CLIA Program; Simplifying CLIA Regulations Relating to Accreditation, Exemption of Laboratories Under a State Licensure Program, Proficiency Testing, and Inspection

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

Centers for Disease Control and Prevention

42 CFR Part 493

[HCFA-2239-F]

RIN 0938-AH82

CLIA Program; Simplifying CLIA Regulations Relating to

Accreditation, Exemption of Laboratories Under a State Licensure

Program, Proficiency Testing, and Inspection

AGENCY: Health Care Financing Administration (HCFA), and Centers for

Disease Control and Prevention (CDC), HHS.

ACTION: Final rule.

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SUMMARY: This final rule responds to selected comments received on a

final rule with a comment period implementing the Clinical Laboratory

Improvement Amendments of 1988, which was published in the Federal

Register on February 28, 1992, in the areas of proficiency testing and

inspections for clinical laboratories. In responding to these comments,

we accommodate, when possible, the Administration's regulatory reform

initiative by reducing duplicative material, emphasizing outcome-

oriented results, and simplifying regulations. In that regard, we also

are streamlining our regulations in the areas of State exemption, and

granting deemed status to laboratories accredited by an approved

accreditation organization.

EFFECTIVE DATE: These regulations are effective on June 15, 1998.

Copies: To order copies of the Federal Register containing this

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 512-1800 or by faxing to (202) 512-

2250. The cost for each copy is $8. As an alternative, you can view and

photocopy the Federal Register document at most libraries designated as

Federal Depository Libraries and at many other public and academic

libraries throughout the country that receive the Federal Register.

This Federal Register document is also available from the Federal

Register

[[Page 26723]]

online database through GPO Access, a service of the U.S. Government

Printing Office. Free public access is available on a Wide Area

Information Server (WAIS) through the Internet and via asynchronous

dial-in. Internet users can access the database by using the World Wide

Web; the Superintendent of Documents home page address is http://

www.access.gpo.gov/su__docs/, by using local WAIS client software, or

by telnet to swais.access.gpo.gov, then login as guest (no password

required). Dial-in users should use communications software and modem

to call (202) 512-1661; type swais, then login as guest (no password

required).

FOR FURTHER INFORMATION CONTACT: Judy Yost, (410) 786-3531.

SUPPLEMENTARY INFORMATION:

I. Background

On February 28, 1992, we published in the Federal Register, at 57

FR 7002, final regulations with an opportunity for public comment,

``Regulations Implementing the Clinical Laboratory Improvement

Amendments of 1988 (CLIA),'' that set forth requirements for

laboratories that are subject to CLIA. CLIA requirements apply to any

laboratory that examines human specimens for the diagnosis, prevention,

or treatment of any disease or impairment of, or the assessment of the

health of, human beings. The regulations at 42 CFR part 493 establish

uniform requirements for all laboratories regardless of location, size,

or type. A laboratory must meet these Federal requirements, or a

laboratory may meet the requirements if it is either accredited by a

private, nonprofit accreditation organization approved by HCFA, and

holds a valid CLIA certificate, or it is located in a State that HCFA

has granted an exemption from CLIA requirements because the State has

in effect laws that provide for requirements equal to or more stringent

than CLIA requirements.

On July 31, 1992, we published in the Federal Register, at 57 FR

33992, a final rule that established the criteria used to approve

accreditation organizations and State licensure programs. These

regulations are found in subpart E of part 493 and are based on

statutory requirements in section 353 (e) and (p) of the Public Health

Service Act.

II. Provisions of the Final Regulations

These regulations respond to public comments received on the

February 28, 1992 rule concerning the inspection of laboratories and

the regulatory use of proficiency testing. In responding to the

concerns of the commenters, we accommodate, whenever possible, the

Administration's regulatory reform commitment by:

(1) Eliminating duplicative material and reorganizing regulations

concerning accreditation by a private, nonprofit accreditation

organization and exemption from CLIA requirements under an approved

State licensure program (subpart E of part 493); (2) emphasizing

education in proficiency testing to improve laboratory performance

(subpart H of part 493); and (3) focusing on an outcome-oriented

approach in laboratory inspections (subpart Q of part 493).

A. Accreditation of a Laboratory by a Private, Nonprofit Accreditation

Organization or Exemption From CLIA Requirements Under an Approved

State Laboratory Program (Subpart E)

Based on the requirements in section 353(e) and (p) of the Public

Health Service Act and regulations in part 493, subpart E, HCFA has

approved six accreditation organizations. They are: American

Association of Blood Banks, American Osteopathic Association, American

Society for Histocompatability and Immunogenetics, College of American

Pathologists, Commission on Office Laboratory Accreditation, and Joint

Commission on Accreditation of Healthcare Organizations. We have also

approved three State licensure programs for CLIA exemption of licensed

laboratories within the State: Washington, New York, and Oregon.

The existing regulations in subpart E contain duplicative

information, which we are eliminating by restructuring subpart E and

consolidating requirements. The revised subpart better reflects the

process involved and better organizes the information required from

organizations and States to obtain HCFA approval. This restructuring

does not change the current requirements, but only redesignates them

into a more customer-oriented document, making them easier for users to

understand. In this process, we use new section numbers, but retain all

the requirements in subpart E.

B. Participation in Proficiency Testing for Laboratories Performing

Tests of Moderate Complexity (Including the Subcategory of Provider-

performed Microscopy), High Complexity, or Any Combination of These

Tests (Subpart H)

Proficiency testing (PT) is the testing of laboratory samples, the

values of which are unknown to the laboratory, to assess the accuracy

of the laboratory's results. PT serves as a test performance indicator,

as well as provides invaluable feedback. Under the CLIA regulations,

laboratories test PT samples three times a year for the tests the

laboratory performs, which are listed in subpart I of part 493. Samples

for these three testing events are provided and graded by HCFA-approved

PT programs. A laboratory's performance is described as satisfactory

performance, unsatisfactory performance, or unsuccessful performance.

Satisfactory performance occurs when a laboratory attains a passing

score for all analytes, subspecialties, or specialties. Unsatisfactory

performance occurs when a laboratory fails to attain the minimum

satisfactory score for an analyte, subspecialty, or specialty for a

testing event. Unsuccessful performance occurs when a laboratory fails

to attain the minimum satisfactory score for an analyte, subspecialty,

or specialty for two consecutive or two of three consecutive testing

events.

Comments Concerning Regulatory Use of PT

In response to the concerns of commenters received on the final

rule published February 28, 1992, we are emphasizing our existing

policy that uses PT as an outcome indicator of laboratory performance

and for educational purposes. We found that the commenters'

recommendations were consistent with our regulatory reform initiative.

Comment: Many commenters recommended that we use PT performance

more for educational purposes than for punitive actions. Commenters

stated that PT is an excellent mechanism for assisting laboratories to

identify and solve problems, evaluate personnel, and improve test

performance; however, while PT is a valuable educational tool, it has

limitations that should preclude it from use as the sole indicator for

regulatory intervention.

Response: We agree with the commenters. We allow a laboratory to

undertake education or training, or both, to correct initial

unsuccessful PT performance for each laboratory specialty in which it

performs PT. An educational focus for an initial occurrence of

unsuccessful PT affords the laboratory further opportunity to undertake

training of its personnel, or to obtain technical assistance, or both,

to identify, correct, and prevent the problems that led to PT failures.

We are revising subpart H to clarify and emphasize HCFA's educational

approach. This approach will not release the laboratory from its

responsibility to perform patient testing accurately and reliably. It

is, however,

[[Page 26724]]

less punitive than some laboratories' initial perception of the PT

actions we would impose, and provides an incentive, as well as a

mechanism for laboratories to improve their performance.

The enforcement provisions in Sec. 493.1838 give a laboratory the

opportunity to train personnel or to obtain technical assistance, or

both, when the laboratory has performed PT unsuccessfully. We are

adding a new paragraph (c) to Sec. 493.803, which sets forth the

educational emphasis of PT, to respond to comments received on PT

requirements. These regulatory additions unify commenters'

recommendations with the Administration's Reinventing Government

initiative by focusing on education as a correction to the problem, as

opposed to punitive measures.

Comment: Commenters recommended that HCFA use PT performance as an

index of performance or a screening tool to identify potential

problems. Commenters also suggested that we impose stricter sanctions

(that is, that we remove from a laboratory's certificate the

laboratory's authorization to test a specific analyte) when a

laboratory demonstrates an unwillingness or inability to correct the

problems that caused the failure.

Response: We agree with the commenters. We have also established

some exceptions at Sec. 493.803(c) that encompass the commenters'

suggestions. We would take more assertive actions when there is an

immediate jeopardy to patient health and safety, when a laboratory

demonstrates an inability or unwillingness to provide evidence that it

has taken steps to correct its PT problem(s), or if it has a history of

noncompliance with CLIA requirements other than proficiency testing

(for example, a laboratory that has had condition level deficiencies in

quality control).

C. Inspection--Subpart Q

We are revising part 493 subpart Q, Inspections, in response to

commenters' concerns. We are also reconstructing this subpart into a

more concise format, using succinct, easier to understand language.

Additionally, we are redirecting the HCFA inspection process to focus

more on outcomes, rather than a solely process-oriented review of a

laboratory. These actions also follow the Administration's Reinventing

Government initiative in that the onsite survey is less process

dependent.

1. Alternate Quality Assessment Survey

Comment: We received comments requesting that we inspect

laboratories onsite every 2 years, but provide a ``paper inspection''

that the laboratory would complete between biennial onsite inspections.

Response: We believe that it would be a prudent use of our

resources, and a sensible means of allowing greater flexibility than

the program currently provides, to have an inspection scheme that gears

itself to the variations we see in laboratory compliance. For those

laboratories that we believe pose potential risks to public health and

safety, judging from their compliance history, we continue to believe

that regular onsite inspections present the most viable course of

assuring ourselves that these laboratories maintain compliance with

CLIA requirements. On the other hand, for those laboratories that have

a sustained record of maintaining compliance, the need to have a

constantly recurring onsite presence is not as compelling.

We believe that the statute specifically authorizes our focussed

use of limited inspection resources. Specifically, section 353(g)(2) of

the Public Health Service Act calls for inspections to be performed on

a biennial basis, ``or with such other frequency as the Secretary

determines to be necessary to assure compliance'' with CLIA standards.

We believe that the use of the Alternate Quality Assurance Survey

allows us to be in a position to inspect onsite with less frequency

than we have before, while still assuring that those laboratories that

require the closest supervision will continue to receive it. This

approach would further the statutory mandate that we have a schedule

for inspections that enables us to ensure facility compliance with

program requirements.

