BILL ANALYSIS
SB 744
Page 1
Date of Hearing: June 30, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
SB 744 (Strickland) - As Amended: May 21, 2009
SENATE VOTE : 39-0
SUBJECT : Clinical laboratories.
SUMMARY : Revises licensing and certification requirements for
clinical laboratories by recognizing accreditation of clinical
laboratories by private, nonprofit organizations (PNOs), as
specified, revises license fees according to the number of tests
performed, and makes other administrative changes.
Specifically, this bill :
1)Requires the State Department of Health Services (Department)
to issue a certificate of deemed status to laboratories
accredited by PNOs that they deem meet state licensure or
registration requirements, provided that the following
conditions are met:
a) The PNO meets all of the following requirements:
i) Is approved by the federal Center for Medicare and
Medicaid Services as an accreditation body under the
federal Clinical Laboratory Improvement Amendments of
1988 (CLIA) and provides the Department with the
following information:
(1) A detailed comparison of the individual
accreditation or approval requirements, with the
comparable condition-level requirements;
(2) A detailed description of its inspection
process, including all of the following:
(a) Frequency of inspections;
(b) Copies of inspection forms;
(c) Instructions and guidelines;
(d) A description of the review and
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decisionmaking process of inspections;
(e) A statement concerning whether inspections
are announced or unannounced; and,
(f) A description of the steps taken to
monitor the correction of deficiencies.
(3) A description of the process for monitoring
proficiency testing performance, including action to
be taken in response to unsuccessful participation;
(4) A list of all of its current California
licensed or registered laboratories and the expiration
date of their accreditation, licensure, or
registration, as applicable; and,
(5) Procedures for making proficiency testing
information available, including explanatory
information required to interpret proficiency testing
results, on a reasonable basis, upon request of any
person.
ii) Is approved by the Department as having
accreditation standards that are equal to, or more
stringent than, state requirements for licensure and
registration;
iii) Conducts inspections of clinical laboratories in a
manner that will determine compliance with federal
standards and California laws to the extent that
California laws provide greater protection to residents,
or are more stringent than federal standards, as
determined by the Department. Permits the Department to,
without taking regulatory action, implement or interpret
this section by means of an All Clinical Laboratories
Letter (ACLL), as specified.
iv) Agrees to permit the Department or its agents or
contractors to conduct random inspections of clinical
laboratories accredited by it in order to validate
compliance with California law.
b) The laboratory meets all of the following requirements:
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i) Meets the accreditation standards of the PNO;
ii) Agrees to permit the PNO to provide any records or
other information to the Department, its agents, or
contractors, as the Department may require;
iii) Pays fees, as specified;
iv) Authorizes its proficiency testing organization to
furnish to the PNO the results of the laboratory's
participation in an approved proficiency testing program
for the purpose of monitoring the laboratory's
proficiency testing, along with explanatory information
needed to interpret the proficiency testing results, upon
request of the Department;
v) Authorizes the PNO to release to the Department the
laboratory's proficiency test results that constitute
unsuccessful participation in an approved proficiency
testing program, as defined, when the laboratory has
failed to achieve successful participation in an approved
proficiency testing program.
vi) Authorizes the PNO to release to the Department a
notification of every violation of condition-level
requirements, including the actions taken by the
organization as a result of the violation, within 30 days
of the initiation of the action.
vii) Authorizes the PNO to give notice to the Department
of any withdrawal of the laboratory's accreditation.
2)If the PNO has withdrawn or revoked its accreditation of a
laboratory, the laboratory shall retain its certificate of
accreditation for 45 days after it receives notice of the
withdrawal or revocation of the accreditation, or the
effective date of any action taken by the Department,
whichever is earlier.
3)Requires a certificate of deemed status issued to be renewed
annually provided that the conditions for issuance are still
met. Each application for a certificate of deemed status and
each request for renewal of that certificate shall be
accompanied by fees, as specified.
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4)Requires the total of the certificate application and renewal
fees collected by the Department to be sufficient to cover the
cost of issuing the certificate. If the Department determines
that those certificate fees do not fully support the costs of
these activities, it shall report that determination to the
Legislature.
5)Specifies that this bill should not be construed to prohibit
the exercise of the Department's authority to conduct
complaint investigations, sample validation inspections, or
require submission of proficiency testing results to the
Department to ensure compliance of any clinical laboratory
with state standards.
6)Requires the Department to charge fees for the application and
renewal of the certificate of no more than one hundred dollars
($100) for a two-year period.
