[Federal Register Volume 70, Number 82 (Friday, April 29, 2005)]
[Notices]
[Pages 22317-22320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8286]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2207-N]


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

AGENCY: Centers for Medicare & Medicaid Services (CMS), 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 70.42 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, 2007.

DATES: The continuance granted by this notice is effective until April 
30, 2007.

FOR FURTHER INFORMATION CONTACT: Sandra Farragut, (410) 786-3531.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 353 of the Public Health Service Act (PHS Act), as amended 
by the Clinical Laboratory Improvement Amendments of 1988, Pub. L. 100-
578 (CLIA), provides that no laboratory may perform tests on human 
specimens unless it has a certificate to perform these tests issued by 
the Secretary of the Department of Health and Human Services (HHS). 
Under section 1861(s) of the Social Security Act, the Medicare program 
will pay for laboratory services only if the laboratory has a CLIA 
certificate. Section 1902(a)(9)(C) of the Social Security Act requires 
that State Medicaid plans pay only for laboratory services furnished by 
CLIA-certified laboratories. Thus, although subject to specified 
exemptions, laboratories generally 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.
    Regulations in 42 CFR part 493 subpart E implement section 353(p) 
of

[[Page 22318]]

the PHS Act. Sections 493.551 and 493.553 provide that we 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 Licensure 
Program meets specified conditions. Section 493.559 provides that we 
will publish a notice in the Federal Register when we grant exemption 
to a State Laboratory licensure program. It also provides that the 
notice will include the following: the basis for granting the 
exemption, a description of how the laboratory requirements are equal 
to or more stringent than those of CLIA, and the term of approval, not 
to exceed 6 years.
    On July 1, 1997 (62 FR 35513), 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 the Washington State Laboratory licensure 
program was granted an approval of CLIA exemption for laboratories in 
its program.

II. Requirements for Granting CLIA Exemption

    In order to determine whether we should grant or continue an 
approval of an existing CLIA exemption to laboratories licensed by a 
State, we conduct a detailed and in-depth comparison of State licensure 
program and CLIA requirements to determine whether the State program 
meets the requirements at Sec.  493.551 and Sec.  493.553. In summary, 
the State must--
     Have laws in effect that provide for requirements that are 
equal to or more stringent than CLIA requirements;
     Have a State licensure program that licenses or approves 
laboratories that meet State requirements that 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.  493.555 and Sec.  493.557(b);
     Demonstrate that it has enforcement authority and 
administrative structures and resources adequate to enforce its 
laboratory requirements;
     Permit CMS or CMS agents to inspect laboratories within 
the State;
     Require laboratories within the State to submit to 
inspections by CMS or CMS agents as a condition of licensure;
     Agree to pay the cost of the validation program 
administered by CMS and the cost of the State's pro rata share of the 
general overhead to develop and implement CLIA as specified in Sec.  
493.645(a), Sec.  493.646(b), and Sec.  493.557(b); and
     Take appropriate enforcement action against laboratories 
found by CMS or CMS agents not to be in compliance with requirements 
comparable to condition-level requirements, as specified in Sec.  
493.557(b).
    As specified in our regulations at Sec.  493.555 and Sec.  
493.557(b), 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 
equal to or more stringent than the CLIA condition-level requirements;
     The State's inspection process requirements to determine--

--The comparability of the full inspection and complaint inspection 
procedures to those of CMS;
--The State's enforcement procedures for laboratories found to be out 
of compliance with its requirements; and
--The ability of the State to provide CMS with electronic data and 
reports with the adverse or corrective actions resulting from 
proficiency testing (PT) results that constitute unsuccessful 
participation in CMS-approved PT programs and with other data we 
determine to be necessary for validation review and assessment of the 
State's inspection process requirements;

     The State's agreement with us to ensure that the agreement 
obligates the State to--

--Notify CMS 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 CMS 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 CMS' 
withdrawal of the exemption;
--Provide CMS with written notification of any changes in its licensure 
(or approval) and inspection requirements;
--Disclose to CMS or a CMS agent any laboratory's PT results in 
accordance with a State's confidentiality requirements;
--Take the appropriate enforcement action against laboratories found by 
CMS not to be in compliance with requirements comparable to CLIA 
condition-level requirements and report these enforcement actions to 
CMS;
--Notify CMS of all newly licensed laboratories, including changes in 
the specialties and subspecialties for which any laboratory performs 
testing, within 30 days; and
--Provide CMS, as requested, inspection schedules for validation 
purposes.

III. Evaluation of Washington's Request for Continued CLIA Exemption of 
Its Laboratories

    Washington has applied for continued exemption of its laboratories 
from CLIA program requirements.
    We evaluated the application to verify Washington's assurance of 
continued compliance with the following subparts of part 493: Subpart 
H, Participation in Proficiency Testing for Laboratories Performing 
Nonwaived Testing; Subpart J, Facility Administration for Nonwaived 
Testing; Subpart K, Quality Systems for Nonwaived Testing, Subpart M, 
Personnel for Nonwaived Testing; Subpart Q, Inspection; and Subpart R, 
Enforcement Procedures.
    The Washington State Laboratory Licensure Program was found to 
continue to meet the requirements of subparts H, J, K, M, Q, and R.
    We also verified the State of Washington's assurance that it 
requires the laboratories it licenses to meet the requirements for the 
following subparts of part 493 as explained below:

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

    The State of Washington submitted a comparison of its laboratory 
licensure requirements with comparable CLIA condition-level 
requirements (that is, a crosswalk); a description of its inspection 
process; proficiency testing monitoring process; its data management 
and analysis system; its investigative and complaint response 
procedures; its current list of licensed laboratories; and its policy 
regarding announcement and unannouncement of inspections. We have 
determined that the State of Washington has complied with the 
requirements under subpart E of part 493 and that the requirements of 
its laboratory licensure program are equal to the condition-level 
requirements in subparts H, J, K, M, Q, and R of part 493.

