[Federal Register Volume 59, Number 246 (Friday, December 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31513]


[[Page Unknown]]

[Federal Register: December 23, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HSQ-221-N]

 

Medicare, Medicaid, and CLIA Programs; Clinical Laboratory 
Improvement Amendments of 1988 Continuance of Exemption of Laboratories 
Licensed by the State of Washington

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice.

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SUMMARY: This notice announces that laboratories located in the State 
of Washington that possess a valid license under the Medical Test Site 
Licensure Law, Chapter 70.40 of the Revised Code of Washington (RCW), 
continue to be exempt from the requirements of the Clinical Laboratory 
Improvement Amendments of 1988 (CLIA) until October 6, 1996. This 
represents a continuation of the initial exemption announced on October 
6, 1993 (58 FR 52112) for an additional 2 years.

DATES: The continuance granted by this notice is effective until 
October 6, 1996.

FOR FURTHER INFORMATION CONTACT: Val Coppola, (410) 597-5892.

SUPPLEMENTARY INFORMATION:

I. Background and Legislative Authority

    Section 353 of the Public Health Service Act (PHS Act), as amended 
by the Clinical Laboratory Improvement Amendments of 1988 (CLIA), 
requires any laboratory that performs tests on human specimens to meet 
requirements established by the Department of Health and Human Services 
(HHS). Under the provisions of the sentence following section 
1861(s)(14) and paragraph 1861(s)(16) of the Social Security Act, any 
laboratory that also wants to be paid for services furnished to 
Medicare beneficiaries must meet the requirements of section 353 of the 
PHS Act. Subject to specified exceptions, laboratories must have a 
current and valid CLIA certificate to test human specimens and to be 
eligible for payment from the Medicare or Medicaid programs. 
Regulations implementing section 353 of the PHS Act are contained in 42 
CFR part 493.
    Section 353(p) of the PHS Act provides for the exemption of 
laboratories from CLIA requirements in a State that applies 
requirements that are equal to or more stringent than those of CLIA. 
The statute does not specifically require the promulgation of criteria 
for the exemption of laboratories in a State. The decision to grant 
CLIA exemption to laboratories within a State is at the discretion of 
HCFA, acting on behalf of the Secretary of HHS.
    42 CFR part 493 subpart E implements section 353(p) of the PHS Act. 
Section 493.513 provides that HCFA may exempt from CLIA requirements, 
for a period not to exceed 6 years, all State licensed or approved 
laboratories in a State if the State meets specified conditions. 
Section 493.513(k) provides that we will publish a notice in the 
Federal Register announcing the names of States whose laboratories are 
exempt from meeting the requirements of part 493. On October 6, 1993, 
we published a notice in the Federal Register announcing that the State 
of Washington had applied for exemption of its laboratories from CLIA 
requirements; that the evaluation of this application demonstrated that 
all requirements for exemption were met; and that Washington was 
granted an exemption.

II. Requirements for Granting CLIA Exemption

    In order to determine whether we should grant or continue an 
existing CLIA exemption to laboratories within a State, we conduct a 
detailed and in-depth comparison of State and CLIA requirements to 
determine whether the State meets the requirements at Sec. 493.513. In 
summary, the State must:
     Have laws in effect that provide for requirements that are 
equal to or more stringent than CLIA requirements;
     Have an agency that licenses or approves laboratories that 
meet State requirements which meet or exceed CLIA requirements, and, 
therefore, meet the condition level requirements of the CLIA 
regulations;
     Meet the requirements and be approved in accordance with 
Sec. 493.515, Federal review of laboratory requirements of State 
laboratory programs;
     Demonstrate that it has enforcement authority and 
administrative structures and resources adequate to enforce its 
laboratory requirements;
     Permit HCFA or HCFA agents to inspect laboratories within 
the State;
     Require laboratories within the State to submit to 
inspections by HCFA or HCFA agents as a condition of licensure;
     Agree to pay the cost of the validation program 
administered by HCFA and the cost of the State's pro rata share of the 
general overhead to develop and implement CLIA as specified in 
Secs. 493.645(b) and 493.646; and
     Take appropriate enforcement action against laboratories 
found by HCFA or HCFA agents not to be in compliance with requirements 
comparable to condition level requirements.
    As specified in our regulations at 42 CFR 493.515, our review of a 
State laboratory program includes (but is not necessarily limited to) 
an evaluation of:
     Whether the State's requirements for laboratories are 
equivalent to or more stringent than the condition level requirements;
     The State's inspection process requirements to determine:
    + The comparability of the full inspection and complaint inspection 
procedures to those of HCFA;
    + The State's enforcement procedures for laboratories found to be 
out of compliance with its requirements; and
    + The ability of the State to provide HCFA with electronic data and 
reports with the adverse or corrective actions resulting from 
proficiency testing (PT) results that constitute unsuccessful 
participation in HCFA-approved PT programs and with other data HCFA 
determines to be necessary for validation and assessment of the State's 
inspection process requirements;
     The State's agreement with HCFA to ensure that the 
agreement obligates the State to:
    + Notify HCFA within 30 days of the action taken against any CLIA-
exempt laboratory that has had its licensure or approval withdrawn or 
revoked or been in any way sanctioned;
    + Notify HCFA within 10 days of any deficiency identified in a 
CLIA-exempt laboratory in cases when the deficiency poses an immediate 
jeopardy to the laboratory's patients or a hazard to the general 
public;
    + Notify each laboratory licensed by the State within 10 days of 
HCFA's withdrawal of the exemption;
    + Provide HCFA with written notification of any changes in its 
licensure (or approval) and inspection requirements;
    + Disclose any laboratory's PT results in accordance with a State's 
confidentiality requirements;
    + Take the appropriate enforcement action against laboratories 
found by HCFA not to be in compliance with requirements comparable to 
condition level requirements and report these enforcement actions to 
HCFA;
    + Notify HCFA of all newly licensed laboratories, including the 
specialties and subspecialties for which any laboratory performs 
testing, within 30 days; and
    + Provide HCFA, as requested, inspection schedules for validation 
purposes.

