BILL ANALYSIS Ó AB 1774 Page 1 Date of Hearing: April 19, 2016 ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS Rudy Salas, Chair AB 1774 (Bonilla) - As Introduced February 3, 2016 SUBJECT: Clinical laboratories: licensure. SUMMARY: Repeals the laws requiring a clinical laboratory to be licensed and inspected by the California Department of Public Health (CDPH), including the licensing fees associated with licensure of clinical laboratories; provides that clinical laboratories in this state are still subject to the federal Clinical Laboratory Improvement Amendments of 1988 (CLIA), including the fees and enforcement policies set forth by CLIA. EXISTING STATE LAW: 1)Provides for the licensure, registration, and regulation of clinical laboratories and various clinical laboratory personnel by the CDPH and authorizes the CDPH to inspect clinical laboratories and assesses a fee for licensure of those facilities. (Business and Professions Code (BPC) Section 1200, et seq.) 2)Defines several terms, among others, for the purposes of governing clinical laboratories: (BPC Section 1206(a)(5)-1206(a)(16)) AB 1774 Page 2 a) "Clinical laboratory test or examination" means the detection, identification, measurement, evaluation, correlation, monitoring, and reporting of any particular analyte, entity, or substance within a biological specimen for the purpose of obtaining scientific data that may be used as an aid to ascertain the presence, progress, and source of a disease or physiological condition in a human being, or used as an aid in the prevention, prognosis, monitoring, or treatment of a physiological or pathological condition in a human being, or for the performance of nondiagnostic tests for assessing the health of an individual. b) "Clinical laboratory science" means any of the sciences or scientific disciplines used to perform a clinical laboratory test or examination. c) "Clinical laboratory practice" means the application of clinical laboratory sciences or the use of any means that applies the clinical laboratory sciences within or outside of a licensed or registered clinical laboratory. Clinical laboratory practice includes consultation, advisory, and other activities inherent to the profession. d) "Clinical laboratory" means a place used, or an establishment or institution organized or operated, for the performance of clinical laboratory tests or examinations or the practical application of the clinical laboratory sciences. That application may include any means that applies the clinical laboratory sciences. e) "Direct and constant supervision" means personal observation and critical evaluation of the activity of unlicensed laboratory personnel by a physician and surgeon, or by a person licensed under this chapter other than a trainee, during the entire time that the unlicensed laboratory personnel are engaged in the duties, as AB 1774 Page 3 specified. f) "Direct and responsible supervision" means both of the following: i) Personal observation and critical evaluation of the activity of a trainee by a physician and surgeon, or by a person licensed under this chapter other than a trainee, during the entire time that the trainee is performing clinical laboratory tests or examinations. ii) Personal review by the physician and surgeon or the licensed person of all results of clinical laboratory testing or examination performed by the trainee for accuracy, reliability, and validity before the results are reported from the laboratory. g) "Licensed laboratory" means a clinical laboratory licensed, as specified, pursuant to state law. h) "Location" means either a street and city address, or a site or place within a street and city address, where any of the clinical laboratory sciences or scientific disciplines are practiced or applied, or where clinical laboratory tests or examinations are performed. i) "Physician office laboratory" means a clinical laboratory that is licensed pursuant to state law and is either: (A) a clinical laboratory that is owned and operated by a partnership or professional corporation that performs clinical laboratory tests or examinations only for patients of five or fewer physicians and surgeons or podiatrists who are shareholders, partners, or employees of the partnership or professional corporation that owns and operates the clinical laboratory; or (B) a clinical laboratory that is owned and operated by an individual licensed physician and surgeon or a podiatrist, and that AB 1774 Page 4 performs clinical laboratory tests or examinations only for patients of the physician and surgeon or podiatrist who owns and operates the clinical laboratory. j) "Point-of-care laboratory testing device" means a portable laboratory testing instrument that is used within the proximity of the patient for whom the test or examination is being conducted; is used in accordance with the patient test management system, the quality control program, and the comprehensive quality assurance program established and maintained by the laboratory, as specified; it performs clinical laboratory tests or examinations classified as waived or of moderate complexity under the federal CLIA; performs clinical laboratory tests or examinations on biological specimens that require no preparation after collection; or, provides clinical laboratory tests or examination results without calculation or discretionary intervention by the testing personnel; performs clinical laboratory tests or examinations without the necessity for testing personnel to perform calibration or maintenance, except resetting pursuant to the manufacturer's instructions or basic cleaning. aa) "Public health laboratory" means a laboratory that is operated by a city or county, as specified. bb) "Registered laboratory" means a clinical laboratory pursuant to BPC Section 1265(a)(2). 