With input from our partners in the State survey agencies and our

regional office surveyors, we will review and evaluate information,

such as the type and number of deficiencies (if any) cited at the last

onsite inspection, proficiency testing performance, and complaints

lodged against the laboratory. We consider information of this type in

determining whether a laboratory may be a candidate for this self-

inspection (the Alternate Quality Assessment Survey). We believe that a

self-inspection process will motivate laboratories to improve their

performance. It is also an example of the Reinventing Government

initiative put into practice.

A laboratory may receive the Alternate Quality Assessment Survey in

lieu of an onsite inspection. Based on a review of the completed

Alternate Quality Assessment Survey form and information submitted by

the laboratory, should we conclude that, for any reason, the laboratory

is not performing in a manner expected by the statute and regulations,

we will follow the Alternate Quality Assessment Survey with an onsite

inspection to verify that the laboratory is in compliance with CLIA

requirements. A laboratory will not receive the Alternate Quality

Assessment Survey for two consecutive certification cycles.

We will monitor and evaluate the effectiveness of the Alternate

Quality Assessment Survey process through verification inspections of

approximately 5 percent of the laboratories receiving the self-survey

questionnaire. We will adjust the self assessment process, as

indicated.

2. Outcome-oriented Survey Process

Comment: Among the commenters' recommendations were indications

that our February 28, 1992 regulations implementing the CLIA

requirements may not be applicable to all functions of all

laboratories. We were reminded that certain standards might not be

required for every type of testing performed; for example, the

requirements for specimen preparation and storage of specimens would

not directly apply to most point-of-care testing and, typically, have

minimum impact on the quality of testing in this setting. Although HCFA

surveyors have not held laboratories to requirements that are not

applicable to a particular laboratory's testing activities, there was a

concern from the commenters that the surveyors would interrupt direct

patient care and spend an inordinate amount of time performing a line-

by-line comparison of regulations that would not apply to the type of

testing performed by the entity.

Response: In an effort to be responsive to those concerns, we are

enhancing our inspection or survey process by focusing on outcomes. The

outcome-oriented survey is the onsite inspection mechanism that is used

for all laboratories. Onsite inspections are performed for: initial

surveys for newly regulated laboratories; validation inspections of

accredited or CLIA-exempt laboratories, laboratories that do not

qualify for the Alternate Quality Assessment Survey; and for alternate

cycles for those laboratories completing the Alternate Quality

Assessment Survey. The emphasis of the survey is on the quality of the

laboratory's performance and is based on a review of the laboratory's

oversight and monitoring of its preanalytical,

[[Page 26725]]

analytical, and postanalytical testing processes using the quality

assurance requirements in the regulations. Surveyors will review

laboratory performance from the perspective of the effect on patient

care rather than a line-by-line comparison for regulatory compliance.

While we will look at outcomes as indicators of compliance, should we

identify noncompliance with requirements set forth in the CLIA rules,

we will cite deficiencies and, if necessary, impose sanctions. Our

improvements to the survey mechanism are also in line with the

Administration's Reinventing Government initiative by focusing on

outcomes, as opposed to process.

In summary, on commenters' recommendations, we are providing to

laboratories an onsite survey process that is less process dependent

and more outcome-oriented, as well as a self-evaluative assessment (the

Alternate Quality Assessment Survey), to motivate laboratories toward

self-monitoring of their overall performance.

3. Specific Comments and Responses on Issues Concerning Inspection of

Laboratories

We received 114 comments concerning subpart Q, Inspections. Many of

the commenters raised identical or closely related issues, and we

combined them, when appropriate.

Comment: We received numerous comments regarding announced versus

unannounced inspections. Some commenters believed that only a physician

office laboratory should have announced inspections, especially when

direct patient care is provided. They believed that it would be a waste

of the inspector's time if, at the time of the inspection, the

laboratory was closed, the director unavailable, or the laboratory was

not conducting testing. Other commenters believed that the option for

announced inspections should be provided to all laboratories. These

commenters believed that, even if given advance notice of an

inspection, a laboratory would still not be able to ``falsify''

documentation or other data that would not be readily identified by a

competent inspector. Another group of commenters stated that follow-up

inspections should be unannounced. One commenter believed that we

should set standards limiting agency discretion to conduct unannounced

inspections. Still another commenter believed that ``warrants'' should

be required when the laboratory owner does not give advance consent for

his or her laboratory to be inspected.

Response: We agree with commenters who recommended announced

inspections for all laboratories. We have instituted a policy of

announced inspections for all initial and recertification inspections,

which allows a laboratory the latitude to include multiple members of

the staff in the inspection process for the educational value.

Announced, routine inspections are more efficient, in that the

laboratory can make previous testing records more accessible before the

inspection, and these inspections are also less intrusive when the

laboratory is a health care facility providing direct patient care.

We are revising subpart Q by eliminating the modifiers ``announced

and unannounced'' and keeping only the unqualified term

``inspections.'' This is in accordance with section 353(g)(1) of the

Public Health Service Act, which clearly provides for either announced

or unannounced inspections. This provision applies to all laboratories,

in keeping with the site-neutral intent of the CLIA statute. However,

we are maintaining our policy that all complaint and follow-up

inspections are unannounced and are conducted during routine hours of

operation. Because these inspections are most probably for cause,

laboratories are evaluated during normal operating conditions so that

an appropriate assessment can be made.

We disagree with the commenter who believed that we should develop

standards limiting agency discretion to conduct unannounced

inspections. The law allows the Secretary to determine when announced

or unannounced inspections should be conducted and does not call for

standards to be developed limiting this provision. We believe that the

survey procedures and instructions contained in the HCFA State

Operations Manual (HCFA Pub. 7) adequately outline situations in which

an announced or unannounced inspection should be conducted.

We disagree with the commenter who suggested that we require a

``warrant'' when the laboratory owner does not give advance consent for

the laboratory to be inspected. The law provides us with the authority

to enter a laboratory for the purpose of conducting an inspection. If

an owner, director, or any employee of the laboratory refuses our

reasonable request for permission to inspect the laboratory and its

operations, the laboratory may be subject to revocation of its CLIA

certificate, as provided in section 353(i)(1)(E) of the Public Health

Service Act and Sec. 493.1840 of the regulations.

Comment: A few commenters said the word ``will'' should be changed

to ``may'' in the following context: ``HHS will conduct announced or

unannounced surveys'' at Sec. 493.1776(a) (now found at

Sec. 493.1775(b)).

Response: We agree with the commenters. However, as previously

explained, we are removing the specific words ``announced'' and

``unannounced,'' and the pertinent portion of Sec. 493.1775(b) now

reads, `` * * * HCFA or a HCFA agent may conduct an inspection at any

time during the laboratory's hours of operation * * *'' to be

consistent with the rest of the subpart.

Comment: One commenter believed that CLIA requires yearly

inspections, while other commenters recommended that we conduct

inspections every other year onsite with a paper inspection in

alternate years.

Response: Section 353(g)(1) of the Public Health Service Act

requires inspections on a biennial basis or with such other frequency

that the Secretary determines necessary to ensure compliance with the

CLIA requirements. We conduct complaint inspections, as necessary,

after we determine that the complaint alleges a violation of CLIA

requirements. We agree with the commenters' recommendation for onsite

inspections to be alternated with a self-evaluative survey. We have

developed a self-assessment form, the Alternate Quality Assessment

Survey, to be used in alternate cycles for laboratories with a history

of compliance because there is less need to have a constantly recurring

presence in those laboratories.

Comment: Some commenters suggested that inspections be conducted by

professional organizations. There was concern that surveyors would not

be knowledgeable about specialty testing or regulatory requirements,

and might inappropriately apply requirements. Another group of

commenters believed that cytology inspections should be conducted by a

qualified pathologist and cytotechnologist.

Response: Inspections for laboratories holding certificates of

compliance are performed by HCFA regional office laboratory consultants

or State survey agency personnel, or both, and stress an outcome-

oriented focus. In addition to mandatory participation at a HCFA-

sponsored laboratory surveyor training program and one-on-one training

with an experienced surveyor, we also provide written guidelines to

assist surveyors in evaluating laboratory compliance with Federal

regulations. This training provides the surveyor with comprehensive,

detailed information regarding the regulations, outcome-oriented survey

process, and surveyor

[[Page 26726]]

guidelines, all of which complement their technical background.

Training is also provided at the State and Federal regional levels on

an on-going basis. Moreover, we have a contract in place with an

organization of cytology professionals, which provides specialized

reviews of selected cytology laboratories. The individuals who

participate in these reviews are qualified as general supervisors and

technical supervisors in cytology. This contract has been in effect

since 1989.

HCFA also has approved six professional organizations as

accrediting bodies under CLIA. These organizations sought deeming

authority for their programs, which were equal to, or more stringent

than, the CLIA requirements taken as a whole. A laboratory may,

therefore, choose to apply for a certificate of accreditation; in which

case, a HCFA-approved accreditation organization would serve as its

inspecting agency for CLIA.

Comment: One organization believed that it is inappropriate for a

surveyor to interview an employee during an inspection, and if a

disgruntled employee makes false or specious comments against his or

her employer, it may impugn the reputation of the laboratory director.

Response: We disagree. Any interviews conducted during the course

of an inspection are to assist the surveyor in gathering information

for the determination of the laboratory's compliance with the

applicable requirements under part 493. Any pertinent information

received during an inspection is verified, and determination of a

facility's compliance is based on all elements of the inspection

process, not just individual interviews.

Comment: Another group of commenters was concerned that patient

records will be reviewed during the course of the inspection and

believed that patient privacy may be compromised.

Response: We understand the commenters' concerns; however,

laboratory surveyors are health care professionals who are familiar

with the need for patient privacy. Confidentiality of patient and

laboratory information is also reinforced during surveyor training

sessions. Laboratory surveyors appreciate and respect patient

confidentiality. Therefore, we do not believe patient privacy would be

compromised.

Comment: A few commenters believed that we should only conduct

inspections for cause. One commenter believed that complaints should be

better defined. Another commenter believed that complaints should be

verified before a complaint inspection is conducted.

Response: Section 353(g)(2) of the Public Health Service Act

requires that we conduct inspections biennially or with such frequency

as the Secretary determines is necessary. For those laboratories with a

history of compliance, there is less need to have a constantly

recurring onsite presence, and we have developed a self-evaluative

survey, the Alternate Quality Assessment Survey, to be used in

alternate cycles. We believe the use of the Alternate Quality

Assessment Survey allows us to be in a position to inspect onsite with

less frequency than we have before, while still ensuring that those

laboratories that require the closest supervision will continue to

receive it.

