BILL ANALYSIS
SB 744
Page 1
Date of Hearing: July 7, 2009
ASSEMBLY COMMITTEE ON HEALTH
Dave Jones, Chair
SB 744 (Strickland) - As Amended: July 1, 2009
SENATE VOTE : 39-0
SUBJECT : Clinical laboratories.
SUMMARY : Revises licensing and certification requirements for
clinical laboratories to recognize accreditation of clinical
laboratories by approved, private, nonprofit organizations
(PNOs), as specified, revises license fees on clinical
laboratories according to the number of tests performed,
increases licensing fees on laboratory personnel, and makes
other administrative changes. Specifically, this bill :
1)Requires the Department of Public Health (DPH) to issue to
laboratories accredited by PNOs a certificate that the
laboratories are deemed to meet state licensure or
registration requirements, provided the following conditions
are met:
a) The PNO meets all of the following requirements:
i) Is approved by the federal Centers for Medicare and
Medicaid Services as an accreditation body under the
federal Clinical Laboratory Improvement Amendments of
1988 (CLIA) and provides DPH 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;
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(d) A description of the review and
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;
ii) Is approved by DPH 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 DPH. Authorizes DPH to implement or
interpret this section by means of an All Clinical
Laboratories Letter (ACLL), without taking regulatory
action. Requires DPH to post the ACLL on its Web site
and to accept public comment on the ACLL for 30 days
after posting, to consider the public comment, and make
the ACLL final 45 days after posting; and,
iv) Is approved by DPH as meeting the requirements in 1)
a) i) through iii) above.
b) The laboratory meets all of the following requirements:
i) Meets the accreditation standards of the PNO;
ii) Agrees to permit the PNO to provide any records or
other information to DPH, its agents, or contractors, as
DPH may require;
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iii) Pays applicable fees, as specified;
iv) Authorizes its proficiency testing organization to
furnish to DPH and 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 DPH;
v) Authorizes the PNO to release to DPH a notification
of every violation of condition-level requirements,
including the actions taken by the PNO as a result of the
violation, within 30 days of the initiation of the
action; and,
vi) Authorizes the PNO to give notice to DPH of any
withdrawal of the laboratory's accreditation.
2)Provides that 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 accreditation, or
the effective date of any action taken by DPH, whichever is
earlier.
3)Requires a laboratory with a certificate of deemed status to
renew the certificate annually provided that the conditions
for issuance are still met.
4)Requires laboratories applying for a certificate of deemed
status or renewal to pay fees set forth in 8) and 9) below.
Requires the total of certificate application and renewal fees
to be sufficient to cover the cost of issuing the certificate,
and requires DPH to notify the Legislature if the fees are
inadequate to support the costs of licensing and renewal
activities.
5)Prohibits DPH from conducting routine inspections of a
laboratory with a certificate of deemed status, except as
authorized under 6) below.
6)Clarifies that nothing in this section prohibits DPH from
exercising its authority to conduct complaint investigations,
sample validation inspections, or require submission of
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proficiency testing results to DPH to ensure compliance with
state standards.
7)Requires DPH to charge no more than one hundred dollars ($100)
for a two-year period for the application and renewal of the
certificate for a certified phlebotomy technician.
8)Sets new fees for the licensure of laboratory personnel as
follows:
a) The application and renewal fees for a
histocompatibility laboratory director's, clinical
laboratory bioanalyst's, clinical chemist's, clinical
microbiologist's, clinical laboratory toxicologist's,
clinical cytogeneticist's, or clinical molecular
biologist's license at $63;
b) The application fee for a clinical laboratory
scientist's or limited clinical laboratory scientist's
license at $38 and the renewal fee at $25;
c) The application and annual renewal fee for a
cytotechnologist's license at $50;
d) The application fee for a trainee's license at $13 and
the annual renewal fee at $8; and,
e) The application fee for a duplicate license at $5.