3)Specifies that a person licensed to provide health care services under the laws of this state, as specified, is not prohibited from practicing the profession or occupation for which he or she is licensed, nor does it authorize a person licensed under the laws of this state to perform or order services for which he or she is not licensed to perform or AB 1774 Page 5 order. (BPC Section 1206) 4)Exempts specified pharmacy clinical laboratory settings from inspection by CDPH if the laboratory only performs specified tests classified as waived under CLIA and are approved by the federal Food and Drug Administration (FDA) for sale to the public without a prescription in the form of an over-the-counter test kit, as specified. (BPC Section 1206.6) 5)Defines "unlicensed laboratory personnel" to mean a laboratory aide, histocompatibility technician, cardiopulmonary technician, or other person performing the activities authorized by Section 1269. (BPC Section 1212) 6)Requires each clinical laboratory to maintain records, equipment, and facilities that are adequate and appropriate for the services rendered and operated without injury to the public health; requires the CDPH to inspect laboratories no less than once every two years if licensed, maintain a record of those inspections, ensure that every licensed clinical laboratory in California is inspected at least that often; provides that registered clinical laboratories shall not be routinely inspected by CDPH; requires a clinical laboratory to perform all clinical laboratory tests or examinations classified as waived under CLIA in conformity with the manufacturer's instructions; clinical laboratories performing tests or examinations not waived under CLIA must establish and maintain a patient test management system, as specified, must establish and maintain a quality control program, and may use alternative quality control testing procedures recognized CMS or an Individualized Quality Control Plan and a comprehensive quality assurance program, as specified. (BPC Section 1220) 7)Declares that it is the public policy of the state to ensure that California's laboratory standards, including its laboratory personnel standards, be sustained in order to provide accurate, reliable, and necessary test results; that AB 1774 Page 6 inspections are the most effective means of furthering this policy; that it is not the intent of the Legislature to reduce in any way the resources available to the department for inspections, but rather to provide the department with the greatest flexibility to concentrate its resources where they can be most effective; that it is the intent of the Legislature to provide for an inspection process that includes state-based inspection components and that determines compliance with federal and state requirements for clinical laboratories. (BPC Section 1223(a)) 8)Authorizes the CDPH to employ, or contract for, inspectors, special agents, and investigators, and provide any clerical and technical assistance as necessary to administer this chapter and may incur other expenses as necessary. (BPC Section 1223(b)) 9)Provides that laboratories accredited by a private, nonprofit organization shall be deemed by the CDPH to meet state licensure or registration requirements, and be issued a certificate of that deemed status by the CDPH, provided that both the organization and the laboratory meet specified requirements. (BPC Section 1223(c)) 10)Requires every person or clinical laboratory licensed or registered under California clinical laboratory requirements to report to the CDPH within 30 days of any change of name or address. (BPC Section 1227) 11)Requires a clinical laboratory performing clinical laboratory tests or examinations classified as of moderate or of high complexity under CLIA to obtain a clinical laboratory license as specified; provides that no clinical laboratory license shall be issued by the CDPH unless the clinical laboratory and its personnel meet the CLIA requirements for laboratories AB 1774 Page 7 performing tests or examinations classified as of moderate or high complexity, or both; requires a clinical laboratory performing tests or examinations subject to a certificate of waiver or a certificate of provider-performed microscopy under CLIA, to register with the CDPH; provides that a license or registration is valid for one year unless revoked or suspended; provides that whenever a clinical laboratory ceases operations, the laboratory owners, as specified, must notify the CDPH of this fact, in writing, within 30 calendar days from the date a clinical laboratory ceases operation and maintain all medical records and laboratory records, as defined, for specified timeframes; provides that a separate license is required for each location except as specified; provides that the CDPH must state in writing the reason for denying an applicant for clinical laboratory licensure; provides that a withdrawal of application for clinical laboratory licensure does not deprive the CDPH to institute or continue with a proceeding for denial; and provides that the suspension, expiration, or forfeiture by operation of law of a license or registration does not deprive the CDPH's authority to institute or continue an action against a license or registration. (BPC Section 1265) 12)Provides that a primary care clinic that submits an application to the CDPH for a clinic license pursuant to Health and Safety Code (HSC) 1204(a) may submit before or along with the clinic application an application for a license to conduct clinical laboratory tests and examinations, as specified. (BPC Section 1265.1) 13)Requires a clinical laboratory's license and the license or renewal permit of each person performing tests to be conspicuously posted. (BPC Section 1266) 14)Provides that any denial, suspension, or revocation of a license must be conducted in compliance with HSC Section AB 1774 Page 8 100171. (BPC Section 1267) 15)Requires the CDPH to establish standards for the evaluation of cytologic slides, reporting of slides, personnel competency standards and a proficiency testing program for clinical laboratories offering cytology