CMS Divides PT Sanctions Into 3 Categories, Limits Reach of Ban

The Centers for Medicare and Medicaid Services (CMS) has finalized a proposal to divide proficiency testing (PT) sanctions into three categories based on the severity and extent of the violation. In a final rule published in the May 2 Federal Register, the agency uses its authority under the Taking Essential Steps for Testing (TEST) Act of 2012 to amend sanctions under the Clinical Laboratory Improvement Amendments (CLIA). The TEST Act gave CMS discretion to substitute intermediate or alternative sanctions in cases of intentional PT referral. CLIA regulations required labs conducting moderate- or high-complexity testing to enroll in an approved PT program that covers all of the specialties and subspecialties for which the laboratory is certified. As of June 2013, there were 239,922 CLIA-certified laboratories. Of those, 35,035 are required to enroll in a PT program approved by the Department of Health and Human Services (HHS). CMS views proficiency testing as a valuable tool that labs can use to verify the accuracy and reliability of their testing. During PT, an HHS-approved PT program sends samples to be tested by a laboratory on a scheduled basis. After testing the PT samples, the lab reports its results back to the PT program for scoring. As there is no on-site, external proctor for PT testing in a laboratory, the testing relies in large part on an honor system. For each PT event, labs are required to attest that PT samples are tested in the same manner as patient specimens are tested. Any lab that intentionally refers its PT samples to another laboratory for analysis risks having its certification revoked for at least one year, with the owner prohibited from owning or operating another laboratory for two years. While the phrase “intentionally referred” has not been defined by statute or regulations, CMS has consistently interpreted the phrase to mean “general intent, as in intention to act.” Thus, any lab that referred a PT sample to another lab automatically would face the most severe penalties. Under this final rule, CMS has amended the CLIA regulations so that a lab “may” (as opposed to “must”) have its CLIA certification revoked when the agency determines that PT samples were intentionally referred to another laboratory. CMS has established three different sanction categories. Category 1 The first category is for the most serious, egregious violations, encompassing cases of repeat PT referral or cases where a laboratory reports another lab’s test results as its own. In such cases, CMS does not believe that alternative sanctions alone would be appropriate. Therefore, the agency will revoke the CLIA certificate for at least one year, ban the owner or operator from owning or operating a CLIA-certified lab for at least one year, and possibly impose a civil money penalty (CMP). A “repeat proficiency testing referral” is defined as “a second instance in which a proficiency testing sample, or a portion of a sample, is referred, for any reason, to another laboratory for analysis prior to the laboratory’s proficiency testing program event cut-off date within the period of time encompassing the two prior survey cycles (including initial certification, recertification, or the equivalent for laboratories surveyed by an approved accreditation organization).” Category 2 Under a second category of sanctions, a CLIA certificate would be suspended or limited (rather than revoked) in combination with the imposition of alternative sanctions. This approach would be used in instances in which a lab refers PT samples to a lab that operates under a different CLIA number before the PT event close date and, while the lab reports its own results to the PT program, it receives results from the second lab prior to the event close date. Such a referral situation would allow the referring laboratory an opportunity to confirm, check, or change its results prior to reporting its results to the PT program. If, upon investigation, surveyors determine that the referral does not constitute a repeat PT referral, CMS would suspend or limit the CLIA certificate for less than one year rather than revoke it and would impose alternative sanctions. An alternative sanction would always include required training of staff. A suspension of the CLIA certificate means that no testing of human specimens for health care purposes may be performed by that laboratory during the period of suspension. In such cases, the owner or operatory typically contracts with another operator to run the lab under the contracted laboratory’s CLIA certificate. In contrast to a revocation of the CLIA certificate and its accompanying ban on the owner and operator, suspension usually applied only to the individual laboratory in question rather than all laboratories that are under the control of the owner or operator. A limitation of the CLIA certificate means that the lab is not permitted to perform testing or to bill Medicare or Medicaid for lab work in the specialty or subspecialty that has been limited but may continue to conduct all other testing under its own CLIA certificate. In determining whether to suspend or limit the CLIA certificate, CMS would examine the extent of the PT referral practice, as well as its duration. If surveyors determine that in the previous two survey cycles there were prior