Subpart H--Participation in Proficiency Testing for Laboratories 
Performing Nonwaived Testing

    The Washington State program's requirements are equal to the CLIA

[[Page 22319]]

requirements at Sec.  493.801 through Sec.  493.865.

Subpart J--Facility Administration for Nonwaived Testing

    The Washington State Program's requirements are equal to the CLIA 
requirements at Sec.  493.1100 through Sec.  493.1105.

Subpart K--Quality System for Nonwaived Testing

    The Quality Control (QC) requirements of the Washington State 
Laboratory Licensure Program have been evaluated against the 
requirements of the CLIA regulations. The Washington State Program has 
modified its survey process and made revisions to its requirements 
encompassing general QC as well as specialty and subspecialty QC 
requirements in order to reflect the new QC requirements of the CLIA 
regulations. As such, we have determined that the Washington State 
Program's requirements are equal to the requirements of the CLIA 
regulations.

Subpart M--Personnel for Nonwaived Testing

    The Washington State Program requirements are equal to the CLIA 
requirements at Sec.  493.1403 through Sec.  493.1495 for laboratories 
that perform moderate and high complexity testing.

Subpart Q--Inspections

    The Washington State Laboratory Licensure Program requires 
laboratories to comply with the inspection requirements of Sec.  
493.1773 and Sec.  493.1780 of this subpart, as applicable. Thus, we 
have determined that the Washington State Program's requirements are 
equal to the requirements of the CLIA regulations.

Subpart R--Enforcement Procedures

    The Washington State Program meets the requirements of subpart R to 
the extent that subpart R applies to State laboratory licensure 
programs. Accordingly, we have determined that the Washington State 
Program's enforcement and appeal policies are equal to the requirements 
of the CLIA regulations.

IV. Validation Inspections

    The Federal validation inspections of CLIA-exempt laboratories, as 
specified in Sec.  493.563, 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 CMS' principal tool for 
verifying that the laboratories located in and licensed by the State 
are in compliance with CLIA requirements.
    Staff in the CMS Regional Office in Seattle, Washington have 
conducted validation inspections of a representative sample 
(approximately 5 percent) of the laboratories inspected by the 
Washington State Office of Laboratory Quality Assurance (LQA). The 
validation inspections were primarily of the concurrent type; that is, 
CMS surveyors 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 validation surveys verified that the 
Washington inspection process covers all CLIA conditions applicable to 
each laboratory being inspected, and also verified that the State 
laboratory licensure requirements meet or exceed CLIA condition-level 
requirements. The CMS survey staff found the State inspectors highly 
skilled and qualified. The LQA inspected laboratories in timely 
fashion, that is, all laboratories were inspected within the required 
24-month cycle. All parameters monitored by CMS staff to date indicate 
that Washington is meeting all requirements for approval of CLIA 
exemption. This Federal monitoring will continue as an on-going 
process.
    Approval of the CLIA exemption for laboratories located in and 
licensed by Washington is subject to removal if we determine that the 
outcome of a comparability review or a validation review inspection is 
not acceptable, as described under Sec.  493.573 and Sec.  493.575, 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.  493.557(b)(8), 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 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 do 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, as specified in Sec.  493.645.
    Washington must pay for the following:
     Costs of Federal inspection of laboratories in the State 
to verify that Washington's laboratory licensure program requirements 
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 CMS' 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 CMS 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

    CMS grants continued approval of the CLIA exemption for all 
laboratory specialties and subspecialties to all laboratories located 
in and licensed by the State of Washington effective April 30, 2001 to 
April 30, 2007.
    The State of Washington applied timely for re-approval, that is, to 
continue approval for exemption beyond the period ending April 30, 
2001. Review of the application for continued approval, and evaluation 
of the outcomes of the validation inspections indicated that continued 
approval for 6 more years was in order. The actual publication of the 
continued approval was delayed, however, due to the timing of the 
publication of changes to the CLIA regulations, and subsequently the 
time period necessary

[[Page 22320]]

for the State of Washington to publish corresponding changes to the 
Washington State Medical Test Site Rules, which were effective March 
19, 2005.

VIII. Collection of Information Requirements

    This document does not impose information collection, and 
recordkeeping requirements, which are subject to the Paperwork 
Reduction Act of 1995 (PRA) (44 U.S.C. 35). Consequently, it need not 
be reviewed by the Office of Management and Budget under the authority 
of the PRA.

VIX. Regulatory Impact Statement

    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 required 
under its Laboratory licensure program continues to be equal or more 
stringent than those required by the CLIA program. Washington also has 
established that it has a comparable program to monitor and evaluate 
compliance with its laboratory licensure program requirements. 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 continued approval of Washington's 
CLIA exemption will not affect the laboratories or the quality and 
availability of services provided.
    We have examined the impact of this notice as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This notice 
does not reach the economic threshold and thus is not considered a 
major rule.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this notice will 
not have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a notice may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this notice will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $110 million. This notice will have no consequential effect 
on the governments mentioned or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation 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).

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program; No. 93.773 Medicare--Hospital Insurance Program; 
and No. 93.774, Medicare--Supplementary Medical Insurance Program)

    Dated: April 8, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 05-8286 Filed 4-22-05; 8:45 am]
BILLING CODE 4120-01-P