services. (BPC Section 1272.4) 16)Requires the CDPH to develop or adopt a CDPH-administered proficiency testing program for laboratories offering cytology services to be administered by the CDPH or by a proficiency testing program approved by the CDPH; provides that the program conduct announced and unannounced onsite proficiency testing under normal working conditions. (BPC Section 1272.6) 17)Specifies that it is unlawful for a person to own, operate, maintain, direct, or engage in the business of operating a clinical laboratory, as defined, unless he or she possess a valid clinical laboratory license; provides that a health facility, as specified, is not required to obtain a clinical laboratory license. (BPC Section 1281) 18)Authorizes the CDPH to establish and charge fees, as specified, for licensing activities, including: (BPC Section 1300 - 1302) a) Issuing a duplicate license for a change of name; (BPC Section 1268) b) Application for licensure, renewal, and delinquency for personnel and trainee licenses; (BPC Sections 1260.3, 1270.5, c) Application for a license to perform moderate or high complexity tests, as defined under CLIA, based on the AB 1774 Page 9 number of tests performed annually; d) Renewal of a license to perform moderate or high complexity tests, as defined under CLIA, based on the number of tests performed annually; e) Examinations pursuant to this chapter, as specified; f) Application for registration to perform tests or examinations considered waived under CLIA or provider-performed microscopy; g) Cost recovery for CDPH to conduct a complaint investigation, impose sanctions, or conduct a hearing, as specified; specifies that the amount paid by a laboratory for these enforcement activities is limited to no more than the amount a laboratory would pay under CLIA for the same actions; requires a laboratory applying for initial licensures to pay for the CDPH to conduct any re-inspections to ensure compliance; h) Continuing education; (BPC Section 1275) i) Cost recovery for an inspector to travel to a clinical laboratory outside of California to ensure compliance; and, j) Additional laboratory locations, as specified. (BPC Section 1300) 19)Provides that the fees specified in BPC Section 1300 are adjusted annually pursuant to HSC Section 100450. (BPC AB 1774 Page 10 Section 1300.1) 20)Requires the CDPH to give written notice prior to a license or registration expiring, as specified, and authorizes the CDPH to require an examination as a condition for reinstatement if the licenses renewal fee is not paid, as specified. (BPC Section 1301) 21)Provides that CDPH may revoke or suspend a clinical laboratory license if the laboratory does not meet the requirements to operate, as specified; provides that CDPH may impose directed plans of corrections, as defined under CLIA; impose civil money penalties in specified amounts for each day of noncompliance; and impose onsite monitoring, as defined under CLIA, and recover costs associated with onsite monitoring. (BPC Section 1310) EXISTING FEDERAL LAW: 1)Establishes CLIA, which regulates clinical laboratories that perform tests on human specimens and sets standards for facility administration, personnel qualifications and quality control. These standards apply to all laboratory settings, including commercial, hospital or physician office laboratories. (Title 42 of the Code of Federal Regulations (CFR), Part 493) THIS BILL: 1)Repeals state mandates for CDPH to conduct laboratory inspections and contract with accreditation organizations. (BPC Section 1223) 2)Repeals reporting requirements for a licensed clinical laboratory when the laboratory changes a name or address. (BPC Section 1227) AB 1774 Page 11 3)Repeals provisions allowing a primary care clinic, or a network of primary care clinics, as defined, to obtain a license to operate a clinical laboratory that conducts moderate to high complexity tests or examinations; repeals application provisions for these primary care clinics to apply for licensure. (BPC Sections 1241.1, 1265.1) 4)Repeals provisions requiring a clinical laboratory performing moderate or high complexity tests or examinations to be licensed by CDPH; repeals provisions requiring clinical laboratories performing tests or examinations considered waived under CLIA to register with CDPH; repeals provisions describing the application process, lifetime of a license or registration, notices required of CDPH as they relate to licensed clinical laboratories, withdrawal and renewal of a clinical laboratory license, suspension, expiration, and forfeiture of a clinical laboratory license; and repeals requirements for a licensed clinical laboratory to maintain medical and laboratory records, as specified. Repeals provisions making it unlawful for a person to own, operate, maintain, direct, or engage in the business of operating a clinical laboratory, as defined, unless he or she possess a valid clinical laboratory license. (BPC Section 1265 and 1281) 5)Repeals requirements relating to the display of a clinical laboratory license and the license or current renewal permit of each person performing tests. (BPC Section 1266) 6)Repeals requirements for a denial, suspension, or revocation of a license to be in compliance with HSC Section 100171. (BPC Section 1267) 7)Repeals fees associated with clinical laboratory licensing or AB 1774 Page 12 registration. (BPC Sections 1268, 1300(p), and 1300.1) 8)Repeals requirements relating to standards and requirements for cytology programs, including proficiency testing and reporting to the CDPH. (BPC Section 1272.4 and 1272.6) 9)Repeals authorization for CDPH to impose, instead of suspension or revocation of a license, directed plans of corrections, as defined under CLIA; impose civil money penalties in specified amounts for each day of noncompliance; and impose onsite monitoring, as defined under CLIA, and recover costs associated with onsite monitoring. (BPC Section 1310) 10)Specifies that clinical laboratories