7)Requires a clinical laboratory applying for a license to
perform tests or examinations classified as of moderate or of
high complexity under CLIA and a clinical laboratory applying
for certification to pay an application fee for that license
or certification based on the number of tests it performs or
expects to perform in a year, as follows:
a) Fewer than 2,001 tests: $270;
b) Between 2,001 and 10,000, inclusive, tests: $820;
c) Between 10,001 and 25,000, inclusive, tests: $1,315;
d) Between 25,001 and 50,000, inclusive, tests: $1,580;
e) Between 50,001 and 75,000, inclusive, tests: $1,960;
f) Between 75,001 and 100,000, inclusive, tests: $2,340;
g) Between 100,001 and 500,000, inclusive, tests: $2,740;
h) Between 500,001 and 1,000,000, inclusive, tests: $4,910;
and,
i) More than 1,000,000 tests: $5,260, plus $350 for every
500,000 tests over 1,000,000, up to a maximum of 15,000,000
tests.
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8)Requires a clinical laboratory performing tests or
examinations classified as of moderate or of high complexity
under CLIA and a clinical laboratory with a certificate as
described above to pay an annual renewal fee based on the
number of tests it performed in the preceding calendar year,
as follows:
a) Fewer than 2,001 tests: $170;
b) Between 2,001 and 10,000, inclusive, tests: $720;
c) Between 10,001 and 25,000, inclusive, tests: $1,115;
d) Between 25,001 and 50,000, inclusive, tests: $1,380;
e) Between 50,001 and 75,000, inclusive, tests: $1,760;
f) Between 75,001 and 100,000, inclusive, tests: $2,040;
g) Between 100,001 and 500,000, inclusive, tests: $2,440;
h) Between 500,001 and 1,000,000, inclusive, tests: $4,610;
and,
i) More than 1,000,000 tests per year: $4,960, plus $350
for every 500,000 tests over 1,000,000, up to a maximum of
15,000,000 tests.
9) States that the personnel licensing delinquency fee is equal
to the annual renewal fee.
10)Requires a clinical laboratory subject to registration, as
specified, and performing only those clinical laboratory tests
or examinations considered waived under CLIA to pay an annual
fee of one hundred dollars ($100).
11)Requires a clinical laboratory subject to registration, as
specified, and performing only provider-performed microscopy,
as defined under CLIA, to pay an annual fee of one hundred
fifty dollars ($150).
12)Requires a clinical laboratory performing both waived and
provider-performed microscopy to pay an annual registration
fee of one hundred fifty dollars ($150).
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13)Requires the costs of the Department to conduct any
reinspections to ensure compliance of a laboratory applying
for initial licensure to be paid by the laboratory. This
additional cost for each visit shall be equal to the initial
application fee and shall be paid by the laboratory prior to
issuance of a license. The Department shall not charge a
reinspection fee if the reinspection is due to error or
omission on the part of the Department.
14)Requires a fee of $25 to be assessed for approval of each
additional authorized location.
15)Requires the Department, by July 1, 2013, to report during
the annual legislative budget hearing process the extent to
which the state oversight program meets or exceeds federal
oversight standards and 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.
16)Prohibits the total fees collected under this chapter from
exceeding the costs incurred by the Department for licensing,
certification, inspection, or other activities relating to the
regulation of clinical laboratories and their personnel.
17)Requires the annual renewal fee for a clinical laboratory
license or registration to be paid during the 30-day period
before the expiration date of the license or registration.
18)Requires that if the license or registration is not renewed
before the expiration date, the licensee or registrant, as a
condition precedent to renewal, must pay a delinquency fee
equal to 25% of the annual renewal fee for up to 60 days after
the expiration date, in addition to the annual renewal fee in
effect on the last preceding regular renewal date. Failure to
pay the annual renewal fee in advance during the time the
license or registration remains in force shall result in the
forfeiture of the license or registration after a period of 60
days from the expiration date of the license or registration.
19)Requires all fees and interest to be deposited and maintained
in the Clinical Laboratory Improvement Fund (CLIF) and to be
used for the purpose of administering the regulation of
clinical laboratories only, as specified.
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20)Adds an urgency statute, stating that in order to protect the
public health by providing strong clinical laboratory
oversight as soon as possible, it is necessary that this bill
take effect immediately.
21)Makes Legislative findings and declarations.
EXISTING FEDERAL LAW , CLIA, regulates laboratories when
performing testing on human specimens and includes laboratory
standards for proficiency testing, facility administration,
personnel qualifications, and quality control and applies
standards to all settings, including commercial, hospital, or
physician office laboratories.
EXISTING STATE LAW :
1)Establishes within the Department the Laboratory Field
Services (LFS) which provides for licensing and registration
services for clinical laboratories, as specified.
