CMS Publishes Final Rule on Enforcement Actions for CLIA Proficiency Testing Referral

On May 2, 2014, CMS published a final rule (“Final Rule”) amending the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) by fully implementing the Taking Essential Steps for Testing Act of 2012 (“TEST Act”) and establishing three categories of sanctions for proficiency testing referral (“PT referral”).

Previously, a violation involving an intentional referral of PT samples resulted in automatic revocation of a laboratory’s CLIA certificate for two years and a ban on the owner/operator from owning or operating any CLIA-certified laboratory for two years. The penalties for PT referrals are severe because proficiency testing is considered one of the best measures of a laboratory’s performance since it reviews actual test results. Importantly, proficiency testing relies on the integrity and honesty of the laboratory in reporting its own test results without using another laboratory in any way.

While the prior rules allowed CMS little discretion in applying the penalties under the prior statute and defining an “intentional referral,” the TEST Act provides CMS with the discretion to impose alternative sanctions in cases of intentional PT referral, and the Final Rule is intended to provide the remaining regulatory changes and guidance to fully implement the TEST Act.

The Final Rule creates three levels of sanctions for cases of intentional PT referral, based on the severity of the PT referral.

The first category is for the most serious violations, including repeat PT referrals or intentionally submitting another laboratory’s results as your own. CMS has determined that alternative sanctions are not appropriate for these serious violations, and sanctions for these cases will include revocation of the CLIA certificate for at least one year, a ban on the owner/operator from owning and operating a CLIA-certified laboratory for at least one year and potential imposition of a civil monetary penalty (“CMP”).

In these cases of the most serious violations where sanctions include revocation and owner/operator bans, CMS did acknowledge that there should be some discretion to allow for flexibility for owners of multiple laboratories if the ban would create access issues for the communities served by the laboratory. The regulations now include a provision that CMS may exempt laboratory owners from the ban on a laboratory-by-laboratory basis, if CMS finds:

Patients would not be put at risk because of the exemption;
The laboratory being exempted from the ban did not participate in the PT referral that resulted in the revocation; and
The laboratory being exempted did not receive a PT sample from another laboratory and failed to report its receipt to CMS within the past two survey cycles.

The second category is for moderately serious violations, such as referring samples to another laboratory before the event close date. Such a referral would allow the laboratory to use another laboratory’s results to check, confirm or change PT sample testing results prior to submitting them. In these cases, CMS may choose to suspend or limit the laboratory’s CLIA certificate. Suspension and limitation only apply to the individual laboratory in question. Under a suspension, no testing may be performed for the period of suspension, and the owner/operator typically contracts out for laboratory services or contracts with another operator to operate the laboratory under the contracted laboratory’s CLIA certificate. Under a limitation, the laboratory may not perform testing or bill Medicare or Medicaid for laboratory work in the specialty/subspecialty that is limited but may continue to conduct all other testing appropriately performed under its CLIA certificate. The determination of whether to suspend or limit a CLIA certificate will be determined based on a number of factors including, but not limited to, severity, duration and overall compliance history. However, if CMS determines any instance of PT referral occurred in the previous two survey cycles, the laboratory’s CLIA certificate will be suspended. Additionally, alternative sanctions such as CMPs and staff training will likely be required.
The third category is for the least serious violations, such as instances when the samples are referred but the laboratory does not receive the results prior to the PT testing event cut-off date. These violations would result in payment of a CMP and compliance with a directed plan of correction, which would include staff training.

Practical Takeaways

While the Final Rule provides more flexibility in addressing PT referral issues, CMS has made clear that PT referral is still a serious issue among CLIA-certified laboratories. Given these changes, providers may want to take the opportunity to review their policies and procedures on PT samples and reeducate staff regarding the referral prohibition for PT samples. Updating laboratory policy and procedure manuals regarding PT referral and the new sanctions may also be appropriate.

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