must continue to comply with federal provisions specified in CLIA and must adhere to quality control plans, inspections, and enforcement policies set forth by CMS. 11)Makes other conforming, technical, non-substantive changes. FISCAL EFFECT: Unknown. This bill is marked fiscal by the Legislative Counsel. COMMENTS: Purpose. This bill repeals the laws requiring a clinical laboratory to be licensed and inspected by the CDPH, including the licensing fees associated with licensure of clinical laboratories and provides that clinical laboratories in this state are still subject to the federal CLIA, including the fees and enforcement policies set forth by CLIA. This bill is sponsored by the author. According to the author, "Laboratory Field Services (LFS) is the state entity responsible AB 1774 Page 13 for licensing clinical laboratories and clinical laboratory personnel in California. In two successive audits over [eight] years, the State Auditor has found that LFS is woefully neglecting its state mandate. Despite past Legislative efforts to increase its budget, allow for additional staffing, and reduce workload through a mechanism to contract [with] accrediting bodies, [LFS] continues to fail to meet the majority of its mandates. In the Auditor's September 2015 report, she noted that state and federal law regarding clinical labs is highly duplicative. In fact, in the mid 1990's, California made strides to try to become exempt from federal oversight. In this process, the Legislature passed laws which were purposely duplicative of federal standards [(SB 113 (Maddy), Chapter 510, Statutes of 1995)]. However, in 1999, the State decided not to move forward with the exemption process. This has left us with a statutory and regulatory structure that largely copies the federal structure. AB 1774 implements the State Auditor's recommendation that we repeal state clinical laboratory licensing because the federal government oversight is highly similar and also well implemented. AB 1774 will free up state resources to focus on personnel standards which are unique to California, while ensuring a continued level of consumer protection in clinical laboratories." Background. Clinical laboratories analyze human specimens such as blood, tissue, and urine so that medical professionals can make diagnoses, prescribe treatment, and perform research. The CDPH oversees these laboratories through licensing, proficiency testing, and inspections by the LFS within the CDPH. Oversight responsibilities for the LFS cover licensing of personnel, such as clinical lab scientists and phlebotomists, and in-state laboratories as well as out-of-state laboratories that test specimens originating within California. There are approximately 2,800 licensed laboratories and approximately 19,300 registered labs. A lab's license or registration is separate from personnel licenses or other certifications. AB 1774 Page 14 The difference between a licensed laboratory and a registered laboratory is determined by the complexity of the tests performed by the lab. A laboratory must be licensed to perform tests of moderate to high complexity, such as testing for hepatitis or certain sexually transmitted diseases by DNA probe, but is authorized to perform all tests. Registered laboratories may perform waived tests, which are simple tests with less chance of error or risk, such as prepackaged manufactured tests. A license or registration is valid for one year and must be renewed annually for the laboratory to continue operating. Additionally, laboratories must pay a set licensing or registration fee determined by the volume and type of tests performed. Licensed laboratories must be inspected by the LFS every two years and be notified of any deficiencies revealed by an inspection. Registered laboratories need not be inspected every two years, but may be inspected as part of a complaint investigation. The state has overseen laboratories since 1926 and has licensed laboratories since the 1950s. In addition to meeting state requirements, all laboratories that the LFS licenses or registers must adhere to federal regulations outlined in the CLIA which was enacted to ensure the accuracy and reliability of laboratory testing. The federal Centers for Medicare and Medicaid Services (CMS) has primary responsibility under the CLIA to regulate laboratories across the nation. The CLIA groups laboratories into two categories based on the complexity of the tests performed. Laboratories that perform complex tests are subject to ongoing oversight in the form of biennial inspections and proficiency testing. At the federal level, these laboratories can choose to be overseen by the CMS or by an accreditation organization that is approved by the CMS. Laboratories that perform waived tests are overseen by the CMS. Inspections by Accreditation Organizations. The federal AB 1774 Page 15 government contracts with the LFS or with CMS-approved accredited organizations to carry out its inspection mandate. Pursuant to a recommendation by the State Auditor in 2008, the LFS began using a state checklist addendum while conducting the federal CLIA inspections, which would incorporate additional state laws into the CLIA inspection and qualify the one inspection for both the CLIA and state requirements. According to the Auditor, the state checklist includes 15 criteria, most of which relate to personnel standards. Approved accredited organizations are national accrediting organizations that the CMS has vetted and determined to possess high standards and quality when conducting its accreditation process. Accreditation by one of these organizations meets the federal CLIA inspection requirements. Although the LFS has been accepting applications since January 1, 2011, only one organization has been approved, two have been pending for the last five years, and one was withdrawn. The LFS is required to approve (or deny) an application within six months; however, the first application was under review for almost two years. The organization was approved in August 2013, but the LFS still has not entered into an agreement to specify its role and responsibilities. The LFS inspects less than 20% of the laboratories that the LFS has not contracted with the federal government to inspect. In the Northern California LFS office, one staff person is assigned to inspect all 250 Northern California labs; however, only eight inspections were conducted in 2013-2014. In Southern California, only 195 of 600 laboratories were inspected in the same timeframe. Exemption to Federal Oversight. A state can request to be exempted from all or part of CLIA's requirements in order to AB 1774 Page 16 retain full oversight over the laboratories within its jurisdiction. Senate Bill 113 (Maddy), Chapter 510, Statutes of 1995 made several changes to state law to incorporate CLIA standards and facilitate a CLIA exemption. California earned the CLIA exemption in 1999 but declined to pursue it because of concerns regarding an annual $2.4 million overhead fee paid to the federal Department of Health and Human Services. As a result, the state has been operating under a largely duplicative set of state and federal standards. In order to be exempted, the state must establish standards that are equal to or more stringent than federal CLIA. CDPH has highlighted some of the major differences between the CLIA law and California law shown in the chart below: ---------------------------------------------------------------- |Subject |CLIA law |California law | |Matter | | | |--------+---------------------------+---------------------------| |Laborato|Requires all laboratories |Requires all laboratories | |ry |to have a qualified |to have a director who is | |Director|director who is a state |qualified as a California | |s |licensed physician and |licensed physician and | | |surgeon, bioanalyst, or |surgeon, clinical | | |doctoral scientist (not |laboratory bioanalyst, or | | |limited by specific |doctoral scientist in | | |specialty areas). |specific specialty areas. | |--------+---------------------------+---------------------------| | |Allows only one person to |Allows multiple directors. | | |serve as director. | | |--------+---------------------------+---------------------------| | |Does not require a |Requires a pathologist | | |qualified pathologist to |director for acute care | | |direct a hospital |hospitals. | AB 1774 Page 17 | |laboratory. | | |--------+---------------------------+---------------------------| | |Does not mandate any |Requires a laboratory | | |requirements for an |director for a waived | | |individual in charge of a |laboratory. | | |waived laboratory. | | |--------+---------------------------+---------------------------| | |Requires notification to |Requires appointment of an | | |CMS within 30 days of |interim laboratory | | |change of director. |director within 5 days of | | | |major change and | | | |notification to CDPH | | | |within 30 days. | |--------+---------------------------+---------------------------| |Laborato|Does not require licensure |Requires laboratory | |ry |for laboratory supervisors |supervisors to pass an | |Supervis|but requires that |examination and have | |ors |supervisors possess a |licensure by state. | | |current state license if | | | |state licensure is | | | |required. | | |--------+---------------------------+---------------------------| |Clinical|Does not have category of |Recognizes a waived | | |technical consultant for |laboratory technical | |Consulta|waived tests. |consultant for waived | |nt | |tests. | |--------+---------------------------+---------------------------| | |Requires clinical |Requires clinical | | |consultant to meet |consultant to be licensed | | |qualifications but they do |to direct a clinical | | |not require licensure, but |laboratory or have | | |requires that consultants |California licensure as a | | |possess a current state |physician and surgeon. | | |license if state licensure | | | |is required. | | |--------+---------------------------+---------------------------| |Testing |Does not specify education |Specifies education | |Personne|requirements other than a |requirements including | |l |minimum of an associate |courses and credit hours: | AB 1774 Page 18 | |degree for high |baccalaureate degree, | | |complexity, and high |except for US military | | |school graduation for |training and experience, | | |moderate and waived |for high complexity; | | |testing. |associate degree for | | | |moderate and waived. | |--------+---------------------------+---------------------------| | |Does not require licensure |Requires licensure for | | |for testing personnel but |testing personnel. | | |requires that testing | | | |personnel possess a | | | |current state license if | | | |state licensure is | | | |required. | | |--------+---------------------------+---------------------------| | |Does not require |Requires CE for renewal of | | |continuing education (CE). |license. | |--------+---------------------------+---------------------------| |Cytology|Does not require licensure |Requires licensure of | | |of cytotechnologists. |cytotechnologists. | |--------+---------------------------+---------------------------| | |Limits a cytotechnologist |Limits a cytotechnologist | | |to reading 100 Pap slides |to reading 80 Pap slides | | |per day, or perform 200 |per day, or perform 160 | | |automated screenings. |automated screenings, less | | | |if adjusted for other | | | |duties. | |--------+---------------------------+---------------------------| | |N/A |Requires a | | | |cytotechnologist to record | | | |the number of Pap slides | | | |read each day at all | | | |locations at which they | | | |work. | |--------+---------------------------+---------------------------| | |Requires an authorized |Requires a licensed person | | |testing person to sign all |to review and release all | | |results. |results. | |--------+---------------------------+---------------------------| AB 