BILL ANALYSIS Ó
AB 1774
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1774 (Bonilla) - As Amended May 11, 2016
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|Policy |Business and Professions |Vote:|15 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill repeals state licensure and registration requirements
for clinical laboratories (labs), including laboratory
inspections, issuance of licenses and registration, and
associated fees. Specifically, this bill:
1)Repeals requirements including:
a) Licensure and registration of labs by the state.
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b) Licensure and registration fees, including provisions
for adjusting such fees.
c) Requirements that out-of-state labs performing tests on
California specimens reimburse the department for travel
and per diem to perform any necessary onsite inspections in
order to ensure compliance with state law.
d) Biennial inspections and proficiency testing
requirements for licensed labs.
e) A number of provisions related to licensure and
registration procedures.
f) A requirement that the California Department of Public
Health (CDPH) report to the Legislature, on or before July
1, 2013, on the extent to which the state oversight program
meets or exceeds federal oversight standards, the extent to
which the federal Department of Health and Human Services
is accepting exemption applications, and the potential cost
to the state for an exemption from the federal Clinical
Laboratory Improvement Act (CLIA).
2)Repeals language granting CDPH the ability to approve and rely
on accreditation organizations to assess compliance with state
licensure requirements, and specifies clinical laboratories
may choose to be overseen by CDPH, or by an accrediting
organization, as follows:
a) For unaccredited labs: Requires CDPH to monitor,
inspect, and investigate all unaccredited clinical
laboratories for compliance with state standards that are
in excess of federal standards. Allows CDPH to levy an
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inspection fee, not to exceed $1,050, for such inspection,
but only when it has spent all but $1 million of the fees
collected previously from clinical laboratories.
b) For accredited labs: Deems a laboratory accredited by an
accrediting organization approved by the Centers for
Medicare and Medicaid Services (CMS) to meet all state
standards.
3)Reduces fee levels for personnel licensure and removes
authority to adjust such fees.
4)Requires CDPH to post on its website a comprehensive list of
the differences between CLIA and state law.
5)Retains numerous standards for clinical laboratories,
including requirements for quality control, compliance with
personnel standards, and participation in proficiency testing,
among others.
6)Authorizes the department or its agents to enter and inspect a
clinical laboratory at any time to enforce state laws and
regulations, including, but not limited to, state standards
that are more stringent than federal standards.
7)Loosens supervision requirements for licensed trainees
performing tests or procuring specimens.
8)Includes a number of technical and conforming changes.
FISCAL EFFECT:
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1)This bill allows LFS to levy a fee for inspection with state
standards only when it has spent all but $1 million of the
fees collected previously from clinical laboratories. This
bill also reduces clinical laboratory personnel fees to
pre-2009 levels, prior to their last increase, resulting in
reduced revenue. It also allows the department to recover
costs for certain activities, but does not allow cost recovery
for inspections if a lab is accredited, and limits the cost
recovery for inspections to $1,050 if a lab is not accredited.
There is a significant reserve of over $20 million in the LFS
Clinical Laboratory Improvement Fund, which could mitigate an
expected sharp reduction in revenue for a year or two. On an
ongoing basis, however, this bill may results in unknown
fiscal risk because the ongoing balance between fee revenue
and workload is unclear.
2)By repealing lab licensure and registration, this bill should
reduce LFS workload. However, given LFS has not performed many
enforcement activities expected under current law with
existing staff, it is unclear what the appropriate staffing
level to meet current-law expectations, nor what it would be
under this bill with different, reduced workload.
COMMENTS:
1)Purpose. According to the author, this bill implements the
State Auditor's recommendation to repeal state clinical
laboratory licensing, because federal government oversight is
highly similar and well-implemented. This bill will free up
state resources to focus on personnel standards which are
unique to California, while ensuring a continued level of
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consumer protection in clinical laboratories.
2)Background. Clinical laboratories analyze human specimens such
as blood, tissue, and urine so that medical professionals can
make diagnoses, prescribe treatment, and perform research.
There are approximately 2,800 laboratories licensed by
Laboratory Field Services (LFS) within CDPH, and approximately
19,300 registered labs. A lab's license or registration is
separate from personnel licenses or other certifications. LFS
also licenses and certifies lab personnel, including clinical
laboratory scientists and trainees, phlebotomists, and
cytotechnologists. Labs are also governed by federal law, and
state law and federal law in California can be enforced by LFS
or private accrediting organizations, as explained below.
