to 
assure that there is confidentiality maintained on this 
process.
    Mr. Cummings. So since you established--what about you, Mr. 
Beigel?
    Mr. Beigel. We take whistleblowers very seriously, always 
have. We consider it a complaint against the laboratory. Some 
of the complaints come in anonymously, and obviously we don't 
know who that individual is, it could be a patient, it could be 
an employee of the laboratory, it could be a current employee, 
it could be a past employee, don't know. If the complainant 
does give us their name, it's held in strict confidence, it's 
not shared with anyone at the lab, it's not shared when we 
report the complaint to CMS who the complainant is. We consider 
it exceptionally serious.
    Mr. Cummings. Dr. Soderman, you found that there's been an 
increase in complaints; is that right, since you did this 
signage thing?
    Dr. Soderman. Yes. Our complaint rate has doubled. And I 
suspect it's going to even go up and above that as we've made 
available to the laboratory technologists and technicians and 
pathologists and to the inspection teams themselves the ability 
to call in and express their concern about the accreditation 
process or a process that's taking place within the laboratory.
    Mr. Cummings. Because we are running out of time, I'm just 
going to ask one other thing.
    You know, CMS makes a big deal of this standardized--some 
kind of standard--I'm sorry, GAO--by which they can--all the 
labs are being held to--I know we've got the CLIA standard, but 
apparently they feel clearly that there is more needed to be 
done. How do you all feel about that, how do you see 
accomplishing that? Dr. O'Leary.
    Dr. O'Leary. Well, as I said in my testimony, we don't 
think it is practically accomplishable the way the GAO has 
framed it. We need a common terminology and understanding as to 
what a serious deficiency is, and that is the development of a 
taxonomy. Mr. Hamilton spoke to that, we are very supportive of 
that. We think it is doable, we think it answers the need.
    Mr. Cummings. You, Dr. Soderman?
    Dr. Soderman. I would agree with Dr. O'Leary. If we can get 
down the same terminology. As he expressed in his discussions 
early on, there are differences between how we approach 
inspection of laboratories, and it's important that differences 
be allowed. At least the base standards have to be similar. So 
we ought to be able to communicate when those base standards 
are failed.
    Mr. Cummings. Let me just--Mr. Beigel.
    Mr. Beigel. I absolutely agree.
    Mr. Cummings. One of the things that was very interesting 
in the Maryland General case is there was an issue as to 
machinery not working properly, and that the--and the 
allegations were that key people knew the machinery wasn't 
working properly and were not disclosing the information, not 
correcting the machine. And it seems to me that is the kind of 
thing that no matter how you look at it should send all kinds 
of red lights flashing, no matter how you all do what you do. 
Is that accurate? Would that be an accurate statement? In other 
words, if you knew that there was a machine not properly doing 
what it is supposed to do, knowing that--not knowing, but 
strong allegations that it probably was giving false readings, 
and that people who knew this were holding back information, I 
mean, would that kind of thing cause you all to say wait a 
minute, this is--if this is true, you've got a major problem?
    Dr. O'Leary. Maryland General's situation is a horrible 
situation. There were so many things wrong with that picture 
and so many lessons to be learned out of it. I mean, we have an 
unusual situation in this situation because we accredited the 
hospital in which the laboratory existed. So in that case, for 
us it was a failure in--it was a failure in communication. Now, 
we can blame people for not communicating with us, but we had 
an obligation to create the mechanisms to assure that 
communication happened. And we now have that in place, and we 
would not have had that in place without Maryland General.
    So I hope that we will harvest some important lessons out 
of the Maryland General situation because it was--you know, the 
communication problems were really horrible, probably the 
worst--I think the worst part of that whole situation.
    Dr. Soderman. One of the interesting aspects of the college 
program is that we send in, as part of the team, medical 
technologists and pathologists that are actively working in the 
laboratory. Our hope is that these individuals will interact 
and appeal to peer relationship and hopefully uncover problems 
like this. The real key in the inspection process is to get the 
inspector in front of and at the work bench, and not have their 
nose constantly in paperwork that may reflect past experiences 
or results of the test, but an active dialog with the 
individuals in that laboratory. Because there is a greater 
chance of in that dialog, they will share information that is 
critical to give us some idea of what the real performance is 
within that lab.
    So one of the keys that we have learned from Maryland 
General is you not only have to go in there and inspect the 
paperwork, but we recognize that there are hundreds of 
thousands of pieces of paper at any time you inspect a lab, we 
can't inspect every one. It is that personal one-to-one 
relationship that is the real key in successfully inspecting.
    Mr. Cummings. I have some followup questions. Thank you, 
Mr. Chairman. I will send them to you in writing.
    Mr. Souder. Thank you. And one of the challenges, just like 
we went through this machine question and the company then said 
the whole succession of employees didn't know how to operate 
the machine, given what you said about what is likely to be 
happening in the workplace, the bottom line is if you have a 
whole group of employees who say they can't work the machine, 
it's real irrelevant whether it's the machine or the employees 
because we are headed into that type of determination.
    Thank you for your testimony today. We look forward to 
continuing to work with you. And please stay in touch with us 
as any legislation may evolve and the regulations may evolve. 
With that, the subcommittee stands adjourned.
    [Whereupon, at 4:26 p.m., the subcommittee was adjourned.]

                                 
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