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Guest Lab Consultant Libby Knollmeyer: What to Expect When You’re Expecting (or Not Expecting) a Lab Inspection

Prior to CLIA ’88 (Clinical Laboratory Improvement Amendments of 1988) only laboratories participating in interstate commerce underwent inspections. Since the enactment of CLIA ’88, all laboratories are subject to inspection, and all non-waived laboratories are inspected. CLIA has the right to appear at any point in time to inspect a lab.

There are two types of inspections for non-waived labs:  routine and non-routine

Routine inspections take place every two years as mandated by CLIA, regardless of which agency is responsible for the inspection. If a lab has a Certificate of Compliance, CLIA will be the inspecting agency. If the laboratory has opted for a Certificate of Accreditation from one of the approved accrediting agencies, that agency will perform the inspection. Either way, the inspections are set on a two year cycle and the renewal of the laboratory’s certificate is dependent upon successful completion of the inspection. If no deficiencies are cited, the certificate will be renewed very soon after the inspection is completed. If deficiencies are cited during the inspection, the laboratory will receive a deficiency report and will be given a timeline to submit a plan of correction. Once the plan of correction is accepted by the inspecting agency, the certificate will be renewed. Failure to achieve a successful conclusion to the inspection process will result in the cancellation of the lab’s certificate, and therefore loss of privileges to do lab testing and to bill for lab testing.

The inspection cycle differs slightly for a newly set-up laboratory. CLIA or the accrediting agency will come in to do an inspection after the lab has been in operation for 3 – 6 months to ensure everything required is in place and all regulations are being followed. CLIA and the accrediting agencies do not inspect prior to the lab starting testing operations because they want the lab to generate data for them to review upon their inspection.

It should be noted that states which require state lab licensing in addition to CLIA certification frequently require inspection of the lab before the license number can be assigned and before the lab has begun operating. The CLIA application will not be released to CMS until the state is satisfied that the lab has everything in order, so both state lab licensing and CLIA certification will be dependent on this inspection. Check with your state to determine if it has regulations for laboratories in addition to CLIA regulations.

Non-routine inspections include validation inspections, off-cycle inspections, and inspections generated by a complaint against the laboratory.

Validation inspections occur when the primary inspection is performed by an accrediting agency, and CLIA opts to inspect the lab again behind the accrediting agency. CLIA has an assigned number of validation inspections to perform each year, but the selection process is random for the most part. So being selected for a validation inspection doesn’t necessarily mean CLIA thinks there are any problems. A lab could have been selected for a validation inspection merely because it was convenient in location and scheduling for the CLIA inspector.

Off-cycle inspections occur when there have been problems identified in the lab and the routine inspection led to serious deficiencies. CLIA and COLA (Commission on Office Laboratory Accreditation) will frequently follow-up a routine inspection that generated deficiencies with a second inspection to satisfy the inspector that the plan of correction (Plan of Required Improvement if COLA) was actually put into place and effective. Sometimes labs do so poorly on an inspection that they request an off-cycle inspection to get back in good standing and get the Certificate of Accreditation renewed. Regardless of when an off-cycle inspection takes place, the routine inspection will remain on the established every-two-year cycle tied to the expiration date of their certificate.

Any complaint against a laboratory can generate an inspection, and usually does. The agency to which the complaint was sent will usually do the inspection. The extent of the inspection will depend on the severity of the complaint, but the inspector has the right to look into any part of the laboratory on a complaint-generated inspection.

Waived Labs do not generally undergo inspections by CLIA, but are subject to be inspected at any time if there is a complaint generated, or if they are selected as one of the small percentage of waived labs that CLIA inspects routinely. There has been discussion of including waived labs in the routine inspection cycle, but to date that has not occurred. CLIA and COLA follow the same policies regarding waived labs; CAP (College of American Pathologists) does not recognize the “waived” test category and treats all tests with the same regulations as for moderate or highly complex laboratories. The Joint Commission (TJC) operates almost exclusively in the hospital arena where waived labs are nonexistent; it is unlikely that any Physician Office Laboratory (POL) would opt for TJC accreditation so inspection of waived labs is a non-issue for TJC.

Should I bring in a consultant to prepare for an inspection?

The answer to that question depends on the training and experience of the staff running the laboratory, but in general getting a consultant’s opinion and input on the lab’s preparedness for an inspection is a good idea.  The time to benefit most from a consultant’s input, however, is early on in the setup of the laboratory. If the lab is set up in compliance with all lab regulations, if the staff is educated adequately about those requirements, and if good processes for maintaining regulatory compliance are established from the beginning, then passing an inspection becomes just another day’s work.

Want more information about inspections? Libby has a wonderful checklist called “I’M YOUR CLIA INSPECTOR – WHAT AM I GOING TO LOOK FOR?” that she will be glad to share with MMP readers who email her with a request (eknollmeyer@triad.rr.com).


Guest Author Libby Knollmeyer

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.

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Guest Lab Consultant Libby Knollmeyer: The Pros and Cons of Moving from a Waived Medical Lab to a Non-Waived (Certificate of Compliance) Lab

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.

Guest Author Libby Knollmeyer

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.