A complaint is an allegation against a laboratory by any individual

for any perceived or real violation of the CLIA requirements. For

example, there may be a complaint that a laboratory is operating

without a certificate or that a laboratory is performing testing

outside of the certificate it holds. Inspectors are instructed to

determine if the complaint involves CLIA requirements or regulations

under the jurisdiction of another agency. If the complaint involves a

violation of State or other Federal law that is under the jurisdiction

of another agency (for example, the Occupational Safety and Health

Administration), we refer the complaint to the appropriate State or

agency for investigation. If the complaint is an alleged violation of

the CLIA requirements, we may conduct an unannounced onsite inspection

focusing on the alleged violations.

Comment: A commenter wanted the phrase ``including allegations that

individuals other than physicians are performing microscopic exams''

added at Sec. 493.1776(a)(2). Another group of commenters believed that

we should conduct unannounced inspections to substantiate which

individuals are performing testing.

Response: When a complaint alleges that an individual performing

tests is not qualified, we investigate the laboratory's compliance with

the CLIA personnel qualification requirements. It is our policy to

conduct unannounced complaint inspections. To clarify this policy we

are moving Sec. 493.1776(a)(2) to Sec. 493.1775(b) and also referencing

this in Sec. 493.1773(f).

Comment: Some commenters objected to ``onsite proficiency testing''

as part of the inspection process as being inappropriate based on the

complications involved in testing PT samples and suggested that we

delete Sec. 493.1777(b)(1).

Response: We disagree with the commenters. Section 493.1777(b)(1),

now Sec. 493.1773(b)(1), provides the surveyor with the authority to

require a laboratory to perform testing, which may include analysis of

PT samples from a HCFA-approved PT program, as part of the inspection.

We are aware of the complications referred to by the commenters.

Although the option of requiring a laboratory to perform testing on PT

samples exists, it is not routinely employed by surveyors. If it were

employed, it would be structured to address complications expressed by

the commenters.

Comment: One commenter believed that we should require onsite

(proficiency) testing during routine inspections for laboratories

holding a certificate of waiver.

Response: Section 353(d)(2)(C) of the Public Health Service Act

specifically exempts laboratories performing only waived tests from

routine inspections and all quality standards including PT. We,

therefore, may not require this testing or routinely inspect waived

testing.

Comment: A few commenters suggested that we add the following

language to Sec. 493.1775, ``States may coordinate the Medicare/

Medicaid compliance surveys for skilled nursing facilities, nursing

facilities, and intermediate care facilities for the mentally retarded

with CLIA compliance activities.''

Response: We encourage coordination of inspections under the

Medicare, Medicaid, and CLIA programs. Due to separate laws and

funding, resources, expertise, and availability, we can do no more than

encourage inspectors from different programs to coordinate inspections

to reduce the burden on facilities. Thus, we are making no change to

the regulations.

Comment: Commenters also suggested that we change Sec. 493.1775(d)

to read: ``* * *payments for laboratory services to the laboratory or *

* * `` to ensure that a suspension of Medicare payments for laboratory

services by a provider could not result in the suspension of payments

for any non-laboratory services.

Response: We are moving this requirement from Sec. 493.1775(d) to

Sec. 493.1773(g). As stated above, CLIA and Medicare/Medicaid are

separate programs. Actions we take under the CLIA program may result in

a laboratory being unable to perform certain tests. We notify the

Medicare and Medicaid programs, as appropriate, of any action we take

to suspend, limit or revoke the

[[Page 26727]]

CLIA certificate, which may have an impact on the facility's overall

participation in Medicare/Medicaid.

Comment: One commenter suggested that we change

Sec. 493.1780(b)(4)(ii) to ensure that inspection reports from

accreditation bodies are readily available to inspectors.

Response: The current regulations require that an accrediting

organization submit pertinent information to HCFA, which includes

inspection reports from the accreditation organization's surveys. We

find that performing validation inspections without prior knowledge of

the organization's findings offers a more unbiased approach for our

surveyors than performing inspections with prior knowledge. Therefore,

inspection reports from accreditation organizations are not normally

made available to surveyors before they perform validation inspections.

However, these reports are used in the comparability review of the

organization's inspection.

Comment: Some commenters urged us to approve the College of

American Pathologists as an accrediting organization, so that

laboratories that are accredited by this organization will meet CLIA

requirements.

Response: HCFA approved the College of American Pathologists as an

accreditation organization (see notice published February 9, 1995 in

the Federal Register at 60 FR 7774). Five other organizations have also

been approved as accreditation organizations: American Association of

Blood Banks; American Osteopathic Association; American Society for

Histocompatibility and Immunogenetics; Commission on Office Laboratory

Accreditation; and Joint Commission on Accreditation of Health Care

Organizations.

Comment: Several commenters indicated that it is possible for

mobile laboratories providing services in more than one State to

operate under one certificate. They questioned which State would have

the responsibility to inspect the laboratories.

Response: When a mobile laboratory provides service in more than

one State under one certificate, the State in which the laboratory's

home base is located has the responsibility to ascertain compliance

with the regulations. This may involve contacting other State survey

agencies and coordinating survey activity or scheduling the survey to

coincide with testing performed in the State in which the home base is

located.

Comment: Another commenter suggested that we inspect a mobile

laboratory when it reaches a specific mileage limit.

Response: Section 353(g)(2) of the Public Health Service Act

requires that we conduct inspections on a biennial basis or with such

other frequency as the Secretary determines to be necessary to assure

compliance with CLIA requirements and standards. While there is

latitude in determining frequency of inspection, we believe the

assurance of accurate testing is independent of mileage traveled.

Therefore, we will continue to inspect mobile laboratories with the

same frequency as other types of laboratories.

Conforming Changes

To avoid the continued use of an overly long term in the text of

the regulations, we are adding a definition for the term, ``State

licensure program,'' which means a State laboratory licensure or

approval program.

III. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the

Federal Register and invite prior public comment on proposed rules. The

notice of proposed rulemaking includes a reference to the legal

authority under which the rule is proposed, and the terms and

substances of the proposed rule or a description of the subjects and

issues involved. This procedure can be waived, however, if an agency

finds good cause that a notice-and-comment procedure is impracticable,

unnecessary, or contrary to the public interest and incorporates a

statement of the finding and its reasons in the rule issued.

With regard to all elements of this regulation except one, we are

responding to comments we received in previous rulemaking documents

and, in response to earlier rules. Accordingly, a final rule is

justified. The one exception concerns the rewritten subpart E. But

here, since we are making no substantive changes, but merely condensing

and reorganizing content, we believe that it is unnecessary and not in

the public interest to delay the effectiveness of this clarification,

as would happen were we to issue a proposed rule.

Therefore, we find good cause to waive the notice of proposed

rulemaking and to issue this final rule.

IV. Redesignation Table

The following table is a guide to readers in identifying the source

of requirements in the final rule.

------------------------------------------------------------------------

Existing section New section

------------------------------------------------------------------------

493.501(a) introductory text........... 493.551(a)

493.501(a)(1).......................... 493.551(a)(1)

493.501(a)(2).......................... 493.551(a)(2)

493.501(b) introductory text........... 493.551(b)

493.501(b)(1).......................... 493.551(a)(3)

493.501(b)(2).......................... 493.551(a)(3)

493.501(b)(3).......................... 493.551(b)(1)

493.501(b)(4).......................... 493.551(b)(2)

493.501(c) introductory text........... 493.553(a)

493.501(c)(1).......................... 493.557(a)(1)

493.501(c)(2).......................... 493.553(a)(1)

493.501(c)(3).......................... 493.553(a)(2) (i)-(iv) & (vi)

493.501(c)(4).......................... 493.553(a)(3)

493.501(c)(5).......................... 493.557(a)(2)

493.501(c)(6).......................... 493.557(a)(3) (i)-(iii)

493.501(c)(7).......................... 493.553(a)(4)

493.501(c)(8).......................... 493.553(a)(5)

493.501(c)(9).......................... 493.553(a)(6)

493.501(c)(10)......................... 493.557(a)(4)

493.501(c)(11)......................... 493.557(a)(5)

493.501(c)(12)......................... 493.553(a)(2)(v)

493.501(d) introductory text........... 493.553(b)

493.501(d)(1).......................... 493.553(b)(1)

493.501(d)(2).......................... 493.553(b)(2)

[[Page 26728]]

493.501(d)(3).......................... 493.553(b)(3)

493.501(d)(4).......................... 493.553(c)

493.501(d)(5).......................... 493.553(d)

493.501(d)(6).......................... 493.561(a)(1)

493.501(d)(7).......................... 493.561(b) (1)-(3)

493.501(d)(8).......................... 493.561(a)(2)

493.501(e) introductory text........... 493.559(a)

493.501(e)(1).......................... 493.559(b)(1)

493.501(e)(2).......................... 493.559(b)(4)

493.501(e)(3).......................... 493.559(b)(2)(ii)

493.501(e)(4).......................... 493.559(b)(5)

493.503(a)............................. 493.551(b)(3)

493.503(b)(1).......................... 493.551(b)(4)

493.503(b)(2).......................... 493.551(b)(4)

493.503(b)(3).......................... 493.551(b)(5)-(6)

493.503(b)(4).......................... 493.551(b)(6)

493.504................................ 493.551(c)

493.506(a)............................. 493.559(b)(2)(i) &

493.557(a)(1)

493.506(b)(1).......................... 493.555(a)

493.506(b)(2)(i)....................... 493.557(a)(3) (i)-(iii)

493.506(b)(2)(ii)...................... 493.555(b)

493.506(b)(2)(iii)..................... 493.557(a)(6)

493.506(b)(2)(iv)...................... 493.557(a)(7)

493.506(b)(2)(v)....................... 493.557(a)(8)

493.506(b)(2)(vi)...................... 493.557(a)(9)

493.506(b)(2)(vii)..................... 493.557(a)(10)

493.506(b)(2)(viii).................... 493.557(a)(11)

493.506(b)(3)(i)....................... 493.555(c)(1)

493.506(b)(3)(ii)...................... 493.555(c)(2)

493.506(b)(3)(iii)..................... 493.555(c)(3)(i)

493.506(b)(3)(iv)...................... 493.555(c)(4)

