[Federal Register Volume 60, Number 166 (Monday, August 28, 1995)]
[Notices]
[Pages 44503-44507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21264]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[HSQ-230-N]


Medicare, Medicaid, and CLIA Programs; Clinical Laboratory 
Improvement Amendments of 1988 Exemption of Permit-Holding Laboratories 
in the State of New York

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

ACTION: Notice.

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SUMMARY: Section 353(p) of the Public Health Service Act provides for 
the exemption of laboratories from the requirements of the Clinical 
Laboratory Improvement Amendments of 1988 (CLIA) when the State in 
which they are located has requirements equal to or more stringent than 
those of CLIA. This notice grants exemption from CLIA requirements 
applicable only to laboratories located within the State of New York, 
including New York City, that possess a valid permit, as mandated under 
Part 58, and Article Five of Title V of the Public Health Law of the 
State of New York. This title is applicable to all laboratories except 
those operated by an individual, licensed physician, osteopath, 
dentist, podiatrist, or a physician's group practice which performs 
laboratory tests personally or through his or her employees, solely as 
an adjunct to the treatment of his or her own patients.

EFFECTIVE DATE: The provisions of this notice are effective on August 
28, 1995 to June 30, 2001.

FOR FURTHER INFORMATION CALL: Val Coppola, (410) 786-3406.

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 (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 program. Regulations 
implementing 

[[Page 44504]]
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 our discretion, 
acting on behalf of the Secretary of HHS.
    Part 493, subpart E, implements section 353(p) of the PHS Act. 
Section 493.513 provides that we may exempt from CLIA requirements, for 
a period not to exceed 6 years, 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.

II. Notice of Approval of CLIA Exemption to New York State 
Laboratories

    In this notice, we grant CLIA exemption for all specialties and 
subspecialties to all laboratories located in the State of New York, 
including New York City, that possess a valid permit to perform 
laboratory testing effective August 28, 1995 to June 30, 2001.

III. Evaluation of New York State (NYS) Laboratories

    The following describes the process we used to determine whether we 
should grant exemption from CLIA requirements to permit-holding NYS 
laboratories.

A. Requirements for Granting CLIA Exemption

    To determine whether we should grant a CLIA exemption to all 
laboratories within the State of New York, we conducted a detailed and 
in-depth comparison of NYS' requirements for its laboratories to those 
of CLIA and evaluated whether NYS' standards meet the requirements at 
Sec. 493.513. In summary, we evaluated whether NYS--
     Has laws in effect that provide for requirements that are 
equal to, or more stringent than, CLIA requirements;
     Has an agency that licenses or approves laboratories 
meeting State requirements that also meet or exceed CLIA requirements, 
and would, therefore, meet the condition level requirements of the CLIA 
regulations;
     Demonstrates that it has enforcement authority and 
administrative structures and resources adequate to enforce its 
laboratory requirements;
     Permits us or our agents to inspect laboratories within 
the State;
     Requires laboratories within the State to submit to 
inspections by us or our agents as a condition of licensure;
     Agrees to pay the cost of the validation program 
administered by us 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
     Takes appropriate enforcement action against laboratories 
found by us or our agents not to be in compliance with requirements 
comparable to condition level requirements.
    We also evaluated whether NYS laboratories meet the requirements 
and are approved in accordance with Sec. 493.515, Federal review of 
laboratory requirements of State laboratory programs.
    As specified in Sec. 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 our procedures;
--The State's enforcement procedures for laboratories found to be out 
of compliance with its requirements; and
--The ability of the State to provide us 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 we 
determine to be necessary for validation and assessment of the State's 
inspection process requirements;

     The State's agreement to--

--Notify us 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 us 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 our 
withdrawal of the exemption;
--Provide us 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 we find 
not to be in compliance with requirements comparable to condition level 
requirements and report these enforcement actions to us;
--Notify us of all newly licensed laboratories, including the 
specialties and subspecialties, for which any laboratory performs 
testing, within 30 days; and
--Provide to us, as requested, inspection schedules for validation 
purposes.

