The Centers for Medicare and Medicaid Services (CMS) has proposed important changes and clarifications to the regulations governing proficiency testing (PT) samples under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The proposals, CMS said, would “prevent confusion on the part of laboratories, reduce the risk of noncompliance, and establish policies under which certain PT referrals by labs would not generally be subject to revocation of a CLIA certificate or a two-year prohibition on laboratory ownership or operation that may be applied to an owner and an operator when a CLIA certificate is revoked.” They were published in the Feb. 7 Federal Register, “Medicare and Medicaid Programs; Part II—Regulatory Provisions to Promote Program Efficiency, Transparency, and Burden Reduction.” Comments are due April 8. Treatment of PT Samples Under CLIA rules, for each PT event, labs are required to attest that PT samples are tested in the same manner as patient specimens are tested, that is, by integrating them into the lab’s routine patient workload, with the testing performed by the personnel who routinely perform such testing, using the laboratory’s routine methods. Some have interpreted this to mean they can send out PT samples for reflex or confirmatory testing if this is their standard operating procedure. To clarify this point, CMS would add a statement to the rules that would “explicitly note that the requirement to treat PT samples in the same manner as patient specimens does not mean it is acceptable to refer PT samples to another laboratory for testing even if that is the standard operating procedure for patient specimens. . . . A PT sample must never be sent to another laboratory under any circumstances.” Narrow Exception for Intentional Referrals The CLIA rules prohibit a lab from intentionally referring a PT sample to another lab for analysis of a test that the lab is certified to perform. Violating this ban results in a one-year revocation of the lab’s CLIA certificate and triggers a two-year ban on the lab’s owner or operator from owning or operating another lab. The term “intentional referral” has not been defined by the statute or regulations, CMS noted, “but we have consistently interpreted it from the onset of the program to mean general intent, as in intention to act. Whether or not acts are authorized or even known by the lab’s management, a lab is responsible for the acts of its employees.” Expansive case law has supported this interpretation, the agency pointed out. Now, CMS is proposing to carve out a narrow exception to its policy on intentional referrals. If a CMS investigation reveals that PT samples were sent to another lab for reflex or confirmatory testing, it is not a repeat PT referral, and it occurred “in full conformance with the lab’s written, legally accurate, and adequate standard operating procedure,” the referral would be deemed improper, but not intentional, and would be subject to intermediate sanctions. These may include any combination of civil money penalties, a directed plan of correction (such as required remedial training of staff), temporary suspension of Medicare or Medicaid payments, or other sanctions specified in the rules. There are caveats attached to the exception, however. The carve-out, CMS said, “is meant to be a one-time exception to a finding of an intentional referral by virtue of a general intent to forward a PT sample to another lab.” The agency expects labs to eliminate any improper referrals “or we will find that future referrals are intentional.” Also, any lab that receives a PT sample from another lab for testing must notify CMS of the receipt of that sample regardless of whether the referral was made for reflex or confirmatory testing or for any other reason. Change in Statutory Language CMS is proposing to amend the regulations to implement the Taking Essential Steps for Testing (TEST) Act, signed into law last December, which gives the agency express authority to impose alternative sanctions in the event of an intentional PT referral. Specifically, the word “will” would be replaced with “may” in the regulation that currently requires revocation of a lab’s CLIA certificate if it refers a PT sample to another lab and bars the lab’s owner or operator from owning or operating another lab for two years from the effective date of the certificate revocation. CMS said it plans further rulemaking to implement provisions of the new law. Perspectives on the Proposals In comments to NIR, attorney Robert E. Mazer, with Ober/Kaler in Baltimore, noted, “Most of the discussion in the proposed rule does not relate to the recent legislation that gives CMS enforcement discretion in handling intentional PT referrals. “CMS would first bolster its authority to find that there’s been an unlawful referral of PT samples when the referral is for confirmatory or reflex testing by specifying that the requirement that the lab treat PT samples like patient specimens applies only until the lab would refer a sample to another laboratory [emphasis added]. This will make it even more difficult for a lab to defend a charge of an improper PT referral by saying that it followed regulations requiring that it test PT samples just as it tests patient specimens. CMS then specifies narrow circumstances where such referrals would not be considered intentional. In those circumstances, CMS cannot revoke the lab’s CLIA certificate. “CMS proposes to only partially implement the recently enacted TEST Act. The proposed regulations state that a lab that CMS has determined to have intentionally referred its PT samples to another lab for analysis may have its CLIA certificate revoked. The regulations currently say that such a lab will have its certificate revoked. This change reflects the discretion provided to the agency by the TEST Act. “CMS states that it will ‘undertake further rule-making’ to implement the legislation. Accordingly, the proposed rule does not provide any insights as to how CMS will exercise its new discretion to impose penalties other than revocation—and the related two-year ban on the lab’s owner or operator from owning or operating another lab—in the case of PT referrals which the agency continues to consider ‘intentional.’” “CMS did not propose any change to the provision within the enforcement procedures section of the CLIA regulations that states that CMS revokes the lab’s CLIA certificate if it determines that it has intentionally referred a PT sample to another laboratory for analysis. 42 CFR 493.1840 (b). Therefore, if the proposed regulatory changes were adopted, there would be a potential inconsistency between these two provisions.”