493.506(b)(3)(v)....................... 493.555(c)(5)

493.506(b)(3)(vi)...................... 493.557(b)(12)(i)-(ii)

493.506(b)(3)(vii)..................... 493.557(b)(13)

493.506(b)(3)(viii).................... 493.557(b)(14)

493.507(a) introductory text........... 493.563(a)(1)

493.507(a)(1).......................... 493.563(b)

493.507(a)(2).......................... 493.563(c)

493.507(b)............................. 493.565

493.507(c)............................. 493.567

493.507(d)............................. 493.569

493.507(e)............................. 493.571

493.507(f)............................. 493.563(e) + (d)

493.509(a)............................. 493.573(a)

493.509(b)............................. 493.573(b)

493.509(c)............................. 493.573(c)

493.509(d)............................. 493.573(d)

493.511(a)(1).......................... 493.575(a)(1)

493.511(a)(2).......................... 493.575(a)(3)

493.511(a)(3).......................... 493.575(a)(4) & (a)(4)(i)

493.511(b)............................. 493.575(b)(1)

493.511(c)............................. 493.575(b)(2)

493.511(d) introductory text........... 493.575(c)

493.511(d)(1).......................... 493.575(c)(1)

493.511(d)(2).......................... 493.575(c)(2)

493.511(d)(3)-(4)...................... 493.575(c)(3)

493.511(d)(5).......................... 493.575(c)(4)

493.511(e)............................. 493.575(d)

493.511(f)............................. 493.575(e)

493.511(g)............................. 493.575(f)

493.511(h)............................. 493.575(g)(1) & (g)(3)

493.511(i)............................. 493.575(h)(1)

493.511(j)............................. 493.575(k)

493.513(a) introductory text........... 493.553(c) & 493.551(a)

493.513(a)(1)-(2)...................... 493.551(a)(1)

493.513(a)(3).......................... 493.551(a)(2)

493.513(a)(4).......................... 493.557(b)(1)

493.513(a)(5).......................... 493.557(b)(2)

493.513(a)(6).......................... 493.557(b)(3)

493.513(a)(7).......................... 493.557(b)(4)

493.513(a)(8).......................... 493.557(b)(5)

493.513(b)(1)-(2)...................... 493.551(a)(3)

493.513(c) introductory text........... 493.553(a)

493.513(c)(1).......................... 493.553(a)(1)

[[Page 26729]]

493.513(c)(2).......................... 493.553(a)(2)(i)-(vi)

493.513(c)(3).......................... 493.557(b)(1)

493.513(c)(4).......................... 493.553(a)(3)

493.513(c)(5).......................... 493.553(a)(4)

493.513(c)(6).......................... 493.553(a)(5)

493.513(c)(7).......................... 493.553(a)(6)

493.513(c)(8).......................... 493.553(b)(6)

493.513(d)(1).......................... 493.557(b)(7)

493.513(d)(2).......................... 493.557(b)(8)(i)-(iii)

493.513(e)............................. 493.553(b)(1)

493.513(f)............................. 493.553(b)(2)

493.513(g)............................. 493.553(b)(3)

493.513(h)............................. 493.561(c)

493.513(i)............................. 493.553(d)

493.513(j)............................. 493.561(a)(1)

493.513(k)............................. 493.559(a)

493.513(k)(1).......................... 493.559(b)(1)

493.513(k)(2).......................... 493.559(b)(4)

493.513(k)(3).......................... 493.559(b)(3)

493.513(k)(4).......................... 493.559(b)(5)

493.513(l)............................. 493.557(b)(14)

493.513(m)............................. 493.561(a)(2)

493.515 (a)(1)......................... 493.555(a)

493.515(a)............................. 493.555 introductory text

493.515(a)(2).......................... 493.555(b)

493.515(a)(2)(ii)...................... 493.557(b)(9)

493.515(a)(2)(iii)..................... 493.557(b)(10)

493.515(a)(3) introductory text........ 493.555(c) introductory text

493.515(a)(3)(i)....................... 493.555(c)(1)

493.515(a)(3)(ii)...................... 493.555(c)(2)

493.515(a)(3)(iii)..................... 493.555(c)(4)

493.515(a)(3)(iv)...................... 493.557(b)(11)

493.515(a)(3)(v)....................... 493.557(b)(12)

493.515(a)(3)(vi)...................... 493.557(b)(13)

493.515(a)(3)(vii)..................... 493.555(c)(3)(ii)

493.515(a)(3)(viii).................... 493.555(c)(5)

493.517(a)............................. 493.563(a)(2)(i)-(ii)

493.517(a)(1).......................... 493.563(b)(1)(2)

493.517(a)(2).......................... 493.563(c)(1)-(2)

493.517(b)(1).......................... 493.565(a)

493.517(b)(2).......................... 493.565(b)

493.517(b)(3).......................... 493.565(c)

493.517(c)............................. 493.567(b)

493.517(d)............................. 493.569(b)

493.517(e)............................. 493.571(b) and (c)

493.517(f)............................. 493.563(f)

493.519(a)............................. 493.573(a)

493.519(b)............................. 493.573(b)

493.519(c)(1).......................... 493.573(c)(1)

493.519(c)(2).......................... 493.573(c)(2)

493.519(d) introductory text........... 493.573(d)(1)(ii)

493.519(d)(1)-(4)...................... 493.573(d)(2)(i)-(iv)

493.521(a)(1).......................... 493.575(a)(2)

493.521(a)(2).......................... 493.575(a)(3)

493.521(a)(3).......................... 493.575(a)(4) & (4)(ii)

493.521(b)............................. 493.575(b)(1)

493.521(c)............................. 493.575(b)(2)

493.521(d)............................. 493.575(c)

493.521(e)............................. 493.575(d)

493.521(f)............................. 493.575(e)

493.521(g)............................. 493.575(i)

493.521(h)............................. 493.575(h)

493.521(i)............................. 493.575(f)

493.521(j)............................. 493.575(g)(2)-(3)

493.521(k)............................. 493.575(j)(1)-(2)

493.521(l)............................. 493.575(k)

493.1775(a)............................ 493.1773(a); 493.1775(a)

493.1775(b)(1)......................... 493.1773(b)(2)

493.1775(b)(2)......................... 493.1773(b)(4)

493.1775(b)(3)......................... 493.1773(b)(3)

493.1775(b)(4)(1)-(ii)................. 493.1773(f); 493.1775(b)(1)-(4)

493.1775(b)(4)(iii)-(iv)............... 493.1775(a)

493.1775(b)(5)......................... 493.1773(b)(5)

493.1775(c)............................ 493.1773(d)

[[Page 26730]]

493.1775(d)............................ 493.1773(g)

493.1776(a) introductory text.......... 493.1773(a); 493.1775(a) & (b)

493.1776(a)(1)-(4)..................... 493.1773(f); 493.1775(a)

493.1776(a)(4) (uncoded text).......... deleted; redundant

493.1776(b)(1)......................... 493.1773(b)(2)

493.1776(b)(2)......................... 493.1773(b)(4)

493.1776(b)(3)......................... 493.1773(b)(3)

493.1776(b)(4)......................... 493.1773(f); 493.1775(b)(1)-(4)

493.1776(b)(5)......................... 493.1773(b)(5)

493.1776(c)............................ 493.1773(d)

493.1776(d)............................ 493.1773(g)

493.1777 introductory text............. 493.1773(a), (f); 493.1777(a)-

(c)

493.1777(a)............................ 493.1777(a)-(b)

493.1777(b)............................ 493.1773(b)

493.1777(c)............................ 493.1773(c)

493.1777(d)............................ deleted; redundant

493.1777(e)............................ 493.1773(d)

493.1777(f)............................ 493.1773(e)

493.1777(g)............................ 493.1773(g)

493.1780(a)............................ 493.1773(a); 493.1780(a)

493.1780(b)............................ 493.1773(a), (f); 493.1780(b)

493.1780(c)............................ 493.1773(b)

493.1780(d)............................ 493.1773(c)

493.1780(e)............................ deleted; redundant

493.1780(f)............................ 493.1773(d)

493.1780(g)............................ 493.1773(g); 493.1780(c)

------------------------------------------------------------------------

V. Regulatory Impact Statement

A. General

Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612), we prepare a regulatory flexibility analysis unless we

certify that a rule will not have a significant economic impact on a

substantial number of small entities. For purposes of the RFA, all

clinical laboratories are considered to be small entities. Individuals

and States are not included in the definition of a small entity.

In addition, section 1102(b) of the Act requires us to prepare a

regulatory impact analysis if a rule 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 define a small rural

hospital as a hospital that is located outside of a Metropolitan

Statistical Area and has fewer than 50 beds.

B. Provisions of the Final Regulations

This rule has been drafted in response to comments pertaining to

proficiency testing and the CLIA inspection process. As our responses

to commenters' concerns were developed, it became apparent that we were

also fulfilling the Administration's regulatory reform initiative. This

initiative directs us to revise regulations that are outdated or

otherwise in need of reform. We have, therefore, also included subpart

E of part 493 in this rule.

Subpart E

Subpart E of part 493 provides for the accreditation of a

laboratory by an accreditation organization, and the exemption of

laboratories within a particular State from CLIA requirements when the

accreditation organization or State applies requirements that are equal

to, or more stringent than, the CLIA requirements taken as a whole.

Subpart E contains requirements for State licensure programs,

accreditation organizations, laboratories seeking deemed status by

virtue of accreditation by a HCFA-approved accreditation organization,

and laboratories that operate within a State that HCFA has determined

maintains requirements that are equal to or more stringent than the

CLIA requirements. We are revising subpart E by removing duplicative

information. We are reorganizing subpart E to distinguish accreditation

organization and State licensure program responsibilities from those of

laboratories. We are combining common requirements for accreditation

organizations and State licensure programs. These actions will

accommodate the Administration's regulatory reform initiative. We are

making no substantive changes to the content or the intent. Therefore,

we are not imposing additional burden. The relief established by

reorganizing and combining like requirements is not quantifiable, but

it should aid in the submission of materials for approvals and

reapprovals.

Subpart H

The changes we are making in Sec. 493.803(c) reflect HCFA's policy

of an educational focus for proficiency testing. We are clarifying

existing enforcement options in response to comments received

concerning PT sanctions. In this rule, subpart H provides that, if a

laboratory is initially unsuccessful in PT, it must obtain technical

assistance, or undertake training of personnel, or both, rather than

having HCFA impose principal or alternative sanctions. This affords the

laboratory an additional opportunity to correct the problem that caused

the PT failure, encouraging quality testing in a more positive manner.

