BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
744 (Strickland)
Hearing Date: 5/26/2009 Amended: 5/21/2009
Consultant: Katie Johnson Policy Vote: Health 11-0 B, P &
ED 6-1
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BILL SUMMARY: SB 744, an urgency measure, would increase
licensing fees on clinical laboratories and their personnel, as
administered by the Laboratory Field Services (LFS) within the
California Department of Public Health (CDPH).
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Clinical laboratory ($3,500)
($5,000) ($5,000) Special*
licensing, registration,
and laboratory staff
fee revenue
*Clinical Laboratory Improvement Fund (CLIF)
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STAFF COMMENTS:
Existing federal law, the Clinical Laboratory Improvement
Amendments of 1988 (CLIA), regulates laboratories that perform
tests on human specimens. CLIA includes laboratory standards for
proficiency testing, facility administration, personnel
qualifications, and quality control. CLIA applies to all
laboratory settings, including hospital, commercial, and
physician offices. Existing federal law permits states to seek
an exemption from CLIA.
On or before July 1, 2013, this bill would require the CDPH to
report on the extent to which the state oversight program meets
or exceeds federal oversight standards, the extent to which the
federal government is accepting applications for exemption, and
the potential cost to the state for an exemption. Currently,
California clinical laboratories pay approximately $6.5 million
in fees to the federal government for CLIA oversight and the
state receives $1.5 million in federal funds to administer CLIA
provisions. Thus, the federal government retains $5 million in
clinical laboratory fees. Were the state to seek and be granted
a CLIA exemption, clinical laboratories would no longer pay fees
to both the federal government and the state; they would only
pay state fees. However, if the state were to be granted a CLIA
exemption today, it would be required to pay the approximately
$5 million in administrative fees to the federal government.
Existing state law establishes the Laboratory Field Services
(LFS) within the CDPH, which provides for the licensing and
registration of clinical laboratories, as specified, and
collects specified fees to support its activities, including
licensing, registration, inspection, and certification efforts.
Page 2
SB 744 (Strickland)
In September 2008, the California State Auditor released a
report entitled, "Department of Public Health: Laboratory Field
Services' Lack of Clinical Laboratory Oversight Places the
Public at Risk." The report detailed the lack of oversight,
inspection, and imposition of sanctions of clinical laboratories
by the CDPH. The department stated that this lack of oversight
was primarily due to insufficient financial resources.
Existing state law permits the CDPH to certify a clinical
laboratory as meeting licensing or registration requirements
that is accredited by a private, nonprofit organization that is
federally approved by CLIA. This bill would require these
accrediting agencies to conduct inspections of clinical
laboratories in a way that would determine compliance with state
and federal laws and would allow the CDPH to implement this
provision by means of an All Clinical Laboratories Letter. This
bill would place additional requirements on accrediting agencies
relating to inspections of laboratories, as specified.
This bill would increase the certification and biennial renewal
fee of a phlebotomy technician from $25 to $100. The current fee
generates approximately $1 million annually. Preliminary
analysis indicates that this fee would generate approximately $2
million in revenues, or $1 million net, from licensing 36,000 -
40,000 phlebotomists each year.
This bill would also increase fees on various clinical personnel
in specified amounts.
This bill would require clinical laboratories that perform tests
classified as moderate to high complexity under CLIA that would
be applying for licensure or annual renewal to pay a fee based
on the number of tests performed at the laboratory, which would
be capped at 15 million tests per facility annually. The current
fees generated approximately $1.8 million in FY 2007-2008. It is
estimated that revenues would be $4 million in FY 2009-2010 and
$5 million ongoing, or $2 million net in FY 2009-2010 and $3
million net ongoing.
This bill would increase the annual fee for the clinical
laboratories registered by the CDPH that perform tests waived by
CLIA and/or provider-performed microscopy. The current fee
generates approximately $500,000 annually. This fee increase
would generate approximately $1 million in FY 2009-2010 and $1.5
million ongoing, or $500,000 net in FY 2009-2010 and $1 million
net ongoing.
This bill would prohibit the total fees collected from exceeding
the costs incurred by the department for licensing,
certification, inspection, or other activities related to the
regulation of clinical laboratories.
This bill would provide that the costs of the CDPH to conduct a
reinspection of a laboratory applying for initial licensure
would be paid by the laboratory in the amount of the initial
application fee unless the reinspection was due to an error or
omission by the department. This bill would require a clinical
laboratory to pay a delinquency fee equal to 25 percent of the
annual renewal fee if its license or registration is not renewed
before the expiration date.