[Federal Register Volume 62, Number 126 (Tuesday, July 1, 1997)]
[Notices]
[Pages 35513-35516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17193]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration
[HSQ-243-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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[[Page 35514]]

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 April 30, 2001.

DATES: The continuance granted by this notice is effective until April 
30, 2001.

FOR FURTHER INFORMATION CONTACT: Val Coppola, (410) 786-3531.

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.
    Various regulations in 42 CFR part 493 subpart E implement 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, 
describing the basis for granting the exemption, describing how the 
laboratory requirements are equal to or more stringent than those of 
CLIA, and specifing a term of approval not to exceed 6 years. On 
December 23, 1994 (59 FR 66314), 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 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 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.
    We evaluated the request for continuation of the Washington CLIA 
exemption for equivalency against the three major categories of CLIA 
rules: the

[[Page 35515]]

implementing regulations, the enforcement regulations, and the deeming/
exemption requirements.
    We evaluated the application to verify Washington's assurance of 
continued 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 Complexity (Including the 
Subcategory), High Complexity, or Any Combination of These Tests; 
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 A, E, H, M, P, Q, and R.

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 any 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 a representative 
sample (approximately 5 percent) of the laboratories inspected by the 
Washington Office of Laboratory Quality Assurance (LQA). The validation 
inspections were of the concurrent type; that is, HCFA surveyors 
accompanied Washington's surveyors, 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 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. Section 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 Federal hourly rate is multiplied by the total hours required 
to perform Federal validation surveys within the State.
     Costs incurred for Federal investigations and surveys 
triggered by complaints that are substantiated. We will bill Washington 
on a semiannual 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 by the Centers for 
Disease Control and Prevention (CDC).
    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 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 July 1, 1997 to April 30, 2001.

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

[[Page 35516]]

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

    Dated: May 30, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 97-17193 Filed 6-30-97; 8:45 am]
BILLING CODE 4120-01-P