We believe that a laboratory should have ample opportunity to

investigate the reason for its initial failure, to obtain the necessary

technical assistance or training, or both, to correct the problems that

caused the failure and implement a plan of action, which should prevent

reoccurrence. This requirement also exists in subpart R, Enforcement

Procedures. Principal and alternative sanctions may apply if the

laboratory refuses to correct its problems, has repeated compliance

problems, or immediate jeopardy exists. While this educational approach

has always been a viable option, based on comments received on previous

rulemaking, we believe that it is important to clarify that this option

exists and will be exercised. We are revising the regulation

accordingly.

We are not imposing any additional burden with this clarification;

we are

[[Page 26731]]

only identifying which of our enforcement actions or options we

implement in a particular circumstance.

Subpart Q

We are eliminating redundant information by restructuring and

organizing all generic requirements for an onsite inspection into one

section of the regulations. In addition we have implemented the

commenter-recommended laboratory self-inspection process (the Alternate

Quality Assessment Survey). Although an onsite inspection may not be

performed, the survey agency personnel must still review and evaluate

the self-inspection responses submitted by the laboratory and take any

necessary action. While travel and onsite time is eliminated for

inspections of these laboratories, the laboratory surveyors, however,

may realize little or no reduction in the time spent on the overall

process. We expect laboratories that perform the Alternate Quality

Assessment Survey to benefit from the educational aspects realized by

performing this self evaluative survey and minimized disruption to

their activities.

Our onsite survey process, which is outcome-oriented, concentrates

on a review of each laboratory's specific testing activities and its

impact on patient health and safety. We are unable to predict the long

term effects because they are dependent upon each individual

laboratory's compliance and testing activities. Although it is

difficult to quantify the financial impact due to the variability from

laboratory to laboratory, we expect that our collective efforts to

streamline and clarify the regulations may reduce the laboratory costs

associated with CLIA in many cases, without diminishing quality.

C. Conclusion

For these reasons, we have determined, and the Secretary certifies,

that this regulation does not result in a significant impact on a

substantial number of small entities and does 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.

D. OMB Review

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

E. Collection of Information Requirements

This final rule contains information collections that are subject

to review by the Office of Management and Budget under the Paperwork

Reduction Act of 1995. The title, description, and respondent

description of the information collection requirements are shown below

with an estimate of the annual reporting and recordkeeping burden.

Included in the estimate is the time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing and reviewing the collection of information.

Section 493.803 and subpart Q (newly revised Secs. 493.1771 through

493.1780 previously numbered Secs. 493.1775 through 493.1780) are

currently approved under OMB approval number 0938-0612 with an

expiration date of April 30, 2001. Subpart E (newly revised sections

Secs. 493.551, 493.553, 493.555, 493.557, 493.559, and 493.561, which

were previously contained in Secs. 493.501, 493.506, 493.513 and

493.515) is currently approved under OMB approval number 0938-0686 with

an expiration of April 30, 1999.

Section 493.803 contains the requirement that a laboratory must

successfully participate in a PT program approved by HCFA for the

specialties, subspecialties, and analytes listed in the regulation, if

these tests are performed by the laboratory. The burden associated with

this requirement is the testing of PT specimens and recording the

results.

Subpart Q sets forth conditions and standards for inspection of

laboratories. The burden associated with inspections of laboratories,

or alternative mechanisms to determine compliance, consists of

retrieving records and documentation necessary for the inspector to

ascertain compliance, participating in entrance and exit conferences

for onsite inspections, responding to a statement of deficiencies that

may result from an inspection, and documenting any corrective action.

Subpart E sets forth the requirements and process for a private,

nonprofit accreditation organization voluntarily seeking approval under

the CLIA program and a State licensure program voluntarily seeking

exemption for its laboratories within the State from the CLIA program.

The burden associated with these sections is the compilation of

specific information that must be submitted for evaluation as well as

the requirements for providing ongoing information.

Description of Respondents

Respondents for Sec. 493.803 and subpart Q, Secs. 493.1771 through

493.1780 fall in the categories of: small businesses or organizations,

businesses or other for-profit, non-profit institutions, State and

local governments, and Federal agencies.

Respondents for subpart E, Secs. 493.551, 493.553, 493.555,

493.557, 493.559, and 493.561 are private nonprofit accreditation

organizations and State licensure programs.

Estimated Annual Reporting and Recordkeeping Burden

----------------------------------------------------------------------------------------------------------------

Average burden

CFR section Annual number Annual frequency per response Annual burden

of respondents in hours in hours

----------------------------------------------------------------------------------------------------------------

Subpart E 493.551 through 493.561..... 11 varies, as needed....... 192 2112

Subpart H 493.803..................... 63,600 3 events................ 1 190,800

Subpart Q 493.1771 through 493.1780... 36,918 biennial................ 4 4,618

----------------------------------------------------------------------------------------------------------------

Persons interested in commenting on these currently approved

information collections should send comments to the following address:

Health Care Financing Administration, Office of Information Services,

Information Technology Investment Management Group, Room C2-26-17, 7500

Security Boulevard, Baltimore, Maryland, 21244-1850. Attn: HCFA-2239-F.

List of Subjects in 42 CFR Part 493

Grant programs-health, Health facilities, Laboratories, Medicaid,

Medicare, Reporting and recordkeeping requirements.

42 CFR chapter IV is amended as follows:

[[Page 26732]]

PART 493--LABORATORY REQUIREMENTS

1. The authority citation for part 493 is revised to read as

follows:

Authority: Sec. 353 of the Public Health Service Act, secs.

1102, 1861(e), the sentence following sections 1861(s)(11) through

1861(s)(16) of the Social Security Act (42 U.S.C. 263a, 1302,

1395x(e), the sentence following 1395x(s)(11) through 1395x(s)(16)).

Subpart A--General Provisions

Sec. 493.2 [Amended]

2. Section 493.2 is amended by adding in alphabetical order the

following definition of State licensure program:

* * * * *

State licensure program means a State laboratory licensure or

approval program.

* * * * *

Subpart E--Accreditation by a Private, Nonprofit Accreditation

Organization or Exemption Under an Approved State Laboratory

Program

Secs. 493.501 through 493.521 [Removed]

3. Sections 493.501 through 493.521 are removed.

4. In subpart E, new Secs. 493.551, 493.553, 493.555, 493.557,

493.559, 493.561, 493.563, 493.565, 493.567, 493.569, 493.571, 493.573,

and 493.575 are added to read as follows:

Sec.

493.551 General requirements for laboratories.

493.553 Approved process (application and reapplication) for

accreditation organizations and State licensure programs.

493.555 Federal review of laboratory requirements.

493.557 Additional submission requirements.

493.559 Publication of approval of deeming authority or CLIA

exemption.

493.561 Denial of application or reapplication.

493.563 Validation inspections--Basis and focus.

493.565 Selection for validation inspection--laboratory

responsibilities.

493.567 Refusal to cooperate with validation inspection.

493.569 Consequences of a finding of noncompliance as a result of a

validation inspection.

493.571 Disclosure of accreditation, State and HCFA validation

inspection results.

493.573 Continuing Federal oversight of private nonprofit

accreditation organizations and approved State licensure programs.

493.575 Removal of deeming authority or CLIA exemption and final

determination review.

Sec. 493.551 General requirements for laboratories.

(a) Applicability. HCFA may deem a laboratory to meet all

applicable CLIA program requirements through accreditation by a private

nonprofit accreditation program (that is, grant deemed status), or may

exempt from CLIA program requirements all State licensed or approved

laboratories in a State that has a State licensure program established

by law, if the following conditions are met:

(1) The requirements of the accreditation organization or State

licensure program are equal to, or more stringent than, the CLIA

condition-level requirements specified in this part, and the laboratory

would meet the condition-level requirements if it were inspected

against these requirements.

(2) The accreditation program or the State licensure program meets

the requirements of this subpart and is approved by HCFA.

(3) The laboratory authorizes the approved accreditation

organization or State licensure program to release to HCFA all records

and information required and permits inspections as outlined in this

part.

(b) Meeting CLIA requirements by accreditation. A laboratory

seeking to meet CLIA requirements through accreditation by an approved

accreditation organization must do the following:

(1) Obtain a certificate of accreditation as required in subpart D

of this part.

(2) Pay the applicable fees as required in subpart F of this part.

(3) Meet the proficiency testing (PT) requirements in subpart H of

this part.

(4) Authorize its PT organization to furnish to its accreditation

organization the results of the laboratory's participation in an

approved PT program for the purpose of monitoring the laboratory's PT

and for making the annual PT results, along with explanatory

information required to interpret the PT results, available on a

reasonable basis, upon request of any person. A laboratory that refuses

to authorize release of its PT results is no longer deemed to meet the

condition-level requirements and is subject to a full review by HCFA,

in accordance with subpart Q of this part, and may be subject to the

suspension or revocation of its certificate of accreditation under

Sec. 493.1840.

(5) Authorize its accreditation organization to release to HCFA or

a HCFA agent the laboratory's PT results that constitute unsuccessful

participation in an approved PT program, in accordance with the

definition of ``unsuccessful participation in an approved PT program,''

as specified in Sec. 493.2 of this part, when the laboratory has failed

to achieve successful participation in an approved PT program.

(6) Authorize its accreditation organization to release to HCFA a

notification of the actions taken by the organization as a result of

the unsuccessful participation in a PT program within 30 days of the

initiation of the action. Based on this notification, HCFA may take an

adverse action against a laboratory that fails to participate

successfully in an approved PT program.

(c) Withdrawal of laboratory accreditation. After an accreditation

organization has withdrawn or revoked its accreditation of a

laboratory, the laboratory retains its certificate of accreditation for

45 days after the laboratory receives notice of the withdrawal or

revocation of the accreditation, or the effective date of any action

taken by HCFA, whichever is earlier.

Sec. 493.553 Approval process (application and reapplication) for

accreditation organizations and State licensure programs.

(a) Information required. An accreditation organization that

applies or reapplies to HCFA for deeming authority, or a State

licensure program that applies or reapplies to HCFA for exemption from

CLIA program requirements of licensed or approved laboratories within

the State, must provide the following information:

(1) A detailed comparison of the individual accreditation, or

licensure or approval requirements with the comparable condition-level

requirements; that is, a crosswalk.

(2) A detailed description of the inspection process, including the

following:

(i) Frequency of inspections.

(ii) Copies of inspection forms.