1774 Page 19 |Phleboto|Does not address issues of |Explains who may perform | |my |phlebotomy. |phlebotomy and under what | | | |conditions, and sets | | | |requirements of education | | | |and training to be | | | |certified by CDPH to | | | |collect blood for testing. | |--------+---------------------------+---------------------------| | | |Requires approval of | | | |phlebotomy training | | | |programs by CDPH. | |--------+---------------------------+---------------------------| |Unlicens|Does not have category of |Requires documentation of | |ed |laboratory aide. |competence of unlicensed | |Personne| |laboratory aides, limits | |l as | |their activities, and | |Laborato| |specifies supervision | |ry | |requirements. | |Aides | | | |--------+---------------------------+---------------------------| |Personne|Does not inspect for or |Checks compliance with | |l |enforce state personnel |state personnel | |Licensur|requirements; if personnel |requirements, and | |e |violations are found, they |sanctions or penalizes for | |Enforcem|are referred to state |violations. | |ent |program. | | |--------+---------------------------+---------------------------| |Laborato|Does not define ownership |Defines who can own and | |ry |or set qualifications for |operate a laboratory, | |Owners |ownership. |requires ownership | | | |disclosure down to 5% | | | |interest. | |--------+---------------------------+---------------------------| | | |Tracks change of ownership | | | |and requires notification | | | |of CDPH within 30 days. | |--------+---------------------------+---------------------------| | | |Holds owner and director | | | |jointly and severally | AB 1774 Page 20 | | |responsible for actions of | | | |the lab. | |--------+---------------------------+---------------------------| |Physicia|Defines POL as a |Closely defines POL and | |n |self-designated status. |allows up to 5 doctors to | |Office |Does not specify limits to |oversee a POL to test on | |Laborato|number of physicians or |their own patients. More | |ries |receipt of referral |than 5 owners are required | |(POL) |specimens from outside |to register or be licensed | | |physicians. |as a laboratory. | |--------+---------------------------+---------------------------| |Complain|CLIA does not address |Performs complaint | |ts |business processes other |investigations of | | |than Medicare, doesn't |laboratories, offsite | | |certify or inspect |collection stations, | | |stand-alone specimen |inducement issues, or | | |collection sites, and does |personnel issues. | | |not address inducement | | | |issues, such as the | | | |provision of personnel or | | | |supplies in exchange for | | | |referrals of laboratory | | | |work. | | |--------+---------------------------+---------------------------| |Reportin|Do not require reporting |Requires laboratories to | |g of |of infectious diseases as |report infectious diseases | |Infectio|a condition of licensure. |as a condition of | |us | |licensure. | |Diseases| | | | | | | |--------+---------------------------+---------------------------| |Payment |Does not address |Prohibits soliciting, | |for |fraudulent collection of |selling, or buying blood | |Blood |blood samples. |or other biological | |Specimen| |specimens to laboratories, | |s | |except for research, | | | |teaching, or quality | | | |assurance purposes. | |--------+---------------------------+---------------------------| AB 1774 Page 21 |Autoveri|Does not have a provision |Allows autoverification | |fication|for autoverification using |using a computer algorithm | | |a computer algorithm in |in conjunction with | | |conjunction with automated |automated instrumentation | | |instrumentation to review |to review and verify the | | |and verify the results of |results of clinical | | |clinical laboratory tests |laboratory tests for | | |for accuracy and |accuracy and reliability. | | |reliability. |Requires annual review by | | | |director. | | | | | |--------+---------------------------+---------------------------| |Posting |Does not require posting |Requires personnel | |of |of personnel licenses in a |laboratory licenses to be | |Personne|clinical laboratory. |posted in a clinical | |l | |laboratory. | |Licenses| | | | | | | |--------+---------------------------+---------------------------| |Certific|Biennial certificate. |Annual license and | |ate and | |registration renewal. | |Licensur| | | |e | | | |Period | | | |--------+---------------------------+---------------------------| |Histopat|Does not require direct |Requires direct | |hology |supervision of personnel |supervision by a | | |performing dissection, |pathologist of a person | | |slide preparation or |engaged in histological | | |staining of specimens for |dissection when the person | | |histological examination |assisting a pathologist is | | |because CLIA does not |not board-certified. | | |consider these technical | | | |components to be testing. | | | | | | |--------+---------------------------+---------------------------| |Control |Federal government sets |California controls | | |rules through regulation |statutes and regulations, | | |and publication of |with statutory changes | AB 1774 Page 22 | |guidelines. |subject to legislative | | | |authority and review. | ---------------------------------------------------------------- State Audit Reports. In 2008, the California Bureau of State Audits published an audit report on the effectiveness of LFS titled Department of Public Health: Laboratory Field Services' Lack of Clinical Laboratory Oversight Places the Public at Risk. The report concluded that the LFS had not provided its state mandated oversight of labs, struggled to respond to complaints, and did not have sufficient controls for its policies and procedures. The LFS attributes these issues to a lack of funding, but failed to properly increase fees. The report further detailed missed opportunities for the LFS to leverage its resources to help meet