Democratic Committee Leaders and CMS Present Latest Challenges to Theranos

By Kelly Hardy Briganti, Editorial Director, G2 Intelligence

Both the Centers for Medicare & Medicaid Services (CMS) and some high ranking Democratic Committee members had some bad news for Theranos at the start of this month.

The company itself issued a statement announcing “CMS has decided to impose all available sanctions regarding our lab business,” following a 2015 survey of its Newark, Calif. laboratory. Those sanctions include the loss of its CLIA certificate, suspension of Medicare and Medicaid payments for hematology services, cancellation of approval to receive Medicare and Medicaid payments for laboratory services, and concurrent barring of Holmes from owning, operating or directing a lab for two years. The company is also subject to a $10,000 daily penalty starting July 12 until it corrects all the deficiencies cited by the CMS in prior inspection reports. Theranos vowed to continue on with its mission, promising to work with CMS “non-stop to resolve the issues identified.” It has 60 days before the revocation of the CLIA certificate will take effect. If it does take effect the Arizona lab will also have to cease lab operations. Theranos can appeal the sanctions, which would delay the revocation.

The company’s announcement also highlighted that it does more than just lab testing, including research and development of “many technologies that are not dependent on running a clinical laboratory.” For more information about CMS’ letter to Theranos and its response, see the next issue of Laboratory Industry Report.

Even prior to CMS issuing its decision, three Democratic Committee leaders sent Theranos a letter seeking more information about “how company policies permitted systematic violations of federal law and how Theranos is working with regulators to address these failures,” as well as information about the “steps Theranos is taking to correct flawed test results sent to medical professionals and patients.” The letter came from Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), Health Subcommittee Ranking Member Gene Green (D-TX) and Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO).