[Federal Register Volume 72, Number 188 (Friday, September 28, 2007)]
[Notices]
[Pages 55219-55221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-18731]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-2267-N]


Medicare, Medicaid, and CLIA Programs; Clinical Laboratory 
Improvement Amendments of 1988 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 and 
licensed by 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, are exempt from the requirements of the Clinical 
Laboratory Improvement Amendments of 1988 until September 28, 2013.

EFFECTIVE DATES: The exemption granted by the notice is effective until 
September 28, 2013.

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

SUPPLEMENTARY INFORMATION:

I. Background

    Section 353 of the Public Health Service Act (PHSA), as amended by 
the Clinical Laboratory Improvement Amendments of 1988 (CLIA) (Pub. L. 
100-578) enacted on October 31, 1988, generally provides that no 
laboratory may perform tests on human specimens for the diagnosis, 
prevention or treatment of any disease or impairment of, or assessment 
of the health of human beings unless it has a certificate to perform 
that category of tests issued by the Secretary of the Department of 
Health and Human Services (HHS). Under section 1861(s) of the Social 
Security Act (the Act), the Medicare program will only pay for 
laboratory services if the laboratory has a CLIA certificate. Section 
1902(a)(9)(C) of the Act requires that State Medicaid plans pay only 
for laboratory services furnished by CLIA-certified laboratories. Thus, 
although subject to specified exemptions and exceptions, laboratories 
generally must have a current and valid CLIA certificate to test human 
specimens for medical purposes noted above to be eligible for payment 
for those tests 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 States that enact legal 
requirements that are equal to or more stringent than CLIA's statutory 
and regulatory requirements.
    Section 353(p) of the PHS Act is implemented in subpart E of 
regulations at 42 CFR part 493. 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 the specified conditions. Section 493.559 
provides that we will publish a notice in the Federal Register when we 
grant exemption to an approved 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.
     The term of approval, not to exceed 6 years.

State of Washington's Application for CLIA Exemption of Its 
Laboratories

    The State of Washington has applied for exemption of its 
laboratories from CLIA program requirements. The State of Washington 
submitted all of the applicable information and attestations required 
by Sec.  493.551, Sec.  493.553, and Sec.  493.557 for State licensure 
programs seeking exemption of their licensed laboratories from CLIA 
program requirements.
    Examples of documents and information submitted are: 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 response 
procedures for complaints received against laboratories; and its policy 
regarding announcement and unannouncement of inspections.

CMS Analysis of Washington's Application and Supporting Documentation

    In order to determine whether we should grant a CLIA exemption to 
laboratories licensed by a State, we review the application and 
additional documentation that the State submits to CMS and conduct a 
detailed and in-depth comparison of State licensure program and CLIA 
requirements to determine whether the State program meets the 
requirements at subpart E of part 493.
    In summary, the State generally must demonstrate that its State 
licensure program meets the following requirements:
     Have State laws in effect that provide for laboratory 
requirements that are equal to or more stringent than CLIA condition-
level requirements for laboratories.
     Have a State licensure program with requirements that are 
equal to or more stringent than the CLIA condition-level requirements 
such that the State program licenses laboratory would meet the CLIA 
condition-level requirements if it were inspected against those 
requirements.
     Is shown to meet the requirements of Sec.  493.553, Sec.  
493.555, and Sec.  493.557(b) and is approved by CMS under Sec.  
493.551. For example, among other things, programs would need to:


[[Page 55220]]


--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).
--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 the following:
     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 following:

--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.
--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 CMS to ensure that the 
agreement obligates the State to do the following:

--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 CLIA condition-level requirements in a 
validation survey 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.
--Provide CMS, as requested, inspection schedules for validation 
purposes.

    In keeping with the process described above, we evaluated the 
application and supporting materials that were submitted by Washington 
State to verify that the laboratories licensed through their program 
will meet or exceed the requirements of 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.
    We found that Washington State's laboratory licensure program 
requirements mapped to all the CLIA condition-level requirements. Its 
licensure program's inspection process and proficiency testing 
monitoring processes were adequate. Other materials that were submitted 
demonstrated compliance with the other above-referenced requirements of 
subpart E of Part 493. As a result, CMS concluded that the submitted 
documents supported exempting laboratories licensed under that program 
from the CLIA program requirements. Furthermore, a review of CMS' 
validation inspections conducted by the CMS office in Seattle, 
Washington, supported the conclusion.
    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.
    The CMS Regional Office in Seattle, Washington has 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 State'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 State of 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 validation surveys 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' Seattle office to date 
indicate that the State of Washington is meeting all requirements for 
approval of CLIA exemption. This Federal monitoring will continue as an 
on-going process.

Conclusion

    Based on review of the documents submitted by the Washington State 
laboratory licensure program pursuant to the requirements of subpart E 
of part 493, as well as the outcome of the validation inspections 
conducted by the CMS regional office in Seattle, we find that the 
Washington State laboratory licensure program meets the requirements of 
42 CFR Sec.  493.551(a), and that as a result, we may exempt from CLIA 
program requirements all State licensed or approved laboratories.
    Approval of the CLIA exemption for laboratories located in and 
licensed by the State of 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 the State of Washington fails to pay the 
required fee every 2 years as required under Sec.  493.646.

Laboratory Data

    In accordance with our regulations at Sec.  493.557(b)(8), the 
State of Washington will continue to agree to provide us with changes 
to a laboratory's specialties or subspecialties based on the State's 
survey. The State of Washington also will provide us with changes in a 
laboratory's certification

[[Page 55221]]

status, such as a change from a regular certificate to a certificate of 
waiver.

Required Administrative Actions

    CLIA is a 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.
    The State of Washington must pay for the following:
     Costs of Federal inspection of laboratories in the State 
to verify that Washington State'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 the State 
of Washington on a semiannual basis.
     The State of Washington's proportionate share of the costs 
associated with establishing, maintaining, and improving the CLIA 
computer system, a portion of those services from which the State of 
Washington received direct benefit or contributed to the CLIA program 
in the State. Thus, the State of 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) 
and the Food and Drug Administration (FDA).
    In order to estimate the State of 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 1.5 percent of the registered 
laboratories are in the State of Washington. We determined that a 
corresponding percentage of the applicable CDC, FDA, and CMS costs 
should be borne by the State of Washington.
    The State of 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.

II. Approval

    In light of the foregoing, CMS grants approval of the State of 
Washington's laboratory licensure program under Subpart E. All 
laboratories located in and licensed by the State of Washington under 
the Medical Test Site Licensure Law, Chapter 70.42 of the Revised Code 
of Washington, are CLIA-exempt for all specialties and subspecialties 
until September 28, 2013.

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

    Dated: July 20, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
 [FR Doc. E7-18731 Filed 9-27-07; 8:45 am]
BILLING CODE 4120-01-P