From the Contributor’s Corner: The TEST Act and Laboratory Certification Revocation for Unintentional Referrals

Health Wolters Kluwer Law & Business will periodically feature posts from outside contributors who are members of our Advisory Board. Today’s post comes from Ericka L. Adler.

On December 4, 2012, President Obama signed the Taking Essential Steps for Testing Act of 2012 (“TEST Act”) into law. The TEST Act amends Section 353 of the Public Health Service Act to address the lack of regulatory flexibility given to CMS under CLIA rules in dealing with revocation of laboratory CLIA certificates for unintentional referrals of proficiency testing samples by laboratories. The TEST Act comes after much criticism of the CLIA rules by the industry and several high profile legal battles in which major medical institutions faced the loss of their certification due to existing regulations.

Laboratories that submit claims for Medicare reimbursement must have a CMS-issued certificate under the Clinical Laboratory Improvement Amendments (42 U.S.C. 263(a)) (“CLIA”). Holding such a certificate is a prerequisite to a laboratory being able to operate and conduct non-waived testing (e.g., tests of moderate to high complexity).

As part of the CLIA certification requirements, laboratories are required to engage in periodic proficiency testing, which essentially involves a CMS-approved proficiency testing program (“PT Program”) sending specimens to the CLIA laboratory at regular intervals, with the direction that the laboratory test the specimens in the same manner it would handle similar patient specimens. Upon completion of the testing of the PT Program specimen, the laboratory returns the results to the PT Program for analysis, where the data is compared to known, controlled results. Failure to achieve accurate testing results under the PT Program can lead to a loss of the laboratory’s CLIA certification and its ability to conduct non-waived testing.

In addition to inaccurate testing, there are other events that constitute a violation of proficiency testing, resulting in laboratories regularly (and often unknowingly) violating proficiency testing standards and jeopardizing their CLIA certification. Such events include, but are not limited to, the intentional or unintentional discussing or sharing of proficiency test processing or results with another laboratory. The most common proficiency testing violation occurs when one laboratory refers a PT Program specimen to a second laboratory to perform the proficiency testing or to confirm the original laboratory’s results. Often, this occurs when a laboratory’s normal protocol dictates handling certain patient testing in such a manner. However, in this instance, following the same procedures a lab uses for similar patient tests will actually violate the proficiency testing rules which prohibit an intentional referral of proficiency testing samples. These seemingly inconsistent requirements have led to confusion by laboratories as to how they can treat the proficiency testing sample in the same manner as patient samples, but not refer them to another laboratory if that is the usual manner in which the lab’s own patient samples would usually be handled.

Although laboratories attempt to put into place protocols to avoid the referral of proficiency testing between laboratories, a large number of accidental referrals occur through human error and automated systems that do not recognize a proficiency test sample. The resulting consequence has created great hardship for many laboratories, since violation of proficiency testing rules previously required CMS to revoke the CLIA certificate, regardless of intent. Moreover, once the certificate was revoked, CMS had no discretion under the law but to bar certain persons and entities, such as the owner and operator of the laboratory, the entire hospital network (if the laboratory is hospital-based), the laboratory director, the board of directors, or other laboratory-related parties, from owning and/or affiliating with another laboratory for period of time. The inability of a hospital or practice to own and/or operate a laboratory for any period of time can clearly effect the essential operations of that entity and access to quality patient care.

Great criticism from the industry over proficiency testing violations, as well as some high profile institutions losing their certifications, resulted in a call for a change to the law. The TEST Act addresses the lack of regulatory flexibility within CLIA rules and grants CMS discretion to circumvent the revocation of CLIA certificates for unintentional referrals of proficiency testing samples to other laboratories. This new legislation will permit CMS to impose alternative sanctions prior to revoking a laboratory’s CLIA certificate, where a proficiency testing sample was referred to another laboratory for confirmatory testing or because the laboratory does not offer a specific test. Additionally, the law now makes the certificate revocation for a laboratory optional rather than mandatory.

The TEST Act will hopefully prevent the harsh and often unwarranted loss of a laboratory’s CLIA certification for inadvertent violations of PT Program requirements, although it is still essential for all labs to take steps to comply with the PT Program’s strict requirements.

 Ericka L. Adler is a partner at the firm of Kamensky Rubinstein Hochman & Delott, LLP.  Her primary practice focus is in the areas of regulatory and transactional health care law and she has substantial experience structuring sophisticated health care ventures and advising clients regarding compliance with federal and state health care laws and regulations. Ms. Adler lectures to and advises physicians, providers and other health care specialists nationally regarding regulatory health care issues, day to day practice management, physician contract matters and other business issues that impact healthcare. Ms. Adler has a J.D. and an LL.M in health care law from the Health Law Institute at the DePaul University College of Law.  You can reach her at and can follow her on Twitter at @krhdhealthlaw.