III. Evaluation of the Washington Request for Continued CLIA Exemption

    Washington has applied to HCFA for continued exemption of its 
laboratories from CLIA requirements.
    As with the initial application, we evaluated the request for 
continuation of the Washington CLIA exemption for equivalency against 
the three major categories of CLIA rules: The implementing regulations, 
the enforcement regulations, and the deeming/exemption requirements.
    We evaluated the application to verify Washington's assurance of 
compliance with the following subparts of part 493: Subpart A, General 
Provisions; Subpart E, Accreditation by a Private, Nonprofit 
Accreditation Organization or Exemption Under An Approved State 
Laboratory Program; Subpart H, Participation in Proficiency Testing for 
Laboratories Performing Tests of Moderate or High Complexity, or Both; 
Subpart M, Personnel for Moderate and High Complexity Testing; Subpart 
P, Quality Assurance for Moderate or High Complexity Testing, or Both; 
Subpart Q, Inspection; and Subpart R, Enforcement Procedures.
    Washington was found to continue to meet the requirements of 
Subparts E, H, M, P, Q, and R, exactly as they had been described in 
the October 6, 1993 Federal Register notice. We also evaluated 
Washington's compliance with Subpart A, as described below.

Subpart A, General Provisions

    Washington has modified a portion of its requirements which deal 
with laboratories that perform certain moderate complexity microscopic 
examinations. Due to the labile nature of the material examined, the 
time required to perform routine inspections of this testing is less 
than the time required to inspect most other moderate complexity 
procedures. The State has developed this subdivision of moderate 
complexity testing in order to reduce the licensure charges to the 
laboratories that perform only waived tests and one or more of the 
following:
     Wet mounts;
     Potassium hydroxide preparations;
     Pinworm examinations;
     Fern tests;
     Post-coital examinations, qualitative;
     Nasal smears for eosinophiles;
     Post vasectomy semen analysis, qualitative; and
     Any other tests classified as physician-performed 
microscopy procedures under Federal law and regulation. All regulatory 
requirements for moderate complexity testing apply to the laboratories 
performing the tests within this subcategory. These tests satisfy the 
requirements of Subpart A of 42 CFR 493.

IV. Validation Inspections

    The Federal validation inspections of CLIA-exempt laboratories, as 
specified in Sec. 493.517, were conducted on a representative sample 
basis as well as in response to substantial allegations of 
noncompliance (complaint inspections). The outcome of those validation 
inspections has been and will continue to be HCFA's principal tool for 
verifying that the laboratories located in and licensed by the State 
are in compliance with CLIA requirements.
    HCFA staff of the Laboratory Survey Section, Division of Health 
Standards and Quality in the HCFA Regional Office in Seattle, 
Washington have conducted validation inspections of approximately 7 
percent of the laboratories inspected by the Washington Office of 
Laboratory Quality Assurance (LQA). The validation inspections were of 
the concurrent type; i.e., HCFA inspectors accompanied Washington's 
inspectors, each inspecting against his or her agency's respective 
regulations. Analysis of the validation data revealed no significant 
differences between the State and Federal findings. The Washington 
inspection process covers all appropriate CLIA conditions and the State 
laboratory licensure requirements were found to meet or exceed CLIA 
requirements. The HCFA survey staff found the State inspectors highly 
skilled and qualified. The LQA is maintaining its workload at the 
proper level to assure that all laboratories within the State will be 
inspected in a 24 month cycle. All parameters monitored by HCFA staff 
to date indicate that the LQA is meeting all requirements under the 
CLIA exemption. This Federal monitoring will continue as an on-going 
process.
    The CLIA exemption of laboratories located in and licensed by 
Washington may be removed if we determine the outcome and comparability 
review of validation inspections are not acceptable as described under 
Sec. 493.521 or if Washington fails to pay the required fee every 2 
years as required under Sec. 493.646.