2)Requires a clinical laboratory that performs tests that are of
moderate or high complexity to be licensed by the Department.
Requires a clinical laboratory that performs tests that are of
low complexity, also referred to as "waived tests," or that
perform provider-performed microscopy (PPM), which is
microscopic analysis of a specimen by a health care provider
such as a physician, to be registered, rather than licensed,
by the Department, and requires a laboratory that operates
multiple locations, to obtain a separate license or
registration for each laboratory location.
3)Defines a clinical laboratory as any establishment or
institution operated for the performance of clinical
laboratory tests or examinations, or the practical application
of clinical laboratory sciences.
4)Allows the Department to certify a clinical laboratory that is
accredited by a PNO as having met state licensure or
registration requirements, provided that the accrediting
organization is federally approved under CLIA, has
accreditation standards that are equal to, or more stringent
than, state licensure and registration requirements, and
allows the Department to randomly inspect its accredited
clinical laboratories for compliance with state law.
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Specifies certification requirements for accredited
laboratories, including allowing the accrediting organization
to provide any records or other information about the
laboratory required by Department.
5)Requires clinical laboratories to pay fees, as specified, to
the Department for the purposes of initial and renewal
licensure, registration, or certification.
6)Establishes CLIF, into which fees collected by the Department
from clinical laboratories are deposited and used for the
purpose of licensing, registration, certification, inspection,
or other activities relating to the regulation of clinical
laboratories.
7)Requires the services of a public health laboratory to be
available to city or county local public health departments
for the purpose of examining suspected cases of infectious and
environmental diseases, and to assist in community disease
surveillance. Requires any city or county public health
laboratory, and specified personnel to be approved by the
Department, and to comply with all applicable CLIA
requirements. Under existing law, public health laboratories
are exempt from licensure and certification fees.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office, "The
California Department of Public Health's (CDPH's) LFS Program is
responsible for oversight of clinical laboratories. Currently
all laboratories, whether small or large, pay the same fee
created in statute in 1951. Because of underfunding, LFS is
unable to adequately enforce state laws and regulations
regarding licensing, certification and registration of clinical
laboratories. This has resulted in inability to conduct
biennial inspections or complaint investigations, backlogs of
licensing applications, and failure to take enforcement action
for proficiency testing failures or sanctions for
non-compliance.
"A strong clinical laboratory oversight program is necessary to
protect public health. Changing the way fees are assessed to
adopt a sliding license fee schedule based on volume of testing
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will allow CDPH to hire needed staff at competitive salaries to
carry out these duties."
Background .
Clinical laboratories. According to the Department, there are
currently approximately 19,000 clinical laboratories in
California, 3,000 of which are licensed laboratories performing
moderate and/or high complexity testing. The remaining 12,000
are registered labs performing waived tests and/or
provider-performed microscopy. California clinical laboratories
are subject to both federal and state oversight.
Federal CLIA requirements establish standards for laboratories
to ensure the accuracy, reliability, and timeliness of patient
test results, and specify numerous quality standards, including
those for facility administration, personnel qualifications,
quality control, and proficiency testing, a process used by
laboratories to verify the accuracy and reliability of their
test results. CLIA standards apply to laboratory testing in all
states, and in all settings, including commercial, hospital, or
physician office laboratories. CLIA standards are based on the
complexity of the testing (waived, moderate, or high
complexity). To become certified under CLIA, a clinical
laboratory must pay applicable fees, meet all applicable
standards, and be surveyed biennially. In California, the
Department is contracted by The Centers for Medicare & Medicaid
Services (CMS) to conduct the biennial CLIA survey on behalf of
the federal government. CLIA fees are based on the type of
certification sought by a laboratory, and the annual volume and
types of testing performed.
In addition to CLIA standards, California clinical laboratories
must meet state licensure requirements in order to operate.
Similar to CLIA, state licensing law requires biennial surveys,
proficiency testing, and specified personnel requirements.
However, state clinical laboratory licensing law establishes
certain standards that differ with, or exceed, CLIA standards.
For example, state law requires LFS to investigate complaints
made against clinical laboratories. State law also requires
clinical laboratories to pay annual fees to the Department in
order to be licensed or registered. Fee amounts for the
2008-2009 fiscal year for initial licensure are $1,023, and $952
for renewal. Fees for initial and renewal registration are $62
for laboratories performing waived tests, and $92 for
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laboratories performing provider-performed microscopy.
Some clinical laboratories voluntarily seek accreditation from
accrediting organizations, which are private, nonprofit
organizations approved by CMS to provide laboratory oversight.