their state mandated requirements. The State Auditor recently published its 2015 update report (Follow-up - California Department of Public Health: Laboratory Field Services is Unable to Oversee Clinical Laboratories Effectively, but a Feasible Alternative Exists). The update concluded that the LFS is still not performing its mandated oversight requirements. Although the LFS has made progress in rectifying issues raised in the 2008 report, the LFS continues to be ineffective in maintaining laboratory oversight. Additionally, the LFS made an unauthorized fee increase in 2015 that resulted in laboratories overpaying by more than $1 million. Since the 2008 report, the LFS has collected more than $12 million in laboratory fees that have not been spent. Despite this surplus, the LFS still faces personnel shortages and continues to miss inspections, handle complaints and conduct proficiency testing. The LFS has also demonstrated problems with its proficiency testing program, sanctioning program, and complaint inspection. According to the State Auditor, the LFS has not established AB 1774 Page 23 timeframes for complaint investigation, resolution, or follow up. The LFS has only sanctioned four facilities since 2007 and did not collect any civil money penalties during the audit period. In one case, the LFS took more than 15 months to fine a laboratory after investigating and confirming use of unlicensed laboratory personnel. Furthermore, the Auditor found that the LFS has not inspected half of the required laboratories in the State, and has not inspected any of the required out-of-state labs. State law has required inspection of out-of-state laboratories since 1996, but LFS did not begin inspecting them until November 2014. In 2014, the LFS failed to inspect 93% of these labs. According to the State Auditor, "we believe Laboratory Services' workload largely duplicates federal oversight with no meaningful benefit to consumers. State law and CLIA are nearly equivalent in their mandates, and the oversight each requires is redundant: Both Laboratory Services and CMS collect fees from laboratories to perform inspections, monitor proficiency testing, investigate complaints, and issue sanctions. Eliminating the portion of Laboratory Services that we have found to be exceedingly deficient for many years would end the duplicate oversight and the duplicate fees. CMS has processes in place to ensure that it effectively administers CLIA; therefore, relying on CLIA would keep the public health benefits of laboratory monitoring intact, as they are today, while reducing the regulatory burden on California's clinical labs." In short, the current system of state licensure for clinical laboratories may not provide any additional benefits or protections to consumers. Prior Related Legislation. SB 744 (Strickland), Chapter 201, Statutes of 2009, authorized LFS to contract with accreditation organizations, if approved by LFS, to serve as the state inspecting agent. If a laboratory earned accreditation from one AB 1774 Page 24 of these organizations, the laboratory would meet the state inspection requirement. This bill was sponsored by the CDPH. ARGUMENTS IN SUPPORT: The California Society of Pathologists writes in support, "[This bill] does not disrupt current unique California personnel standards or the enforcement of those standards. The specifics of the reform can be debated but it is clear that reform of the current LFS licensing authority is long overdue." The California Society of Dermatology & Dermatological Surgery (CalDerm) writes in support, "This bill would save precious health care resources by ending the State's redundant licensing requirements - including ending the cost of redundant licenses and enabling inspection and enforcement personnel to focus on more critical issues." The California Chapters of American College of Physicians write in support, "This bill would save precious health care resources by ending the State's redundant licensing requirements - including ending the cost of redundant licenses and enabling inspection and enforcement personnel to focus on more critical issues." The California Hospital Association writes in support, "The [2015 State Auditor's report states] that since the problems that have plagued LFS have persisted, the state's consumers have, in effect, been relying on federal oversight from the [CMS] through its administration of [CLIA]. LFS' oversight of laboratory facilities largely duplicates federal oversight with no meaningful benefit to consumers, yet both LFS and CMS collect fees from laboratories to perform inspections, monitor proficiency testing, investigate complaints, and issue AB 1774 Page 25 sanctions. [This bill] would repeal state law requiring that laboratory facilities be licensed by the state, thus reducing the regulatory and financial burden on laboratory facilities. CHA does support the continuation of the personnel standards and any efforts to ensure the enforcement of these standards." ARGUMENTS IN OPPOSITION: The Engineers and Scientists of California, IFPTE Local 20 writes in opposition, "Federal law is different in this area and the feds are not going to enforce this state's laws. Rather, we should be providing more stringent direction to the [CDPH] and [LFS] to ensure that they do their job protecting patients." The California Labor Federation writes in opposition, "[T]he repeal of California laws regulating clinical laboratories would only erode quality standards. California's regulations were put into place to respond to specific concerns, and despite the regulator's lack of oversight, those laws are still needed. We cannot depend on the federal government to enforce state law. Rather than throw out state law, we should work to find a way to make the state regulator more effective and thereby preserve important state protections for patients and workers." The California Association of Bioanalysts (CAB) writes in concern, "We urge you to address the root cause for the unfavorable State audit, rather than reacting hastily to abolish a licensure that, as far as the CAB is concerned, has provided the clinical laboratories in the State of California with much needed oversight and accountability." IMPLEMENTATION ISSUES: AB 1774 Page 26 1)If the state clinical laboratory license requirements are removed, all medical and laboratory records should be maintained. 