3)Federal versus state standards. The federal Clinical
Laboratory Improvement Act (CLIA) establishes minimum
standards for laboratories to ensure the accuracy,
reliability, and timeliness of patient test results. All labs
must maintain a CLIA certificate under federal law. The
federal CMS administers CLIA, and enforces requirements
through accrediting organizations or through state agencies.
California law also specifies a number of requirements that
are the same as, or similar to, CLIA.<1>
In addition to CLIA standards and CLIA-like standards that
were adopted in state law, California clinical labs and
out-of-state labs performing tests on California specimens
--------------------------
<1>
According to CDPH, California has incorporated federal CLIA law
as published on January 1, 1994, which is different from CLIA as
finally adopted in April 2003. The Clinical Laboratory
Technology Advisory Committee, which advises CDPH on lab issues,
is currently performing a crosswalk of these differences.
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must meet other California-specific standards in order to
operate. These include a variety of personnel standards
specifying which professional may perform what type of test,
and requirements related to education and supervision. There
are also a number of other provisions, including limitations
on cytology laboratories, requirements related to proficiency
testing, and actions that constitute unlawful practice. CDPH
administers state clinical laboratory law, and enforces
requirements through LFS staff and, more recently, through an
approved accrediting organizations.
4)Licensed versus Registered Labs. All laboratories must
maintain either a registration or a license under state law,
depending on if they perform simple or more complex tests.
Federal law separates labs into two categories: those
performing simple tests, and those performing moderate- to
high-complexity tests.
Labs performing only simple tests, often physician offices,
must be registered with LFS, but are not required to be
licensed. They must also maintain a CLIA certificate and pay
a biennial fee, and are subject to complaint investigations
and sanctions.
Labs performing moderate- to high-complexity testing, however,
are subject to more stringent standards under CLIA and under
state law. To become certified under CLIA, these labs must
pay a fee to CMS and meet all applicable standards, including
biennial surveys, proficiency testing, and personnel
requirements. This group of labs is also subject to state
licensure. Similar to CLIA, state licensing law requires
biennial surveys, proficiency testing, and personnel
requirements. As noted, state law establishes certain
standards that differ from, or exceed, CLIA standards.
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5)Accredited labs versus Nonaccredited. Licensed labs, those
performing complex tests, either be accredited by private
organizations, or nonaccredited. About half of the licensed
clinical labs in California are accredited. Accreditation can
demonstrate compliance with state or federal standards, if the
accrediting organization is approved by CDPH or CMS,
respectively. Six accreditation organizations have been
approved by CMS, and one has been approved by CDPH.
For accredited labs, the accrediting organizations perform the
inspections, monitor proficiency testing, and oversee
compliance with applicable standards. The lab provides the
state and/or federal government with proof of accreditation
and is deemed in compliance with state and/or federal law.
For nonaccredited labs, the federal government contracts with
LFS as the oversight entity to ensure compliance with federal
CLIA law. LFS verifies compliance with CLIA and uses a "state
checklist addendum" to examine compliance with state law.
According to the State Auditor, the state checklist of
additional requirements in state law includes 15 criteria,
most of which relate to personnel standards.
6)Scathing State Audits. The California State Auditor found in
2008, and again in September 2015, severe deficiencies
plaguing CDPH's laboratory oversight through LFS. The 2008
audit found LFS inconsistently monitored laboratory
proficiency testing, was not inspecting laboratories every two
years as required, closed many complaints without taking
action, only sporadically imposed sanctions against
laboratories for violations, and incorrectly adjusted
licensing fees. In response, CDPH sponsored and the
Legislature passed SB 744 (Strickland), Chapter 201, Statutes
of 2009, which authorized LFS to contract with accreditation
organizations to serve as the state inspecting agent, and
adjusted lab licensure fees to account for testing volume.
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The stated purpose of the increased fee revenue pursuant to SB
744 was to allow CDPH to hire needed staff at competitive
salaries to carry out oversight duties.
More recently, the 2015 audit found lab inspections were still
not occurring, and the exact same issues related to
proficiency testing, sanctions, and complaints remained.
Staffing issues that were supposed to be resolved by
increasing revenues pursuant to SB 744 were not resolved.
Positions were eliminated in 2012 due to excessive vacancies
and hiring for authorized positions did not occur due to other
administrative failures. Finally, the 2015 audit noted that
since much of state law is duplicative of the federal CLIA,
and given the multitude of problems at LFS, the Legislature
should repeal state licensure and registration as well as the
associated fees.
7)Staff Comments. The state auditor and many stakeholders
believe many state licensure and registration standards are
duplicative of federal law. Thus, this bill repeals them.