(iii) Instructions and guidelines.

(iv) A description of the review and decision-making process of

inspections.

(v) A statement concerning whether inspections are announced or

unannounced.

(vi) A description of the steps taken to monitor the correction of

deficiencies.

(3) A description of the process for monitoring PT performance,

including action to be taken in response to unsuccessful participation

in a HCFA-approved PT program.

(4) Procedures for responding to and for the investigation of

complaints against its laboratories.

[[Page 26733]]

(5) A list of all its current laboratories and the expiration date

of their accreditation or licensure, as applicable.

(6) Procedures for making PT information available (under State

confidentiality and disclosure requirements, if applicable) including

explanatory information required to interpret PT results, on a

reasonable basis, upon request of any person.

(b) HCFA action on an application or reapplication. If HCFA

receives an application or reapplication from an accreditation

organization, or State licensure program, HCFA takes the following

actions:

(1) HCFA determines if additional information is necessary to make

a determination for approval or denial of the application and notifies

the accreditation organization or State to afford it an opportunity to

provide the additional information.

(2) HCFA may visit the accreditation organization or State

licensure program offices to review and verify the policies and

procedures represented in its application and other information,

including, but not limited to, review and examination of documents and

interviews with staff.

(3) HCFA notifies the accreditation organization or State licensure

program indicating whether HCFA approves or denies the request for

deeming authority or exemption, respectively, and the rationale for any

denial.

(c) Duration of approval. HCFA approval may not exceed 6 years.

(d) Withdrawal of application. The accreditation organization or

State licensure program may withdraw its application at any time before

official notification, specified at Sec. 493.553(b)(3).

Sec. 493.555 Federal review of laboratory requirements.

HCFA's review of an accreditation organization or State licensure

program includes, but is not limited to, an evaluation of the

following:

(a) Whether the organization's or State's requirements for

laboratories are equal to, or more stringent than, the condition-level

requirements for laboratories.

(b) The organization's or State's inspection process to determine

the comparability of the full inspection and complaint inspection

procedures and requirements to those of HCFA, including, but not

limited to, inspection frequency and the ability to investigate and

respond to complaints against its laboratories.

(c) The organization's or State's agreement with HCFA that requires

it to do the following:

(1) Notify HCFA within 30 days of the action taken, of any

laboratory that has--

(i) Had its accreditation or licensure suspended, withdrawn,

revoked, or limited;

(ii) In any way been sanctioned; or

(iii) Had any adverse action taken against it.

(2) Notify HCFA within 10 days of any deficiency identified in an

accredited or CLIA-exempt laboratory if the deficiency poses an

immediate jeopardy to the laboratory's patients or a hazard to the

general public.

(3) Notify HCFA, within 30 days, of all newly--

(i) Accredited laboratories (or laboratories whose areas of

specialty/subspecialty testing have changed); or

(ii) Licensed laboratories, including the specialty/subspecialty

areas of testing.

(4) Notify each accredited or licensed laboratory within 10 days of

HCFA's withdrawal of the organization's deeming authority or State's

exemption.

(5) Provide HCFA with inspection schedules, as requested, for

validation purposes.

Sec. 493.557 Additional submission requirements.

(a) Specific requirements for accreditation organizations. In

addition to the information specified in Secs. 493.553 and 493.555, as

part of the approval and review process, an accreditation organization

applying or reapplying for deeming authority must also provide the

following:

(1) The specialty or subspecialty areas for which the organization

is requesting deeming authority and its mechanism for monitoring

compliance with all requirements equivalent to condition-level

requirements within the scope of the specialty or subspecialty areas.

(2) A description of the organization's data management and

analysis system with respect to its inspection and accreditation

decisions, including the kinds of routine reports and tables generated

by the systems.

(3) Detailed information concerning the inspection process,

including, but not limited to the following:

(i) The size and composition of individual accreditation inspection

teams.

(ii) Qualifications, education, and experience requirements that

inspectors must meet.

(iii) The content and frequency of training provided to inspection

personnel, including the ability of the organization to provide

continuing education and training to inspectors.

(4) Procedures for removal or withdrawal of accreditation status

for laboratories that fail to meet the organization's standards.

(5) A proposed agreement between HCFA and the accreditation

organization with respect to the notification requirements specified in

Sec. 493.555(c).

(6) Procedures for monitoring laboratories found to be out of

compliance with its requirements. (These monitoring procedures must be

used only when the accreditation organization identifies noncompliance.

If noncompliance is identified through validation inspections, HCFA or

a HCFA agent monitors corrections, as authorized at Sec. 493.565(d)).

(7) A demonstration of its ability to provide HCFA with electronic

data and reports in compatible code, including the crosswalk specified

in Sec. 493.553(a)(1), that are necessary for effective validation and

assessment of the organization's inspection process.

(8) A demonstration of its ability to provide HCFA with electronic

data, in compatible code, related to the adverse actions resulting from

PT results constituting unsuccessful participation in PT programs as

well as data related to the PT failures, within 30 days of the

initiation of adverse action.

(9) A demonstration of its ability to provide HCFA with electronic

data, in compatible code, for all accredited laboratories, including

the area of specialty or subspecialty.

(10) Information defining the adequacy of numbers of staff and

other resources.

(11) Information defining the organization's ability to provide

adequate funding for performing required inspections.

(12) Any facility-specific data, upon request by HCFA, which

includes, but is not limited to, the following:

(i) PT results that constitute unsuccessful participation in a

HCFA-approved PT program.

(ii) Notification of the adverse actions or corrective actions

imposed by the accreditation organization as a result of unsuccessful

PT participation.

(13) An agreement to provide written notification to HCFA at least

30 days in advance of the effective date of any proposed change in its

requirements.

(14) An agreement to disclose any laboratory's PT results upon

reasonable request by any person.

(b) Specific requirements for a State licensure program. In

addition to requirements in Secs. 493.553 and 493.555, as part of the

approval and review process, when a State licensure program applies or

reapplies for exemption from the CLIA program, the State must do the

following:

[[Page 26734]]

(1) Demonstrate to HCFA that it has enforcement authority and

administrative structures and resources adequate to enforce its

laboratory requirements.

(2) Permit HCFA or a HCFA agent to inspect laboratories in the

State.

(3) Require laboratories in the State to submit to inspections by

HCFA or a HCFA agent as a condition of licensure or approval.

(4) Agree to pay the cost of the validation program administered in

that State as specified in Secs. 493.645(a) and 493.646(b).

(5) Take appropriate enforcement action against laboratories found

by HCFA not to be in compliance with requirements equivalent to CLIA

requirements.

(6) Submit for Medicare and Medicaid payment purposes, a list of

the specialties and subspecialties of tests performed by each

laboratory.

(7) Submit a written presentation that demonstrates the agency's

ability to furnish HCFA with electronic data in compatible code,

including the crosswalk specified in Sec. 493.553(a)(1).

(8) Submit a statement acknowledging that the State will notify

HCFA through electronic transmission of the following:

(i) Any laboratory that has had its licensure or approval revoked

or withdrawn or has been in any way sanctioned by the State within 30

days of taking the action.

(ii) Changes in licensure or inspection requirements.

(iii) Changes in specialties or subspecialties under which any

licensed laboratory in the State performs testing.

(9) Provide information for the review of the State's enforcement

procedures for laboratories found to be out of compliance with the

State's requirements.

(10) Submit information that demonstrates the ability of the State

to provide HCFA with the following:

(i) Electronic data and reports in compatible code with the adverse

or corrective actions resulting from PT results that constitute

unsuccessful participation in PT programs.

(ii) Other data that HCFA determines are necessary for validation

and assessment of the State's inspection process requirements.

(11) Agree to provide HCFA with written notification of any changes

in its licensure/approval and inspection requirements.

(12) Agree to disclose any laboratory's PT results in accordance

with a State's confidentiality requirements.

(13) Agree to 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.

(14) If approved, reapply to HCFA every 2 years to renew its exempt

status and to renew its agreement to pay the cost of the HCFA-

administered validation program in that State.

Sec. 493.559 Publication of approval of deeming authority or CLIA

exemption.

(a) Notice of deeming authority or exemption. HCFA publishes a

notice in the Federal Register when it grants deeming authority to an

accreditation organization or exemption to a State licensure program.

(b) Contents of notice. The notice includes the following:

(1) The name of the accreditation organization or State licensure

program.

(2) For an accreditation organization:

(i) The specific specialty or subspecialty areas for which it is

granted deeming authority.

(ii) A description of how the accreditation organization provides

reasonable assurance to HCFA that a laboratory accredited by the

organization meets CLIA requirements equivalent to those in this part

and would meet CLIA requirements if the laboratory had not been granted

deemed status, but had been inspected against condition-level

requirements.

(3) For a State licensure program, a description of how the

laboratory requirements of the State are equal to, or more stringent

than, those specified in this part.

(4) The basis for granting deeming authority or exemption.

(5) The term of approval, not to exceed 6 years.

Sec. 493.561 Denial of application or reapplication.

(a) Reconsideration of denial. (1) If HCFA denies a request for

approval, an accreditation organization or State licensure program may

request, within 60 days of the notification of denial, that HCFA

reconsider its original application or application for renewal, in

accordance with part 488, subpart D.

(2) If the accreditation organization or State licensure program

requests a reconsideration of HCFA's determination to deny its request

for approval or reapproval, it may not submit a new application until

HCFA issues a final reconsideration determination.

(b) Resubmittal of a request for approval-- accreditation

organization. An accreditation organization may resubmit a request for

approval if a final reconsideration determination is not pending and

the accreditation program meets the following conditions:

(1) It has revised its accreditation program to address the

rationale for denial of its previous request.

(2) It demonstrates that it can provide reasonable assurance that

its accredited facilities meet condition-level requirements.

(3) It resubmits the application in its entirety.

(c) Resubmittal of request for approval--State licensure program.

The State licensure program may resubmit a request for approval if a

final reconsideration determination is not pending and it has taken the

necessary action to address the rationale for any previous denial.

Sec. 493.563 Validation inspections--Basis and focus.

(a) Basis for validation inspection--(1) Laboratory with a

certificate of accreditation. (i) HCFA or a HCFA agent may conduct an

inspection of an accredited laboratory that has been issued a

certificate of accreditation on a representative sample basis or in

response to a substantial allegation of noncompliance.

(ii) HCFA uses the results of these inspections to validate the

accreditation organization's accreditation process.

(2) Laboratory in a State with an approved State licensure program.

