Many physicians have some type of lab testing capability in their practices, with most practice labs classified as Waived Labs, which means having a Certificate of Waiver.  This Certificate enables a practice to perform simple tests including tests such as urine dipsticks, rapid Strep A for sore throats, Mono Tests, pregnancy slide tests on urine, and Rapid Flu tests.

There is little effort required to become or maintain a Waived Lab

There are no personnel qualification requirements, and the only regulation is to “follow the manufacturer’s instructions” on the test packages. In order to obtain a Certificate of Waiver, an application form (the CMS116 form) must be completed and submitted to CLIA at the state CLIA office.  The CLIA office will issue a CLIA identification number and the practice will receive a bill for the Certificate of Waiver for $150.  Life is wonderfully simple at a Certificate of Waiver level.

There are also Point of Care (POC) instruments that are classified as Waived instruments and can be used by a lab with a Certificate of Waiver.  Glucose is one analyte that can be measured using a POC instrument.  There is a POC instrument that has cartridges available enabling the measurement of a Basic Metabolic Panel chemistry profile (8 general chemistry tests) at a Waived level.  Urine dipsticks can be tested and read electronically by strip readers which print out detailed reports at the Waived Lab level.  A Waived Lab can easily increase its sophistication and range of tests without ever moving from Waived Lab status to Non-Waived Lab status.

Unfortunately, as of today there is no hematology analyzer available to test a Complete Blood Count (CBC) that is classified as a Waived analyzer.  So if measuring the parameters in a CBC is something that is needed or desired in a physician’s practice, a change in the classification status of the laboratory will be required.  The lab will have to obtain a Certificate of Compliance in place of the Certificate of Waiver in order to perform CBC testing or any other non-waived test. There are also personnel requirements which will have to be met and regulations which will have to be followed in addition to the “follow the manufacturer’s recommendations” rule.   In reality, however, it isn’t as cumbersome or burdensome a process as it sounds, and the rewards can be great – both from a diagnostic and a financial viewpoint.   So let’s examine the process required to move from a Certificate of Waiver to a Certificate of Compliance, and both the benefits and disadvantages of life in the Certificate of Compliance world.

What is the process to acquire a Certificate of Compliance?

1. Select someone who is qualified to be Laboratory Director to oversee the lab.
2. Complete the CMS116 application form (available online from CMS).
   1. This will require an evaluation of the number of waived tests performed in the previous 12 month period, and an estimate of the number of non-waived tests expected to be performed in the next 12-month period.
   2. The non-waived test total will be used to calculate the fees for the lab, and the fee increases as test volumes increase.
   3. Submit the application, signed by the lab director, along with proof of the lab director’s qualifications to direct a non-waived lab to the CLIA office in the state in which the practice resides.

It generally takes about 30 days to obtain the upgraded certificate, but can take longer depending on the state.

Once the Certificate of Compliance is issued, the lab is permitted to test and bill for patient results.  CLIA will wait for 3 – 6 months before performing an inspection because they want data to have been generated prior to their arrival so they have something to review.

What new regulations now apply to the lab that didn’t apply before?

The lab must have personnel who meet the requirements defined by CLIA.

• For a moderately complex laboratory, the lab personnel must include a Lab Director, a Clinical Consultant, a Technical Consultant, and testing personnel with at least a high school diploma.
• Personnel may wear more than one hat, so it is possible for the Lab Director to also be the Technical Consultant, the Clinical Consultant, and the testing personnel.
• There are numerous ways in which one can qualify to be a lab director, but in a physician practice the most common is for a physician to either have 2 years of experience in directing a non-waived laboratory or take a course designed to provide the 20 hours of CEU needed to qualify as lab director.
• The lab director cannot qualify to be the Technical Consultant until he/she has directed a lab for a minimum of one year, or has the requisite formal laboratory training required to meet the standards of the position.  This position can be contracted out for a year while the lab director gains the necessary experience in order to qualify for the position himself/herself.
• The lab must have a written procedure manual and a written plan for monitoring and documenting quality assessment.
• The lab must participate in proficiency testing for all non-waived testing, with a cost to subscribe to proficiency testing (generally under $500/year for a lab performing only CBCs).
• The lab must perform a minimum of 2 levels of quality control (QC) every day of patient testing and the results of these tests must be acceptable before patients can be tested and/or reported.
• The lab must perform and document the manufacturer’s required maintenance on all equipment used for non-waived testing, including monitoring room temperature and humidity and all refrigerator and freezer temperatures.
• All required activities must be documented and this documentation must be saved for 2 years.
• The lab must undergo an inspection every 2 years by either CLIA or one of the accrediting agencies approved by CLIA (e.g. COLA).
  • The cost of this inspection is the Compliance Fee and is determined by the number of non-waived tests performed in a 12-month period.
  • During this inspection all saved documentation (including personnel records) will be reviewed by the inspector, who will look to ensure the lab director has reviewed and documented review of all records.
  • If a lab fails to do the required tasks and document their performance, the lab can lose its permission to continue testing.