However, in so doing, this bill raises other issues, including
the following:
a) Enforcement of State Standards. It is the author's
stated intention to uphold state standards that are
stricter than federal standards. However, this bill would
create challenges in doing so. If state standards are
important to maintain, the issues below should be
addressed.
1) Unaccredited Labs: De Facto Modified Compliance
Structure is Weak and Not Clearly Specified. The new
Section 1223 (Business and Professions Code) of this
bill states for unaccredited labs, the state shall
monitor, inspect, and investigate for compliance with
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state standards that are in excess of federal
standards. Compliance with state standards would not
result in a state license, but the department could
inspect, investigate complaints, and cite and fine
facilities. By retaining some state-specific
standards, this bill creates a de facto modified
compliance structure for these state standards.
Generally, state facility standards are enforced
through a license. For example, there is duplication
between CMS certification standards and state licensure
standards for other health facilities like hospitals
and skilled nursing facilities, but the state still
issues licenses to these facilities. Without licensure
and the "stick" of licensure revocation, it appears as
though the lab could still legally operate in violation
of state standards. In addition, the bill gives
inadequate direction to the department as to how it
should enforce state-specific standards (e.g., via
inspections? via a sampling methodology?). Given LFS's
difficulty in enforcing current law, clarifying
enforcement expectations seems paramount.
2) Accredited Labs: Deemed as Meeting State
Standards with no Verification. Unlike (2) above, the
compliance structure for state standards with respect
to accredited labs is clear: there is none. The bill
repeals the existing Section 1223, which gives CDPH the
ability to approve accrediting organizations that
demonstrate their standards meet or exceed state
standards, and the requirement to meet or exceed state
standards is not present in the new Section 1223. The
new Section 1223 of this bill states for labs
accredited by an organization approved under federal
CLIA, that accreditation shall be deemed to meet all
state standards. Essentially, under this bill's
language, federally accredited labs would be "deemed"
in compliance with state standards, such as personnel
standards, without verification of compliance
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3) Out-of-State Labs: Not Subject to State
Personnel Standards. Staff notes repealing licensure
requirements for out-of-state labs subjects in-state
labs to stricter standards than out-of-state labs.
b) Ongoing balance of revenue and workload unclear. This
bill eliminates licensure fees, limiting the department's
ability to generate revenue to enforce the remaining
requirements in state law. This bill also reduces
unrelated personnel application and license fees from their
current levels and deletes authority to adjust them in the
future, without providing a workload justification and
evidence that fee revenue matches ongoing workload.
Additionally, given such uncertainty, the restriction on
levying fees until LFS has spent all but $1 million of the
previously collected fees may not be practicable.
c) Lack of Clarity About Which Standards are Duplicative.
This bill retains all current state standards for clinical
laboratories- some of which are duplicative of federal law,
some of which are similar to federal law, and some of which
are state-specific. There is no effort made to distinguish
in the law which standards are considered duplicative, and
which are state-specific. The differences could be
clarified in the law so the public, the department,
clinical laboratories, and other stakeholders can clearly
identify what is being deferred to federal or third-party
oversight versus what the state is expected to enforce. In
addition, current state law is aligned with a prior version
of federal law, suggesting a more comprehensive statutory
overhaul is warranted.
d) Makes Other, Unrelated Changes. This bill repeals
language that applies to personnel and registered labs as
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well as licensed labs. For example, it repeals
requirements that persons or laboratories report name
changes to the department. It repeals standards for
cytotechnologist competency. It changes supervision
standards for lab personnel. It is unclear whether these
changes are inadvertent or support the bill's main intent.
e) Removes, and Does not Replace, Certain Provisions
Regulating Conduct of Laboratories. Since this bill
removes code related to licensure, this bill also removes
some licensure-related provisions. For example, this bill
repeals a provision that allows CDPH to deny, suspend, or
revoke a license based on a refusal of a reasonable request
to allow the department to inspect the laboratory, its
operations, and pertinent records. If there is no
licensure, there could instead be a provision that would
allow CDPH to impose a fine for such conduct.
Although consistent with the auditor's recommendation to
reduce duplication, the blunt nature of the bill's approach
results in unintended changes, unspecified enforcement of
state-specific standards, and reduced revenue to support any
remaining oversight work. The change in fee structure without
sufficient workload justification results in unknown fiscal
risk and likely inability to perform oversight. Despite LFS's
utter failure to perform state-mandated workload, a more
deliberative approach to recasting state law in this complex
area seems warranted.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
AB 1774
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