Accrediting organizations set forth their own standards and
requirements for clinical laboratories. CLIA allows CMS to deem
a laboratory as having met federal requirements through
accreditation by one of these organizations, as long as the
standards of the organization meet or exceed those in federal
regulations. California law also requires the Department to
deem accredited clinical laboratories as having met state
licensure or registration requirements if the organization
allows the Department to inspect its accredited labs at random,
and the organization has been approved by CMS. Accreditation is
optional, and clinical laboratories that seek accreditation pay
fees to the accrediting organization, in addition to fees for
CLIA certification and state licensure. There are currently six
accrediting organizations approved by CMS, including the College
of American Pathologists, and the Joint Commission.
State Auditor Report . In 2008, the California State
Auditor (Auditor) published a report concluding that LFS
had not provided the clinical laboratory oversight mandated
by state law and regulations. Major findings of the report
revealed that LFS was not inspecting laboratories every two
years, as required, inconsistently monitored laboratory
proficiency testing, closed many complaints without taking
action, sporadically imposed sanctions against laboratories
for violations, and, in three instances since fiscal year
2003-04, incorrectly adjusted licensing fees resulting in
more than $1,000,000 in lost revenue. In light of these
findings, the Auditor proposed a number of recommendations
to leverage existing resources to improve oversight of
clinical laboratories, including a recommendation for the
Department to approve accrediting organizations to conduct
clinical laboratory inspections. The Auditor stated in the
report that the Department had not approved any
accreditation organizations to perform such activities, and
reported that LFS had expressed concern over the quality of
the inspections conducted by accrediting organizations.
The Auditor pointed out that LFS would need to approve
accrediting organizations and monitor their compliance, so
LFS would have the tools to address these concerns.
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In response to the audit report, the Department generally
concurred with the Auditor's findings, and attributed much
of its inability to meet its mandated responsibilities to a
lack of staffing resources. The Department stated that LFS
would take steps to determine how to maximize the use of
existing resources, as well as assess how many additional
resources would be needed. The Department stated that
licensing revenues would likely be increased to cover costs
associated with state oversight mandates. The Department
also stated that it would explore the use of accrediting
organization inspectors to conduct inspections for
compliance with state law, and that it would work with the
appropriate parties to ensure that clinical laboratory
licensing fees are properly adjusted in accordance with the
Budget Act.
Public Health Laboratories . This bill contains provisions
relating to public health laboratories. According to the
Department, there are currently 38 public health
laboratories located in California that are administered
locally by city or county public health departments. Local
public health laboratories provide services relating to the
examination of specimens from suspected cases of infectious
and environmental diseases, including specimens from
humans, milk, water, food, vectors, and the environment.
While public health laboratories may conduct patient
diagnostic testing, they differ from clinical laboratories
in that the scope of their work, including their patient
diagnostic testing, revolves around the prevention and
control of communicable diseases, community surveillance of
infectious or communicable disease, and promoting and
maintaining public health.
Local public health laboratories are approved by the
Department, and are certified to meet state and federal law
and regulations. The Department also certifies public
health microbiologists and public health laboratory
directors to ensure that they meet all educational and
training requirements required by state regulations.
Existing state regulations set forth specific requirements
and standards public health laboratories must meet,
including requirements pertaining to personnel, reporting,
and safety procedures and precautions. Existing
regulations require a public health laboratory
microbiologist, and a public health laboratory director to
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meet specified education and training requirements, and to
be certified by the Department. Local public health
laboratories currently do not pay fees to the Department
for laboratory or personnel certification. With regard to
public health microbiologists and laboratory directors, the
Department issues a lifelong certificate at no charge, with
no renewal requirements.
Double referred : This bill is double-referred to the Assembly
Health Committee.
Arguments in support . This bill's sponsor, California
Department of Public Health, states, "Changing the way fees are
assessed to adopt a sliding license fee schedule based on volume
of testing will allow the Department to hire needed staff at
competitive salaries to carry out these duties."
Arguments in opposition . Michael Lin, MD, a dermatologist,
writes, "In general, but especially in this time of budgetary
and economic distress, there should be a single regulator of
medical laboratories with a single set of rules and a single
fee. Therefore, the Department and Laboratory Field Services
(LFS) must commit to achieving exemption from the Federal CLIA
Program. Alternatively, the LFS function of regulating medical
laboratories should be terminated. All medical laboratories
should not have to pay for a state laboratory license since the
federal CLIA Program is already charging and regulating medical
laboratories."
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Public Health (sponsor)
Blood Centers of California
California Association of Public Health Laboratory Directors
Health Officers Association of California
Opposition
California Society of Dermatology and Dermatologic Surgery
Several individuals
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
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