What are the benefits of moving up to Certificate of Compliance?

• The number of tests which can be performed in the practice grows dramatically when the lab moves from a Certificate of Waiver to a Certificate of Compliance.
• Physicians are now at liberty to set up any test that complies with their level of complexity or below.
• Results can be available in real time and can be used to help diagnose and treat patients while they are onsite.
• Specimen integrity is usually improved when testing is done in-house rather than having to send the specimen outside to a reference lab.
• Reimbursement for testing adds revenue to the practice.  CBCs reimburse at a significantly higher rate than what it costs to perform them.
• Patient satisfaction is almost universally improved when a physician sets up a lab in his practice and the patient can have lab tests done on the premises instead of having to go elsewhere to have the testing done.

What are the negatives associated with upgrading from Waived to Non-Waived status?

• The regulatory burden is higher than with a Waived lab, for which there are no regulations other than to “follow the manufacturer’s instructions.”
• The personnel requirements are more stringent than with Waived labs, and the responsibilities for the CLIA-defined personnel positions are greater also.
• The penalties for failure to follow compliance regulations can be severe.
• It costs more money to be a non-waived lab but generally brings in greater revenue to offset the increased cost.

To summarize, there are a lot more regulations governing non-waived labs than waived labs, but there are also a lot more tests that can be run in a non-waived lab, and additional revenue that can be gained doing non-waived testing.  When results can be obtained in a real time setting, both patient care and patient satisfaction are improved.  Although it seems like there are a lot more hoops to have to jump through to get to a non-waived level, in reality it isn’t a difficult process and the rewards can be great.  It is certainly worth the time and effort to evaluate the needs of the practice and the test volumes to determine if it is feasible to move up to a Certificate of Compliance laboratory.

Consultant Elizabeth “Libby” Knollmeyer, B.S., MT (ASCP) has over 40 years experience in the laboratory industry and has set up many laboratories! She specializes in financial, operational management and compliance issues for both hospital and physician office laboratories. Libby has a wide variety of experience with her areas of special expertise including financial review and management, Quality Management protocols, Outreach development, compliance and regulatory assistance, lab design and up fitting, lab remodeling, and market research for IVD manufacturers. She works independently and with large consulting groups to provide interim management for hospitals, and serves as adviser to lab equipment and supply distributors. She consults (and enjoys traveling) throughout the US and internationally. She can be reached at (336) 288-5823 or at eknollmeyer@triad.rr.com.

CLIA (Clinical Laboratory Improvement Amendments of ’88) is the basic set of regulations governing all laboratories that test human specimens (with rare exceptions). It is the minimum standard for labs.
CLIA has given “deemed status” to several other agencies allowing them to accredit labs and inspect the labs in CLIA’s stead. COLA is one of these agencies (as are CAP and The Joint Commission). All accrediting agencies must be at least as strict as CLIA, or to phrase it a different way, all accrediting agencies must have the same regulations as CLIA does, and then may add additional regulations on top of the CLIA regulations if they wish.