B. Evaluation of the New York State Request for CLIA Exemption

    The State of New York has formally applied to us for an exemption 
from the CLIA requirements for the permit-holding laboratories located 
within the State, including those in New York City. This exemption does 
not apply to laboratories outside of the State of New York that possess 
a NYS permit to perform laboratory testing on specimens from NYS 
residents. In addition, this exemption does not apply to laboratories 
operated by an individual, licensed physician, osteopath, dentist, 
podiatrist, or a physician's group practice which performs laboratory 
tests personally or through his or her employees, solely as an adjunct 
to the treatment of his or her own patients.
    We have evaluated the NYS CLIA exemption application and all 
subsequent submissions for equivalency against the three major 
categories of CLIA rules: The implementing regulations, the enforcement 
regulations, and the deeming/exemption requirements. We found the NYS 
Clinical Laboratory Evaluation Program, which issues, implements, and 
enforces regulations specified in Part 58 and Article Five of Title V 
of the Public Health Law of the State of New York, to administer a 
program that is more stringent than the CLIA program, taken as a whole. 
Rather than enumerating every more stringent item of the NYS 
requirements, we have included in this notice the more significant and 
exemplary areas of stringency. We performed an indepth evaluation of 
the NYS application to verify the State's assurance of compliance with 
the following subparts of part 493.
    Our evaluation identified more stringent areas of the NYS 
requirements that apply to the laboratory as a whole. Rather than 
include them in the appropriate subparts multiple times, we list them 
here: 

[[Page 44505]]

     NYS has extensive requirements involving laboratory 
safety. They include detailed standards for biosafety, chemical safety, 
radiological safety and regulated medical waste.
     NYS permit holding laboratories that use a laboratory 
information system (LIS) for any aspect of specimen testing, reporting, 
and/or record keeping must adhere to all applicable provisions of part 
58 and including, but not limited to, the following:

--Test results are reported, archived, and maintained in an accurate 
and reliable manner.
--Performance and documentation of system maintenance required by the 
LIS manufacturer, or established and validated by the laboratory.
--All devices are maintained to ensure accurate, clear, and 
interference-free report transmissions.
--New or revised software and/or hardware is validated prior to use.
--Written back-up procedures are available for test reporting and 
retrieval when the LIS is out of service.
--The LIS is capable of generating an exact duplicate of a final test 
report and any preliminary report.
--LIS data and programs are protected from unauthorized use.

     NYS regulations provide requirements for forensic testing 
to include PT when applicable.
     NYS regulations list requirements covering paternity 
testing as well as workplace drug testing.

Subpart E, Accreditation by a Private, Nonprofit Accreditation 
Organization or Exemption Under An Approved State Laboratory Program

    HCFA and the Centers for Disease Control and Prevention (CDC) staff 
reviewers have examined the NYS application and all subsequent 
submissions against the exemption requirements a State must meet in 
order to be granted CLIA exempt status (Sec. 493.513, and the 
applicable parts of Secs. 493.515, 493.517, 493.519, and 493.521). The 
State has complied with the applicable CLIA requirements for exemption 
under this subpart.
Subpart H, Participation in Proficiency Testing for Laboratories 
Performing Tests of Moderate Complexity, (Including the Subcategory), 
High Complexity, or Any Combination of These Tests

    The statute and implementing regulations of NYS for PT are more 
stringent than those of CLIA. Permit-holding laboratories are required 
by NYS statute to participate in the NYS PT program for all testing 
performed, provided it is offered by the program. Laboratories must 
enroll and participate in PT for all testing regardless of the CLIA 
categorization of waived, moderate, or high complexity. The PT testing 
available through the NYS PT program is much more extensive than the 
list of tests included in the CLIA regulations. The NYS program offers 
many more analytes, as well as additional specialties and 
subspecialties beyond those in the CLIA requirements.
    The NYS PT program, which we have approved under CLIA, meets the 
requirements of subpart I, Proficiency Testing Programs for Tests of 
Moderate or High Complexity or Both, and in some areas, exceeds the 
CLIA PT program requirements. The passing scores are higher than those 
of CLIA for human immunodeficiency virus testing and for antibody 
detection and antibody identification. Because the PT program is a part 
of the CLIA exemption application, the State may include PT 
requirements that are equal to or more stringent than those of CLIA.
    PT performance is closely monitored by the NYS Clinical Laboratory 
Evaluation Program. If a laboratory fails a particular PT event, the 
laboratory is notified in writing. If a laboratory fails two 
consecutive or two of three PT events (unsuccessful performance), the 
laboratory must stop testing for the unsuccessful category and/or 
analyte.
    Laboratories that wish to add a category or a test to a permit must 
successfully complete two consecutive PT testing events prior to the 
initiation of patient testing. New laboratories must also participate 
successfully in two events before testing patient specimens. The CLIA 
regulations do not contain such requirements.