9)Requires a clinical laboratory applying for a license to
perform tests or examinations classified as of moderate or
high complexity under CLIA and a clinical laboratory applying
for certification of deemed status 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) 2,001 to 10,000 tests: $820;
c) 10,001 to 25,000 tests: $1,315;
d) 25,001 to 50,000 tests: $1,580;
e) 50,001 to 75,000 tests: $1,960;
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f) 75,001 to 100,000 tests: $2,340;
g) 100,001 to 500,000 tests: $2,740;
h) 500,001 to one million tests: $4,910; and,
i) More than one million tests: $5,260, plus $350 for every
500,000 tests over one million, up to a maximum of 15
million tests.
10)Requires a clinical laboratory performing tests or
examinations classified as of moderate or high complexity
under CLIA and a clinical laboratory with a certificate of
deemed status 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) 2,001 to 10,000 tests: $720;
c) 10,001 to 25,000 tests: $1,115;
d) 25,001 to 50,000 tests: $1,380;
e) 50,001 to 75,000 tests: $1,760;
f) 75,001 to 100,000 tests: $2,040;
g) 100,001 to 500,000 tests: $2,440;
h) 500,001 to one million tests: $4,610; and,
i) More than one million tests: $4,960, plus $350 for every
500,000 tests over one million, up to a maximum of 15
million tests.
11)Increases the annual registration fee for a clinical
laboratory performing only those clinical laboratory tests or
examinations considered waived under CLIA, as specified, to
$100.
12)Increases the annual registration fee for a clinical
laboratory performing only provider-performed microscopy as
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defined under CLIA, as specified, to $150.
13)Increases the annual registration fee for a clinical
laboratory performing both waived and provider-performed
microscopy, as specified, to $150.
14)Requires a laboratory applying for initial licensure to pay
the costs for DPH to conduct any reinspections to ensure
compliance of that laboratory. Sets the additional cost for
each visit to be equal to the initial application fee and
requires the laboratory to pay the fee prior to issuance of a
license. Prohibits DPH from charging a reinspection fee if
the reinspection is due to error or omission on the part of
DPH.
15)Requires a fee of $25 to be assessed for approval of each
additional authorized location of a not-for-profit, federal,
state, or local government laboratory that engages in limited
public health testing, as defined.
16)Requires DPH, by July 1, 2013, to report to the Legislature
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.
17)Prohibits the total fees collected under this chapter from
exceeding the costs incurred by DPH for licensing,
certification, inspection, or other activities relating to the
regulation of clinical laboratories and their personnel.
18)Requires a laboratory to pay a delinquency fee of 25% of the
annual renewal fee in addition to the annual renewal fee in
effect on the last preceding regular renewal date, if the
clinical laboratory license or registration is not renewed
before the expiration date. Provides that failure to pay the
annual renewal fee in advance while the license or
registration remains in force shall result in the forfeiture
of the license or registration after 60 days from the
expiration date of the license or registration.
19)Requires interest (in addition to fees) to be deposited and
maintained in the Clinical Laboratory Improvement Fund and to
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be used for the purpose of administering the regulation of
clinical laboratories only, as specified.
20)Makes findings and declarations concerning the Legislature's
intent to provide DPH with flexibility to concentrate its
resources where they can be most effective.
21)This bill contains an urgency clause, and should this bill
pass, it would take effect immediately upon passage.
EXISTING STATE LAW :
1)Provides for the licensing and registration of clinical
laboratories.
2)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.
3)Requires a clinical laboratory that performs tests that are of
moderate or high complexity to be licensed by DPH.
4)Requires a clinical laboratory that performs tests that are of
low complexity, or "waived tests," or a clinical laboratory
that performs provider-performed microscopy, which is
microscopic analysis of a specimen by a health care provider
such as a physician, to be registered with, rather than
licensed by, DPH.
5)Requires a laboratory that operates multiple locations to
obtain a separate license or registration for each laboratory
location.
6)Allows DPH to certify a clinical laboratory that is accredited
by a PNO as having met state licensure or registration
requirements, provided the PNO is federally approved under
CLIA, has accreditation standards that are equal to, or more
stringent than, state licensure and registration requirements,
and allows DPH to randomly inspect its accredited clinical
laboratories for compliance with state law. Specifies
certification requirements for accredited laboratories,
including allowing the accrediting organization to provide any
records or other information about the laboratory required by
DPH.