2)If state licensure of a clinical laboratory is repealed, CDPH should maintain its authority to inspect labs for personnel standards and impose corrective actions or citations and fines, as appropriate. The appropriate number and frequency of inspections is debatable and the practicality of surprise inspections versus scheduled biennial inspections may not be implemented in such a way that clinical laboratories maintain the highest level of consumer protection in regards to tests and examinations, record maintenance, and proper training of employees. 3)It may be useful to amend the current state licensure structure to a modified compliance structure. This modified structure would require CDPH to recognize accreditation organizations that are approved under the federal CLIA and require CDPH to monitor labs for compliance with state standards that are more stringent than federal standards. This modified structure would also authorize the state to concentrate its resources on upholding personnel standards, allowing the CDPH to focus on the provisions that go above and beyond what is required by the federal CLIA, during inspections and complaint investigations. 4)Although stakeholders maintain there are distinct and stringent differences between state and federal law, it is unclear what those differences actually are, and can make inspections, mandated or not, difficult to conduct consistently. The author should consider requiring CDPH to make these differences available to the public. Amendments: AB 1774 Page 27 1)To address the maintenance of records issue raised above, the bill should be amended as follows: On page 25 after lines 1-6, insert: "1272.1(a) Whenever a clinical laboratory ceases operations, the laboratory owners, or delegated representatives of the owners, and the laboratory directors shall notify the department of this fact, in writing, within 30 calendar days from the date a clinical laboratory ceases operation. For purposes of this subdivision, a laboratory ceases operations when it suspends the performance of all clinical laboratory tests or examinations for 30 calendar days at the location for which the clinical laboratory is licensed or registered. (b)(1) Notwithstanding any other provision of law, owners and laboratory directors of all clinical laboratories, including those laboratories that cease operations, shall preserve medical records and laboratory records, as defined in this section, for three years from the date of testing, examination, or purchase, unless a longer retention period is required pursuant to any other provision of law, and shall maintain an ability to provide those records when requested by the department or any duly authorized representative of the department. (2) For purposes of this subdivision, "medical records" means the test requisition or test authorization, or the patient's chart or medical record, if used as the test requisition, the final and preliminary test or examination result, and the name of the person contacted if the laboratory test or examination result indicated an imminent life-threatening result or was of panic value. AB 1774 Page 28 (3)For purposes of this subdivision, "laboratory records" means records showing compliance with CLIA and this chapter during a laboratory's operation that are actual or true copies, either photocopies or electronically reproducible copies, of records for patient test management, quality control, quality assurance, and all invoices documenting the purchase or lease of laboratory equipment and test kits, reagents, or media. (4)Information contained in medical records and laboratory records shall be confidential, and shall be disclosed only to authorize persons in accordance with federal, state, and local laws. (c)The department or any person injured as a result of a laboratory's abandonment or failure to retain records pursuant to this section may bring an action in a court of proper jurisdiction for any reasonable amount of damages suffered as a result thereof." 2)To address the issue of enforcement authority, the author should amend the bill to include: a) Authority for CDPH to impose corrective actions, citations and fines, and sanctions; and, b) Authority for CDPH to enter clinical laboratories to enforce state law and regulation including, but not limited to, state standards that are more stringent than federal standards. 3)To address the issue of a modified compliance structure, the author should amend the bill to: a) Require CDPH to recognize accreditation organizations that are approved under the federal CLIA; b) Require CDPH to monitor, inspect and investigate unaccredited laboratories for compliance with state AB 1774 Page 29 standards that are more stringent than federal standards; and, c) Authorize the state to concentrate its resources on upholding personnel standards 4)To address the issue of transparency in differences between state and federal law with respect to clinical laboratories, the author should amend the bill to: Require CDPH post on its Internet web site, a comprehensive list of the differences between state and federal law. REGISTERED SUPPORT: California Society of Pathologists California Society of Dermatology & Dermatologic Surgery (CalDerm) California Chapters of American College of Physicians California Hospital Association REGISTERED OPPOSITION: Engineers and Scientists of California, IFPTE Local 20 California Labor Federation AB 1774 Page 30 California Association of Bioanalysts Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301, Vincent Chee / B. & P. / (916) 319-3301