Subpart J, Patient Test Management for Moderate Complexity (Including 
the Subcategory), High Complexity, or Any Combination of These Tests

    The NYS requirements for patient test management are more stringent 
than those of CLIA. Areas of stringency that exceed CLIA requirements 
are:
     Oral test requests are followed by a written request 
within 48 hours. If not received in this timeframe, the requestor is 
notified and the written authorization received within 30 days.
     Retention records for test requests, accession records and 
laboratory reports is 7 years; however, pathology reports must be 
retained for 20 years, and cytogenetics and genetic testing reports 
must be held for 25 years.
     State permit-holding laboratories may only refer specimens 
for testing to other laboratories that hold applicable State permits.
     A specimen received by a laboratory must not be tested or 
results reported if--

--It is unsatisfactory or inappropriate for the test requested;
--It has been collected, labeled, preserved, stored, transported or 
otherwise handled in a manner that caused it to become unsatisfactory 
or unreliable as a test specimen;
--It is labile and the time lapse between collection and receipt is 
such that it may no longer be reliable;
--The date and hour of collection, when required by the method or 
procedure, are not furnished; and
--The test is investigational and the laboratory does not have 
authorization from both the ordering individual and the patient 
indicating their awareness of the test limitations and investigational 
nature before the test is performed;

     Specific confidentiality protocols are required that must 
include--
--A definition of confidential information and prohibition of 
unauthorized access;
--The responsibilities of the director/assistant director to determine 
appropriate release and access to information;
--The responsibilities of employees;
--The contents of required in-service training programs;
--A mechanism for documenting attendance and attestation statements 
from each employee who is authorized to access confidential 
information; and
--The consequences of violation of confidentiality requirements which 
may include criminal prosecution.

     Laboratories must not report the results of a test on a 
specimen unless the test request information listed in the regulations 
has been obtained; and
     Specific requirements are listed for patient service 
centers (specimen collection).

Subpart K, Quality Control for Tests of Moderate Complexity (Including 
the Subcategory), High Complexity, or Any Combination of These Tests

    The NYS requirements on quality control (QC) are more stringent 
than CLIA requirements as all testing including waived tests under CLIA 
must meet all QC requirements for high complexity testing. NYS has 
never allowed a phase-in for any of its QC requirements.
    NYS permitted laboratories must perform method validation before a 
test procedure is placed into routine use and 

[[Page 44506]]
maintain documentation of the validations of all procedures while they 
are in use. The linear reportable range must be established or verified 
for all applicable procedures. Three levels of controls must be 
employed for quantitative chemistry testing if calibration is not 
performed or validated within a run of more than 24 hours. Trilevel 
controls are required for quantitative immunology testing. HIV testing 
must be a repeatable positive and a confirmatory test performed by an 
appropriately permitted NYS laboratory before reporting a positive 
result.
    The items listed above are more stringent requirements and 
exemplify the QC contents of the NYS program which, taken as a whole, 
are more stringent than the QC requirements of CLIA.

Subpart M, Personnel for Moderate Complexity (Including the 
Subcategory) and High Complexity Testing

    The personnel requirements of NYS are more stringent than those of 
CLIA, taken as a whole. CLIA allows lesser qualified individuals to 
direct a laboratory performing moderate complexity tests, compared to 
the qualification requirements for individuals directing a laboratory 
in which high complexity testing is performed. CLIA has no requirements 
for an individual or laboratory engaged in waived test performance. NYS 
treats all testing in a manner similar to CLIA's high complexity tests. 
Therefore, NYS does not allow a laboratory to be directed by 
individuals possessing appropriate qualifications for CLIA's moderate 
test performance, nor does it allow a laboratory to be directed by 
individuals possessing the qualifications for waived test performance.
    Individuals who wish to direct a permit holding laboratory must 
obtain a Certificate of Qualification through the Clinical Laboratory 
Evaluation Program. They must formally apply and submit documentation 
of professional and academic expertise in all the specialties and 
subspecialties for which the laboratory conducts testing and holds a 
NYS permit. The documentation is evaluated and approved by the Clinical 
Laboratory Evaluation Program professional staff, in accordance with 
the NYS Public Health law and regulations.