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7)Requires clinical laboratories to pay fees, as specified, to
DPH for the purposes of initial and renewal licensure,
registration, or certification.
8)Establishes the Clinical Laboratory Improvement Fund, into
which fees collected by DPH 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.
9)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 DPH, and
to comply with all applicable CLIA requirements. Under
existing law, public health laboratories are exempt from
licensure and certification fees.
10)Requires an unlicensed person employed by a clinical
laboratory whose job is to withdraw blood from a patient to be
certified as a phlebotomy technician. Existing law requires
an individual seeking phlebotomy technician certification to
pay a fee of $25 to DPH upon initial application and annual
renewal.
EXISTING FEDERAL LAW , under CLIA, regulates laboratories that
perform tests on human specimens. CLIA includes laboratory
standards for proficiency testing, facility administration,
personnel qualifications, and quality control and applies to all
laboratory settings, including hospital, commercial, and
physician office laboratories.
FISCAL EFFECT : According to the Senate Appropriations
Committee analysis, this bill will result in increased annual
Clinical Laboratory Improvement Fund revenues of $3.5 million in
fiscal year 2009-10, and $5 million ongoing.
COMMENTS :
1)PURPOSE OF THIS BILL . According to the author, all
laboratories, whether small or large, currently pay the same
fee created in statute in 1951. Because of under-funding, the
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DPH Laboratory Field Services (LFS) Program, which is
responsible for oversight of clinical laboratories, is unable
to adequately enforce state laws and regulations regarding
licensing, certification and registration of clinical
laboratories. The author states DPH is unable to conduct
biennial inspections or complaint investigations, cannot take
enforcement action for proficiency testing failures or
sanctions for non compliance, and has accumulated backlogs of
licensing applications. LFS was cited in a recent Bureau of
State Audits (BSA) audit for not performing basic laboratory
oversight functions of biennial inspections, complaint
investigations, proficiency testing enforcement and sanctions
for non compliance by laboratories. The BSA audit recommended
that DPH leverage its resources by using inspectors from
accrediting organizations as an option to using state-employed
inspectors. This bill proposes standards for approval of
these accrediting organizations and their inspectors, allowing
DPH to augment its inspections of clinical laboratories by
accepting accreditation inspections performed by approved PNOs
in lieu of state inspections. The author argues that a strong
clinical laboratory oversight program is necessary to protect
public health, and that changing the way fees are assessed to
adopt a sliding license fee schedule based on volume of
testing will allow DPH to hire needed staff at competitive
salaries to carry out these duties.
2)BACKGROUND . According to the DPH Web site, LFS has oversight
of approximately 18,500 clinical laboratories, including
physician offices, clinics, hospitals, independent
laboratories, public health laboratories, and health fairs
that offer testing for diagnosis or treatment. DPH states
there are also approximately 600 independent laboratories
outside California and two laboratories outside the United
States performing testing on specimens from California
patients which must also meet standards that are equivalent to
California clinical laboratory standards. LFS reviews
clinical laboratory license and registration applications for
compliance with state law, issues licenses and registrations,
inspects facilities to assure initial and ongoing compliance,
investigates laboratory complaints, reviews and enforces
proficiency testing standards, and enforces laboratory law,
including issuing sanctions for non-compliance.
DPH also contracts with the federal government to enforce CLIA,
which requires that all laboratories testing human specimens
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be certified by the federal government, and is required to
perform onsite inspections every two years to ensure accuracy
and reliability of laboratory test results and review
proficiency testing results. The LFS CLIA Enforcement Section
states its responsibilities include annually performing
routine inspections of over 800 laboratories each year,
validating 36 accredited facilities, and inspecting over 200
laboratories with a CLIA certificate of waiver.
3)CALIFORNIA STATE AUDITOR REPORT . In September 2008, the
California State Auditor (CSA) published a report entitled,
Department of Public Health: Laboratory Field Services' Lack
of Clinical Laboratory Oversight Places the Public at Risk.