PT referrals that occurred but were not cited by CMS, then the CLIA certificate would always be suspended rather than just limited. The duration of the suspension would reflect the number of samples referred, the period of time the referrals had been occurring, the extent of the practice, and other criteria. In the second category, alternative sanctions also would be applied in addition to the principal sanctions. At a minimum, alternative sanctions would include a CMP as well as a directed plan of correction. In addition, if the CLIA certificate is suspended, CMS would impose state on-site monitoring of the laboratory. Category 3 A third category of sanctions will be applied to those PT referral scenarios in which the referring laboratory does not receive test results prior to the event cutoff date from another laboratory as a result of the PT referrals. In such cases, the lab will be required to pay a CMP as well as comply with a directed plan of correction, which would always include training of staff. For example, a laboratory may place PT samples in an area where other patient specimens are picked up by courier to take to a reference laboratory. The reference laboratory courier may take the PT samples along with the patients’ specimens. The lab personnel notice that the PT samples are missing and contact the reference lab to inquire if they have received the PT samples along with the patients’ specimens. The reference lab is instructed to discard the PT samples and not test them since they were picked up in error. In this case, the “referring” lab realized the error, contacted the receiving lab, and did not receive results back for any of the PT samples. In this scenario, CMS would impose only alternative sanctions. Waived Labs, ‘Intentional’ Referral In responding to comments submitted to the Sept. 23, 2013, proposed rule, CMS notes that the rule does apply to waived laboratories that participate in PT. The agency also has proposed an exception to its longstanding interpretation of “intentionally refers” in a separate rule. Under that proposal, a referral would not be considered “intentional” if the investigation revealed that PT samples were sent to another lab for reflex or confirmatory testing, the referral is not a repeat PT referral, and the referral occurred while personnel were acting in full conformance with the laboratory’s written, legally accurate, and adequate standard operating procedures. Limit on Reach of Ban CMS also responded to concerns that a mandatory one-year prohibition for owners that applies to all laboratories of the owner would not be reasonable for a large health system that owns a large number of laboratories in many locations. Commenters suggested that the one-year ban for the owner should be limited to the single laboratory where the PT referral occurred. The agency notes that it is incumbent upon labs to organize in a manner that allows them to mitigate circumstances so that when one or more labs are sanctioned, the rest of the lab network is not unduly impacted. However, CMS also recognizes that there are benefits to large health systems organizing in ways to promote efficiency of care with the least cost to patients and says it agrees that there should be some discretion in the regulation to allow for flexibility in the mandatory one-year ban against owners of laboratories that would create access issues in the communities in which they serve. As such, CMS is adding a provision to limit the reach of the owner ban for certain labs under the same ownership as the revoked laboratory if CMS finds, after a review, that patients would not be at risk if the lab were exempted from the ban and there is no evidence that a lab to be exempted from the ban participated in or was complicit in the PT referral. However, any lab of the owner that received a PT sample from another lab and failed to report such receipt to CMS may not be exempted from the owner ban. In assessing whether patients would potentially be at risk if the laboratory would be exempted from the ban, CMS will consider factors including, but not limited to, the following: the extent to which staff of the lab that may be exempted from the owner ban have been adequately trained and will promptly have such training reinforced regarding PT, the history of compliance with the CLIA regulations, evidence of any systemic quality issues for the lab that seeks to be exempted, and the potential for access-to-care problems for patients if the lab was not granted an exemption. Takeaway: CMS will use more enforcement discretion in determining what sanctions to impose in cases where a laboratory violates the prohibition of proficiency testing referrals. Sanctions will be divided into three separate categories. Side Box: Cost and Benefits CMS estimates that only six cases per year would actually qualify for alternative sanctions. Based on experience with laboratories that engaged in PT referrals in the past, the agency estimates that the average cost incurred by labs that had their CLIA certificate revoked was $578,000 per laboratory. The cost of alternative sanctions, based on comparable violations, is estimated at $150,000 per laboratory. With net average savings per affected certificate holder of about $428,000, CMS projects that the aggregate annual savings would be approximately $2.6 million per year ($428,000 times six labs).