(i) HCFA or a HCFA agent may conduct an inspection of any laboratory in

a State with an approved State licensure program on a representative

sample basis or in response to a substantial allegation of

noncompliance.

(ii) The results of these inspections are used to validate the

appropriateness of the exemption of that State's licensed or approved

laboratories from CLIA program requirements.

(b) Validation inspection conducted on a representative sample

basis. (1) If HCFA or a HCFA agent conducts a validation inspection on

a representative sample basis, the inspection is comprehensive,

addressing all condition-level requirements, or it may be focused on a

specific condition-level requirement.

(2) The number of laboratories sampled is sufficient to allow a

reasonable estimate of the performance of the accreditation

organization or State.

(c) Validation inspection conducted in response to a substantial

allegation of noncompliance. (1) If HCFA or a HCFA agent conducts a

validation inspection in response to a substantial allegation of

noncompliance, the inspection focuses on any condition-level

requirement that HCFA determines to be related to the allegation.

[[Page 26735]]

(2) If HCFA or a HCFA agent substantiates a deficiency and

determines that the laboratory is out of compliance with any condition-

level requirement, HCFA or a HCFA agent conducts a full CLIA

inspection.

(d) Inspection of operations and offices. As part of the validation

review process, HCFA may conduct an onsite inspection of the operations

and offices to verify the following:

(1) The accreditation organization's representations and to assess

the accreditation organization's compliance with its own policies and

procedures.

(2) The State's representations and to assess the State's

compliance with its own policies and procedures, including verification

of State enforcement actions taken on the basis of validation

inspections performed by HCFA or a HCFA agent.

(e) Onsite inspection of an accreditation organization. An onsite

inspection of an accreditation organization may include, but is not

limited to, the following:

(1) A review of documents.

(2) An audit of meetings concerning the accreditation process.

(3) Evaluation of accreditation inspection results and the

accreditation decision-making process.

(4) Interviews with the accreditation organization's staff.

(f) Onsite inspection of a State licensure program. An onsite

inspection of a State licensure program office may include, but is not

limited to, the following:

(1) A review of documents.

(2) An audit of meetings concerning the licensure or approval

process.

(3) Evaluation of State inspection results and the licensure or

approval decision-making process.

(4) Interviews with State employees.

Sec. 493.565 Selection for validation inspection--laboratory

responsibilities.

A laboratory selected for a validation inspection must do the

following:

(a) Authorize its accreditation organization or State licensure

program, as applicable, to release to HCFA or a HCFA agent, on a

confidential basis, a copy of the laboratory's most recent full, and

any subsequent partial inspection.

(b) Authorize HCFA or a HCFA agent to conduct a validation

inspection.

(c) Provide HCFA or a HCFA agent with access to all facilities,

equipment, materials, records, and information that HCFA or a HCFA

agent determines have a bearing on whether the laboratory is being

operated in accordance with the requirements of this part, and permit

HCFA or a HCFA agent to copy material or require the laboratory to

submit material.

(d) If the laboratory possesses a valid certificate of

accreditation, authorize HCFA or a HCFA agent to monitor the correction

of any deficiencies found through the validation inspection.

Sec. 493.567 Refusal to cooperate with validation inspection.

(a) Laboratory with a certificate of accreditation. (1) A

laboratory with a certificate of accreditation that refuses to

cooperate with a validation inspection by failing to comply with the

requirements in Sec. 493.565--

(i) Is subject to full review by HCFA or a HCFA agent, in

accordance with this part; and

(ii) May be subject to suspension, revocation, or limitation of its

certificate of accreditation under this part.

(2) A laboratory with a certificate of accreditation is again

deemed to meet the condition-level requirements by virtue of its

accreditation when the following conditions exist:

(i) The laboratory withdraws any prior refusal to authorize its

accreditation organization to release a copy of the laboratory's

current accreditation inspection, PT results, or notification of any

adverse actions resulting from PT failure.

(ii) The laboratory withdraws any prior refusal to allow a

validation inspection.

(iii) HCFA finds that the laboratory meets all the condition-level

requirements.

(b) CLIA-exempt laboratory. If a CLIA-exempt laboratory fails to

comply with the requirements specified in Sec. 493.565, HCFA notifies

the State of the laboratory's failure to meet the requirements.

Sec. 493.569 Consequences of a finding of noncompliance as a result of

a validation inspection.

(a) Laboratory with a certificate of accreditation. If a validation

inspection results in a finding that the accredited laboratory is out

of compliance with one or more condition-level requirements, the

laboratory is subject to--

(1) The same requirements and survey and enforcement processes

applied to laboratories that are not accredited and that are found out

of compliance following an inspection under this part; and

(2) Full review by HCFA, in accordance with this part; that is, the

laboratory is subject to the principal and alternative sanctions in

Sec. 493.1806.

(b) CLIA-exempt laboratory. If a validation inspection results in a

finding that a CLIA-exempt laboratory is out of compliance with one or

more condition-level requirements, HCFA directs the State to take

appropriate enforcement action.

Sec. 493.571 Disclosure of accreditation, State and HCFA validation

inspection results.

(a) Accreditation organization inspection results. HCFA may

disclose accreditation organization inspection results to the public

only if the results are related to an enforcement action taken by the

Secretary.

(b) State inspection results. Disclosure of State inspection

results is the responsibility of the approved State licensure program,

in accordance with State law.

(c) HCFA validation inspection results. HCFA may disclose the

results of all validation inspections conducted by HCFA or its agent.

Sec. 493.573 Continuing Federal oversight of private nonprofit

accreditation organizations and approved State licensure programs.

(a) Comparability review. In addition to the initial review for

determining equivalency of specified organization or State requirements

to the comparable condition-level requirements, HCFA reviews the

equivalency of requirements in the following cases:

(1) When HCFA promulgates new condition-level requirements.

(2) When HCFA identifies an accreditation organization or a State

licensure program whose requirements are no longer equal to, or more

stringent than, condition-level requirements.

(3) When an accreditation organization or State licensure program

adopts new requirements.

(4) When an accreditation organization or State licensure program

adopts changes to its inspection process, as required by

Sec. 493.575(b)(1), as applicable.

(5) Every 6 years, or sooner if HCFA determines an earlier review

is required.

(b) Validation review. Following the end of a validation review

period, HCFA evaluates the validation inspection results for each

approved accreditation organization and State licensure program.

(c) Reapplication procedures. (1) Every 6 years, or sooner, as

determined by HCFA, an approved accreditation organization must reapply

for continued approval of deeming authority and a State licensure

program must reapply for continued approval of a CLIA exemption. HCFA

provides notice of the materials that must be submitted as part of the

reapplication procedure.

(2) An accreditation organization or State licensure program that

does not meet the requirements of this subpart, as determined through a

comparability or

[[Page 26736]]

validation review, must furnish HCFA, upon request, with the

reapplication materials HCFA requests. HCFA establishes a deadline by

which the materials must be submitted.

(d) Notice. (1) HCFA provides written notice, as appropriate, to

the following:

(i) An accreditation organization indicating that its approval may

be in jeopardy if a comparability or validation review reveals that it

is not meeting the requirements of this subpart and HCFA is initiating

a review of the accreditation organization's deeming authority.

(ii) A State licensure program indicating that its CLIA exemption

may be in jeopardy if a comparability or validation review reveals that

it is not meeting the requirements of this subpart and that a review is

being initiated of the CLIA exemption of the State's laboratories.

(2) The notice contains the following information:

(i) A statement of the discrepancies that were found as well as

other related documentation.

(ii) An explanation of HCFA's review process on which the final

determination is based and a description of the possible actions, as

specified in Sec. 493.575, that HCFA may impose based on the findings

from the comparability or validation review.

(iii) A description of the procedures available if the

accreditation organization or State licensure program, as applicable,

desires an opportunity to explain or justify the findings made during

the comparability or validation review.

(iv) The reapplication materials that the accreditation

organization or State licensure program must submit and the deadline

for that submission.

Sec. 493.575 Removal of deeming authority or CLIA exemption and final

determination review.

(a) HCFA review. HCFA conducts a review of the following:

(1) A deeming authority review of an accreditation organization's

program if the comparability or validation review produces findings, as

described at Sec. 493.573. HCFA reviews, as appropriate, the criteria

described in Secs. 493.555 and 493.557(a) to reevaluate whether the

accreditation organization continues to meet all these criteria.

(2) An exemption review of a State's licensure program if the

comparability or validation review produces findings, as described at

Sec. 493.573. HCFA reviews, as appropriate, the criteria described in

Secs. 493.555 and 493.557(b) to reevaluate whether the licensure

program continues to meet all these criteria.

(3) A review of an accreditation organization or State licensure

program, at HCFA's discretion, if validation review findings,

irrespective of the rate of disparity, indicate widespread or

systematic problems in the organization's accreditation or State's

licensure process that provide evidence that the requirements, taken as

a whole, are no longer equivalent to CLIA requirements, taken as a

whole.

(4) A review of the accreditation organization or State licensure

program whenever validation inspection results indicate a rate of

disparity of 20 percent or more between the findings of the

organization or State and those of HCFA or a HCFA agent for the

following periods:

(i) One year for accreditation organizations.

(ii) Two years for State licensure programs.

(b) HCFA action after review. Following the review, HCFA may take

the following action:

(1) If HCFA determines that the accreditation organization or State

has failed to adopt requirements equal to, or more stringent than, CLIA

requirements, HCFA may give a conditional approval for a probationary

period of its deeming authority to an organization 30 days following

the date of HCFA's determination, or exempt status to a State within 30

days of HCFA's determination, both not to exceed 1 year, to afford the

organization or State an opportunity to adopt equal or more stringent

requirements.

(2) If HCFA determines that there are widespread or systematic

problems in the organization's or State's inspection process, HCFA may

give conditional approval during a probationary period, not to exceed 1

year, effective 30 days following the date of the determination.

(c) Final determination. HCFA makes a final determination as to

whether the organization or State continues to meet the criteria

described in this subpart and issues a notice that includes the reasons

for the determination to the organization or State within 60 days after

the end of any probationary period. This determination is based on an

evaluation of any of the following:

(1) The most recent validation inspection and review findings. To

continue to be approved, the organization or State must meet the

criteria of this subpart.

(2) Facility-specific data, as well as other related information.

(3) The organization's or State's inspection procedures, surveyors'

qualifications, ongoing education, training, and composition of

inspection teams.

(4) The organization's accreditation requirements, or the State's

licensure or approval requirements.