The CSA found that LFS was not inspecting laboratories every
two years as required, was inconsistent in monitoring
laboratory proficiency testing, closed many complaints without
taking action, and was inconsistent in imposing sanctions
against laboratories for violations of law and regulations.
CSA also stated that LFS had raised fees improperly one year
and failed to impose two subsequent fee increases called for
in the Budget Act, resulting in LFS failing to collect more
than $1 million in fees. CSA reported that the chief of LFS
attributed the problems primarily to a lack of resources. CSA
proposed a number of recommendations to leverage resources to
improve oversight of clinical laboratories, including a
recommendation that DPH approve accrediting organizations to
conduct clinical laboratory inspections. Although LFS had
expressed concern over the quality of the inspections
conducted by accrediting organizations, CSA pointed out that
LFS would need to approve accrediting organizations and
monitor their compliance, so LFS would have the tools to
address these concerns.
In response, DPH generally concurred with CSA's findings and
recommendations, and expressed intentions to respond within
existing resources. DPH stated that licensing revenues would
likely be increased to cover costs associated with state
oversight mandates, 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.
4)SUPPORT . DPH, sponsor of this bill, writes this bill is
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needed because a strong clinical laboratory oversight program
is needed to protect public health. DPH states all
laboratories, whether large or small, pay the same fee created
in statute in 1951, and that because of under-funding, LFS is
unable to enforce state laws and regulations regarding
clinical laboratories. DPH and Blood Centers of California
argue that a sliding license fee schedule based on volume of
testing will allow DPH to hire needed staff at competitive
salaries.
5)SUPPORT IF AMENDED . The California Medical Association (CMA)
states it supports this bill if amended to include codified
intent language that this bill is a precursor to seeking a
federal CLIA exemption, include a sunset and repeal if CLIA
exemption has not been achieved by January 1, 2013, and change
the annual fee and licensing requirements to be bi-annual
rather than annual. California Society of Pathologists (CSP)
write they support this bill if amended to address
responsibilities of recognized accrediting bodies like the
College of American Pathologists, cap fees at an amount
necessary to administer the program, and eliminate LFS
authorization to assess additional fees for a proficiency
testing program for cytology, which was never developed.
6)OPPOSE UNLESS AMENDED . Quest Diagnostics (Quest), in
opposition to a prior version of this bill, states it would
like the fees to be fair and opposes a fee schedule that is
based on volume of tests performed by an individual
laboratory. Quest expresses a preference for fees based on
the complexity of the testing and that recognize that the cost
of inspection is not dependent on the number of tests. Quest
also asks that fees for the cytology proficiency testing
program mentioned in 5) above be eliminated. The California
Society of Dermatology and Dermatologic Surgery states it
opposes this bill unless it includes codified intent stating
that it is a precursor to seeking a CLIA exemption and a
sunset and repeal if a CLIA exemption has not been achieved by
January 1, 2013.
7)OPPOSITION . Several physicians wrote in opposition to a prior
version of this bill that they prefer a single fee and single
regulator, and request eliminating state regulation and fees,
leaving regulation only under CLIA.
8)RELATED LEGISLATION . SJR 15 (Alquist), pending in the Senate,
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encourages the federal government to amend CLIA and enact
legislation that would, allow qualified nondoctoral, non-board
certified persons to serve as laboratory directors of local
public health laboratories.
9)TECHNICAL AMENDMENT . Page 10, line 1: "certificate of
accreditation" should be "certificate of deemed status".
10)DRAFTING CONCERN . Page 15, lines 5-8 and 30-33: should the
maximum be a dollar amount, rather than 15 million tests?
11)SECOND COMMITTEE OF REFERENCE . This bill was previously
heard in Assembly Business and Professions Committee, and was
approved on a 8-0 vote.
REGISTERED SUPPORT / OPPOSITION :
Support
California Department of Public Health (sponsor)
Blood Centers of California
California Association of Public Health Laboratory Directors
Health Officers of California
Opposition
Five individuals
Oppose Unless Amended
California Society of Dermatology and Dermatologic Surgery
Quest Diagnostics
Analysis Prepared by : Allegra Kim / HEALTH / (916) 319-2097