There is little difference between CLIA and COLA from a regulatory viewpoint. COLA enforces a few more requirements than CLIA does, but the differences are relatively minor. One example is that COLA requires correlation studies be done when a new instrument is installed to compare the new instrument to an old instrument or a reference lab method and CLIA does not. Another is that CLIA requires an overlap of old control lot numbers to new control lot numbers but doesn’t specify a number of times they must be run together; COLA requires overlapping old and new 5 times. So there are differences, but it is pretty easy to see that the differences in regulations are not extreme. CLIA publishes their Interpretive Guidelines on the Internet for all to read so you have ready access to the information as to how a regulation is going to be applied; COLA does not and will not share their Interpretive Guidelines (they consider it proprietary information), so understanding how a questionable regulation will be applied is left to a guess or a phone call to COLA headquarters in Maryland.

From a personnel standpoint, there is no difference between CLIA and COLA. COLA follows the CLIA requirements for personnel qualifications and responsibilities, both for moderately complex labs and for highly complex labs.

From an inspection standpoint, there can be notable differences, depending on the state in which the lab is located. CLIA is a federal program but is administered at the state level in each state. While the regulations they enforce are the same, the quality of the CLIA departments from one state to another varies widely. COLA is a nationwide program and the inspectors move freely between states as needed to inspect labs. Both agencies train their inspectors, so in a perfect world all inspections would be the same within an agency. Unfortunately, however, that is not the real life situation. The quality of the inspectors and the inspections they perform can vary widely ”“ in each agency. In many states, CLIA is short-staffed so delays are common. On the whole, COLA is probably a little more uniform throughout the country than CLIA is, but CLIA is usually more dependable with post-inspection routine and follow-up than COLA.

The costs associated with CLIA and COLA are pretty much the same. Both base their costs on the number of non-waived tests performed in a year’s time. All labs pay CLIA a Certificate Fee””the cost of renewing the CLIA identification number. And all non-waived labs pay a Compliance Fee to cover the cost of their inspection, but the Compliance Fee is billed by the inspecting agency, so if you’re inspected by CLIA the Compliance Fee will be billed by CLIA and if you are accredited by COLA, the COLA fee covers the cost of the inspection.

Several states have state lab regulations on top of CLIA regulations that are enforced. Pennsylvania, New York, Massachusetts, Maryland, Illinois, and California are several examples. Whenever there is state licensure of labs in addition to CLIA licensure, the fees will usually be higher because there will be both a CLIA and a state fee. If your lab is located in a state with additional state regulations, be sure and find out how the state regulations differ from CLIA and/or COLA (depending on which you choose for compliance). And be aware that when CLIA amends a regulation to make it less strict, COLA and/or the state may not follow suit. Also be aware that if your lab fails to maintain accreditation with one of the agencies other than CLIA, they will lose their CLIA Certificate as well unless they can pass a CLIA inspection. The accrediting agencies carry just as much weight as does CLIA.

Whenever I am asked which agency I recommend for a new lab, my answer is “it depends”¦” In some states, CLIA is absolutely the best choice (North Carolina is one of those states) because the department is very well run and the inspectors are very well trained and highly accessible when assistance is needed. In other states, CLIA is a disaster and COLA is absolutely the best choice (California and Louisiana being two examples). In the great majority of states, it really doesn’t matter which agency is chosen because overall they both do excellent jobs.

Consultant Elizabeth Knollmeyer, B.S., MT (ASCP) has over 40 years experience in the laboratory industry. She specializes in financial, operational management and compliance issues for both hospital and physician office laboratories.  Libby has a wide variety of experience with her areas of special expertise including financial review and management, Quality Management protocols, Outreach development, compliance and regulatory assistance, lab design and up fitting, lab remodeling, and market research for IVD manufacturers. She works independently and with large consulting groups to provide interim management for hospitals, and serves as adviser to lab equipment and supply distributors.  She can be reached at (336) 288-5823 or at eknollmeyer@triad.rr.com.

The CLIA regulations require a facility to be appropriately certified for each test performed. To ensure that the Medicare and Medicaid programs only pay for laboratory tests categorized as waived complexity under CLIA in facilities with a CLIA certificate of waiver, laboratory claims are currently edited at the CLIA
certificate level.

New test list here (pdf.)

All CLIA waived tests here (pdf.) – updated July 6, 2010