V. Laboratory Data

    In accordance with Sec. 493.513(d)(2)(iii), Washington will 
continue to agree to provide us with changes to a laboratory's 
specialties or subspecialties based on the State's survey. Washington 
also will provide us with changes in a laboratory's certification 
status, such as a change from a regular certificate to a certificate of 
waiver.

VI. Required Administrative Actions

    CLIA is intended to be a totally user-fee funded program. The 
registration fee paid by the laboratories is intended to cover the cost 
of the development and administration of the program. However, when a 
State's application for exemption is approved, we may not charge a fee 
to laboratories in the State. The State's share of the costs associated 
with CLIA must be collected from the State. 42 CFR 493.645 specifies 
that HHS will assess fees such that the costs of administering the CLIA 
program will be shared by all States including those that are CLIA 
exempt.
    Washington must pay for:
     Costs of Federal inspection of laboratories in the State 
to verify that standards are enforced in an appropriate manner. The 
average cost per validation survey nationally is multiplied by the 
number of surveys that will be conducted.
     Costs incurred for Federal investigations and surveys 
triggered by complaints that are substantiated. We will bill Washington 
on an semi-annual basis.
     Washington's proportionate share of the costs associated 
with establishing, maintaining, and improving the CLIA computer system, 
a portion of those services from which Washington received direct 
benefit or contributed to the CLIA program in the State. Thus, 
Washington is being charged for a portion of HCFA's direct and indirect 
costs as well as a portion of the costs incurred in Federal fiscal 
years (FYs) 95-96 by the Centers for Disease Control and Prevention.
    In order to estimate Washington's proportionate share of the 
general overhead costs to develop and implement CLIA we determined the 
ratio of laboratories in the State to the total number of laboratories 
nationally. Approximately 1.6 percent of the registered laboratories 
are in Washington. We determined that 1.6 percent of the applicable CDC 
and HCFA costs for FY 95-96 should be borne by Washington.
    Washington has agreed to pay us the State's pro rata share of the 
overhead costs and anticipated costs of actual validation and complaint 
investigation surveys. A final reconciliation for all laboratories and 
all expenses will be made. We will reimburse the State for any 
overpayment or bill it for any balance.

VII. Approval

    HCFA grants continuance of the CLIA exemption for all specialties 
and subspecialties to all laboratories located in and licensed by the 
State of Washington effective December 23, 1994, to October 6, 1996.

VIII. Regulatory Impact Statement

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless the Secretary certifies that a notice such as this 
would not have a significant economic impact on a substantial number of 
small entities. For purposes of the RFA, we consider all laboratories 
to be small entities.
    Also, section 1102(b) of the Act requires the Secretary to prepare 
a regulatory impact analysis for any notice that may have a significant 
impact on the operations of a substantial number of small rural 
hospitals. Such an analysis must conform to the provisions of section 
604 of the RFA. For purposes of section 1102(b) of the Act, we consider 
a small rural hospital as a hospital that is located outside of a 
Metropolitan Statistical Area and has fewer than 50 beds.
    This notice announces the continuance of the exemption of 
laboratories licensed by the State of Washington from the requirements 
of the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The 
State has established that the quality of laboratory services continues 
to meet standards equivalent to or more stringent than those of the 
CLIA program and also has established that it has a comparable program 
to monitor and evaluate compliance with the standards. The effect of 
the continued exemption from CLIA requirements is that laboratories 
will remain under State, rather than Federal, regulation, with no 
discernible difference in the operations of the programs. Consequently, 
we anticipate that our continuation of Washington's CLIA exemption will 
not affect the laboratories or the quality and availability of services 
provided.
    Therefore, we have determined, and the Secretary certifies, that 
this notice will not result in a significant impact on a substantial 
number of small entities and will not have a significant effect on the 
operations of a substantial number of small rural hospitals. Therefore, 
we are not preparing analyses for either the RFA or section 1102(b) of 
the Act.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

    Authority: Section 353p of the Public Health Service Act (42 
U.S.C. 263a).

    Dated: October 12, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 94-31513 Filed 12-22-94; 8:45 am]
BILLING CODE 4120-01-P