(d) Date of withdrawal of approval. HCFA may withdraw its approval

of the accreditation organization or State licensure program, effective

30 days from the date of written notice to the organization or State of

this proposed action, if improvements acceptable to HCFA have not been

made during the probationary period.

(e) Continuation of validation inspections. The existence of any

validation review, probationary status, or any other action, such as a

deeming authority review, by HCFA does not affect or limit the conduct

of any validation inspection.

(f) Federal Register notice. HCFA publishes a notice in the Federal

Register containing a justification for removing the deeming authority

from an accreditation organization, or the CLIA-exempt status of a

State licensure program.

(g) Withdrawal of approval-effect on laboratory status--(1)

Accredited laboratory. After HCFA withdraws approval of an

accreditation organization's deeming authority, the certificate of

accreditation of each affected laboratory continues in effect for 60

days after it receives notification of the withdrawal of approval.

(2) CLIA-exempt laboratory. After HCFA withdraws approval of a

State licensure program, the exempt status of each licensed or approved

laboratory in the State continues in effect for 60 days after a

laboratory receives notification from the State of the withdrawal of

HCFA's approval of the program.

(3) Extension. After HCFA withdraws approval of an accreditation

organization or State licensure program, HCFA may extend the period for

an additional 60 days for a laboratory if it determines that the

laboratory submitted an application for accreditation to an approved

accreditation organization or an application for the appropriate

certificate to HCFA or a HCFA agent before the initial 60-day period

ends.

(h) Immediate jeopardy to patients. (1) If at any time HCFA

determines that the continued approval of deeming authority of any

accreditation organization poses immediate jeopardy to the patients of

the laboratories accredited by the organization, or continued approval

otherwise constitutes a significant hazard to the public health, HCFA

may immediately withdraw the approval of deeming authority for that

accreditation organization.

[[Page 26737]]

(2) If at any time HCFA determines that the continued approval of a

State licensure program poses immediate jeopardy to the patients of the

laboratories in that State, or continued approval otherwise constitutes

a significant hazard to the public health, HCFA may immediately

withdraw the approval of that State licensure program.

(i) Failure to pay fees. HCFA withdraws the approval of a State

licensure program if the State fails to pay the applicable fees, as

specified in Secs. 493.645(a) and 493.646(b).

(j) State refusal to take enforcement action. (1) HCFA may withdraw

approval of a State licensure program if the State refuses to take

enforcement action against a laboratory in that State when HCFA

determines it to be necessary.

(2) A laboratory that is in a State in which HCFA has withdrawn

program approval is subject to the same requirements and survey and

enforcement processes that are applied to a laboratory that is not

exempt from CLIA requirements.

(k) Request for reconsideration. Any accreditation organization or

State that is dissatisfied with a determination to withdraw approval of

its deeming authority or remove approval of its State licensure

program, as applicable, may request that HCFA reconsider the

determination, in accordance with subpart D of part 488.

Subpart H--Participation in Proficiency Testing for Laboratories

Performing Tests of Moderate Complexity (Including the

Subcategory), High Complexity, or Any Combination of These Tests

5. In Sec. 493.803, paragraph (b) is revised and a new paragraph

(c) is added to read as follows:

Sec. 493.803 Condition: Successful participation.

* * * * *

(b) Except as specified in paragraph (c) of this section, if a

laboratory fails to participate successfully in proficiency testing for

a given specialty, subspecialty, analyte or test, as defined in this

section, or fails to take remedial action when an individual fails

gynecologic cytology, HCFA imposes sanctions, as specified in subpart R

of this part.

(c) If a laboratory fails to perform successfully in a HCFA-

approved proficiency testing program, for the initial unsuccessful

performance, HCFA may direct the laboratory to undertake training of

its personnel or to obtain technical assistance, or both, rather than

imposing alternative or principle sanctions except when one or more of

the following conditions exists:

(1) There is immediate jeopardy to patient health and safety.

(2) The laboratory fails to provide HCFA or a HCFA agent with

satisfactory evidence that it has taken steps to correct the problem

identified by the unsuccessful proficiency testing performance.

(3) The laboratory has a poor compliance history.

Subpart Q--Inspection

6. In subpart Q, new Secs. 493.1771 and 493.1773 are added to read

as follows:

Sec. 493.1771 Condition: Inspection requirements applicable to all

CLIA-certified and CLIA-exempt laboratories.

(a) Each laboratory issued a CLIA certificate must meet the

requirements in Sec. 493.1773 and the specific requirements for its

certificate type, as specified in Secs. 493.1775 through 493.1780.

(b) All CLIA-exempt laboratories must comply with the inspection

requirements in Secs. 493.1773 and 493.1780, when applicable.

Sec. 493.1773 Standard: Basic inspection requirements for all

laboratories issued a CLIA certificate and CLIA-exempt laboratories.

(a) A laboratory issued a certificate must permit HCFA or a HCFA

agent to conduct an inspection to assess the laboratory's compliance

with the requirements of this part. A CLIA-exempt laboratory and a

laboratory that requests, or is issued a certificate of accreditation,

must permit HCFA or a HCFA agent to conduct validation and complaint

inspections.

(b) General requirements: As part of the inspection process, HCFA

or a HCFA agent may require the laboratory to do the following:

(1) Test samples, including proficiency testing samples, or perform

procedures.

(2) Permit interviews of all personnel concerning the laboratory's

compliance with the applicable requirements of this part.

(3) Permit laboratory personnel to be observed performing all

phases of the total testing process (preanalytic, analytic, and

postanalytic).

(4) Permit HCFA or a HCFA agent access to all areas encompassed

under the certificate including, but not limited to, the following:

(i) Specimen procurement and processing areas.

(ii) Storage facilities for specimens, reagents, supplies, records,

and reports.

(iii) Testing and reporting areas.

(5) Provide HCFA or a HCFA agent with copies or exact duplicates of

all records and data it requires.

(c) Accessible records and data: A laboratory must have all records

and data accessible and retrievable within a reasonable time frame

during the course of the inspection.

(d) Requirement to provide information and data: A laboratory must

provide, upon request, all information and data needed by HCFA or a

HCFA agent to make a determination of the laboratory's compliance with

the applicable requirements of this part.

(e) Reinspection: HCFA or a HCFA agent may reinspect a laboratory

at any time to evaluate the ability of the laboratory to provide

accurate and reliable test results.

(f) Complaint inspection: HCFA or a HCFA agent may conduct an

inspection when there are complaints alleging noncompliance with any of

the requirements of this part.

(g) Failure to permit an inspection or reinspection: Failure to

permit HCFA or a HCFA agent to conduct an inspection or reinspection

results in the suspension or cancellation of the laboratory's

participation in Medicare and Medicaid for payment, and suspension or

limitation of, or action to revoke the laboratory's CLIA certificate,

in accordance with subpart R of this part.

7. Section 493.1775 is revised to read as follows:

Sec. 493.1775 Standard: Inspection of laboratories issued a

certificate of waiver or a certificate for provider-performed

microscopy procedures.

(a) A laboratory that has been issued a certificate of waiver or a

certificate for provider-performed microscopy procedures is not subject

to biennial inspections.

(b) If necessary, HCFA or a HCFA agent may conduct an inspection of

a laboratory issued a certificate of waiver or a certificate for

provider-performed microscopy procedures at any time during the

laboratory's hours of operation to do the following:

(1) Determine if the laboratory is operated and testing is

performed in a manner that does not constitute an imminent and serious

risk to public health.

(2) Evaluate a complaint from the public.

(3) Determine whether the laboratory is performing tests beyond the

scope of the certificate held by the laboratory.

(4) Collect information regarding the appropriateness of tests

specified as waived tests or provider-performed microscopy procedures.

[[Page 26738]]

(c) The laboratory must comply with the basic inspection

requirements of Sec. 493.1773.

Sec. 493.1776 [Removed]

8. Section 493.1776 is removed.

9. Section 493.1777 is revised to read as follows:

Sec. 493.1777 Standard: Inspection of laboratories that have requested

or have been issued a certificate of compliance.

(a) Initial inspection. (1) A laboratory issued a registration

certificate must permit an initial inspection to assess the

laboratory's compliance with the requirements of this part before HCFA

issues a certificate of compliance.

(2) The inspection may occur at any time during the laboratory's

hours of operation.

(b) Subsequent inspections. (1) HCFA or a HCFA agent may conduct

subsequent inspections on a biennial basis or with such other frequency

as HCFA determines to be necessary to ensure compliance with the

requirements of this part.

(2) HCFA bases the nature of subsequent inspections on the

laboratory's compliance history.

(c) Provider-performed microscopy procedures. The inspection sample

for review may include testing in the subcategory of provider-performed

microscopy procedures.

(d) Compliance with basic inspection requirements. The laboratory

must comply with the basic inspection requirements of Sec. 493.1773.

10. Section 493.1780 is revised to read as follows:

Sec. 493.1780 Standard: Inspection of CLIA-exempt laboratories or

laboratories requesting or issued a certificate of accreditation.

(a) Validation inspection. HCFA or a HCFA agent may conduct a

validation inspection of any accredited or CLIA-exempt laboratory at

any time during its hours of operation.

(b) Complaint inspection. HCFA or a HCFA agent may conduct a

complaint inspection of a CLIA-exempt laboratory or a laboratory

requesting or issued a certificate of accreditation at any time during

its hours of operation upon receiving a complaint applicable to the

requirements of this part.

(c) Noncompliance determination. If a validation or complaint

inspection results in a finding that the laboratory is not in

compliance with one or more condition-level requirements, the following

actions occur:

(1) A laboratory issued a certificate of accreditation is subject

to a full review by HCFA, in accordance with subpart E of this part and

Sec. 488.11 of this chapter.

(2) A CLIA-exempt laboratory is subject to appropriate enforcement

actions under the approved State licensure program.

(d) Compliance with basic inspection requirements. CLIA-exempt

laboratories and laboratories requesting or issued a certificate of

accreditation must comply with the basic inspection requirements in

Sec. 493.1773.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical

Assistance Program, Catalog of Federal Domestic Assistance Program

No. 93.773, Medicare--Hospital Insurance; and Program No. 93.774,

Medicare--Supplementary Medical Insurance Program)

Dated: October 13, 1997.

Nancy-Ann Min DeParle,

Deputy Administrator, Health Care Financing Administration.

Dated: September 18, 1997.

David Satcher,

Director, Centers for Disease Control and Prevention.

Approved: February 2, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98-12752 Filed 5-13-98; 8:45 am]

BILLING CODE 4120-01-P