BILL ANALYSIS
SB 744
Page 1
SENATE THIRD READING
SB 744 (Tony Strickland)
As Amended July 14, 2009
2/3 vote. Urgency
SENATE VOTE :39-0
BUSINESS & PROFESSIONS 8-0 HEALTH 16-0
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|Ayes:|Hayashi, Conway, Eng, |Ayes:|Jones, Fletcher, Adams, |
| |Hernandez, Nava, John A. | |Ammiano, Carter, Conway, |
| |Perez, Ruskin, Smyth | |De La Torre, |
| | | |De Leon, Gaines, Hayashi, |
| | | |Hernandez, Bonnie |
| | | |Lowenthal, |
| | | |Nava, V. Manuel Perez, |
| | | |Salas, |
| | | |Audra Strickland |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 16-0
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|Ayes:|De Leon, Conway, Ammiano, | | |
| | | | |
| |Charles Calderon, Coto, | | |
| |Davis, | | |
| |Fuentes, Hall, Harkey, | | |
| |Nielsen, | | |
| |John A. Perez, Skinner, | | |
| |Solorio, Audra | | |
| |Strickland, | | |
| |Torlakson, Hill | | |
| | | | |
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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 :
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1)Requires the State Department of Health Services (DHS) 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 decision
making 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;
and,
(4) A list of all of its current California
licensed or registered laboratories and the expiration
date of their accreditation, licensure, or
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registration, as applicable.
ii) Is approved by DHS 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 DHS. Permits DHS to, without taking
regulatory action, implement or interpret this section by
means of an All Clinical Laboratories Letter (ACLL), as
specified.
iv) Is approved by DHS as meeting the requirements of
this bill. Requires DHS to begin accepting applications
for approval, in a form and manner prescribed by DHS, by
January 1, 2011. Requires DHS to make a determination on
an application submitted pursuant to this subparagraph
within 180 days of receiving the application.
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 DHS, its agents, or contractors, as
DHS may require;
iii) Pays fees, as specified;
iv) Authorizes its proficiency testing organization to
furnish to DHS and the PNO the results of the
laboratory's participation in an approved proficiency
testing program, as specified, for the purpose of
monitoring the laboratory's proficiency testing, along
with explanatory information needed to interpret the
proficiency testing results, upon request of DHS;
v) Authorizes the PNO to release to DHS a notification
of every violation of condition-level requirements,
including the actions taken by the organization as a
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result of the violation, within 30 days of the initiation
of the action; and,
vi) Authorizes the PNO to give notice to DHS of any
withdrawal of the laboratory's accreditation.
2)States that if the PNO has withdrawn or revoked its
accreditation of a laboratory, the laboratory shall retain its
certificate of deemed status for 45 days after it receives
notice of the withdrawal or revocation of the accreditation,
or the effective date of any action taken by DHS, whichever is
earlier.
3)Requires a certificate of deemed status issued to be renewed
annually provided that the conditions for issuance are still
met. Except as otherwise authorized, DHS shall not conduct
routine inspections of a laboratory issued a certificate of
deemed status. Each application for a certificate of deemed
status and each request for renewal of that certificate shall
be accompanied by fees, as specified.
4)Requires the total of the certificate application and renewal
fees collected by DHS to be sufficient to cover the cost of
issuing the certificate. If DHS 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 DHS's authority to conduct complaint
investigations, sample validation inspections, or require
submission of proficiency testing results to DHS to ensure
compliance of any clinical laboratory with state standards.
6)Requires DHS to charge fees for the application and renewal of
the certificate of no more than $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:
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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.
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,
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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 $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 $150.
12)Requires a clinical laboratory performing both waived and
provider-performed microscopy to pay an annual registration
fee of $150.
13)Requires the costs of DHS 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. DHS shall not charge a reinspection fee if the
reinspection is due to error or omission on the part of DHS.
14)Requires a fee of $25 to be assessed for approval of each
additional authorized location.
15)Requires DHS, 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.
16)Prohibits the total fees collected under this chapter from
exceeding the costs incurred by DHS for licensing,
certification, inspection, or other activities relating to the
regulation of clinical laboratories and their personnel.
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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.
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.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, annual increased fee-supported special fund costs of
$4 million to support DPH inspectors who conduct training and
inspections that have been identified by the Bureau of State
Audits as inadequate under current law. The increased funding
is derived from moving from a flat fee schedule to one that
accounts for the volume of testing performed at specific labs.
COMMENTS : According to DHS, 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.
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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, DHS 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 fiscal year
(FY) 2008-2009 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 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 DHS to deem
accredited clinical laboratories as having met state licensure
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or registration requirements if the organization allows DHS 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.
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 million
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 DHS to approve accrediting
organizations to conduct clinical laboratory inspections.
Analysis Prepared by : Sarah Huchel / B. & P. / (916) 319-3301
FN: 0002594