Subpart P, Quality Assurance for Moderate Complexity (Including the 
Subcategory) or High Complexity Testing, or Any Combination of These 
Tests

    The applicable standards of the NYS regulations have been revised 
and are equivalent to the CLIA requirements at Secs. 493.1701 through 
493.1721 concerning quality assurance. NYS does, however, require 
laboratories to evaluate and define the relationship between the same 
test by different methods or different instrument three times per year. 
CLIA requires this evaluation twice a year.

Subpart Q, Inspection

    The NYS permit-holding laboratories are routinely inspected on-site 
biennially. Routine inspections and complaint inspections are performed 
on an unannounced basis. Inspection for a laboratory first entering the 
program is scheduled after the facility has notified the Clinical 
Laboratory Evaluation Program that it is prepared to begin patient 
testing. A new laboratory will not receive a NYS permit until an on-
site inspection is performed and all identified deficiencies have been 
corrected. This requirement and the use of unannounced compliance 
inspections are more stringent than those of CLIA. We conduct 
compliance inspections to monitor the correction of deficiencies and 
ensure that laboratories continue to meet State standards.
    NYS also uses a protocol similar to that of HCFA for complaint 
investigations involving laboratories performing cytopathology. This 
inspection focuses on all cytology requirements and, if indicated, 
retrospective rescreens of previously read cytology cases are 
performed.

Subpart R, Enforcement Procedures

    We have reviewed documentation of the State's enforcement 
authority, its administrative structure and the resources used to 
enforce its standards for completeness. The State appropriately applies 
limitations and revocations of its permits for laboratories as well as 
intermediate sanctions such as on-site monitoring of laboratories and 
imposition of civil money penalties.
    The State has provided us with the mechanism it currently uses to 
monitor the PT performance of its laboratories. The action NYS takes 
for unsuccessful PT participation is more stringent than those of 
CLIA's enforcement policy. A permitted laboratory must suspend testing 
for the unsuccessful analyte or category until it successfully 
remediates the problem area. The State has provided appropriate 
documentation demonstrating that its enforcement policies and 
procedures are equivalent to those of CLIA.

IV. Federal Validation Inspections and Continuing Oversight

    We will conduct the Federal validation inspections of CLIA-exempt 
laboratories, as specified in Sec. 493.517, on a representative sample 
basis as well as in response to substantial allegations of 
noncompliance (complaint inspections). The outcome of those validation 
inspections will be our principal means for verifying the 
appropriateness of the exemption given to laboratories in NYS. This 
Federal monitoring is an on-going process. The State of New York will 
provide us with survey findings for each laboratory selected for 
validation.

V. Removal of Approval of New York State Exemption

    We will remove the CLIA exemption of laboratories located in NYS 
that possess a valid permit if we determine the outcome and 
comparability review of validation inspections are not acceptable, as 
described under Sec. 493.521, or if the State fails to pay the required 
fee every 2 years as required under Sec. 493.646.
VI. Laboratory Data

    In accordance with Sec. 493.513(d)(2)(iii), NYS will provide us 
with changes to a laboratory's specialties or subspecialties based on 
the State's survey and with changes in a laboratory's permit status.

VII. Required Administrative Actions

    CLIA is intended to be generally a 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 that are covered by the exemption. We will 
collect the State's share of the costs associated with CLIA from the 
State. Section 493.645 specifies that HHS will assess fees that a State 
must pay for the following:
     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 

[[Page 44507]]
will bill the State on an semi-annual basis. We anticipate that most of 
these surveys will be referred to the State and that there will be 
little Federal activity in this area.
     The State's proportionate share of general overhead costs 
for the items and services it benefits from and only for those paid for 
out of registration or certificate fees we collected.
    In order to estimate the State's proportionate share of the general 
overhead costs, we determined the ratio of laboratories in the State to 
the total number of laboratories nationally. In that the general 
overhead costs apply equally to all laboratories, we determined the 
cumulative overhead costs that should be borne by the State of New 
York.
    The State of New York has agreed to pay us its 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.
    In accordance with the provisions of Executive Order 12866, this 
notice was not reviewed by the Office of Management and Budget.

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

    Dated: August 2, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 95-21264 Filed 8-25-95; 8:45 am]
BILLING CODE 4120-01-P