Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
Enrollment and Certification Processes in the 
Clinical Laboratory Improvement 
Amendments Program 
JANET REHNQUIST 
Inspector General 
AUGUST 2001 
OEI-05-00-00251  OFFICE OF INSPECTOR GENERAL 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 
amended by Public Law 100-504, is to protect the integrity of the Department of Health and 
Human Services programs as well as the health and welfare of beneficiaries served by them. 
This statutory mission is carried out through a nationwide program of audits, investigations, 
inspections, sanctions, and fraud alerts. The Inspector General informs the Secretary of program 
and management problems and recommends legislative, regulatory, and operational approaches 
to correct them. 
Office of Evaluation and Inspections 
The Office of Evaluation and Inspections (OEI) is one of several components of the Office of 
Inspector General. It conducts short-term management and program evaluations (called 
inspections) that focus on issues of concern to the Department, the Congress, and the public. 
The inspection reports provide findings and recommendations on the efficiency, vulnerability, 
and effectiveness of departmental programs. 
OEI's Chicago Regional Office prepared this report under the direction of William Moran, 
Regional Inspector General and Natalie Coen, Deputy Regional Inspector General. Principal 
OEI staff included: 
REGION  HEADQUARTERS 
John Traczyk, Team Leader  Bambi Straw, Program Specialist

Susan Otter, Lead Analyst

Dennis Tharp, Analyst

To obtain copies of this report, please call the Chicago Regional Office at (312) 353-4124. 
Reports are also available on the World Wide Web at our home page address: 
http://www.hhs.gov/oig/oei/  E X E C U T I V E  S U M M A R Y  
PURPOSE 
To identify vulnerabilities in the Clinical Laboratory Improvement Amendments program 
enrollment and certification processes. 
BACKGROUND 
The Clinical Laboratory Improvement Amendments of 1988 (CLIA) establish quality 
standards for all laboratory testing to ensure the accuracy, reliability and timeliness of 
patient test results regardless of where the test was performed. The Centers for 
Medicare and Medicaid Services (CMS) oversee the CLIA program. 
Laboratories that conduct moderate or high complexity testing are surveyed every 2 years 
by State agencies and private sector accreditation agencies to ensure compliance. 
Laboratories conducting provider-performed microscopy procedures and/or waived tests 
are not routinely surveyed. Waived and provider-performed microscopy facilities 
constitute 75 percent of laboratories certified under CLIA. 
Waived tests are determined by the FDA to have an insignificant risk of erroneous 
result, including simple and accurate tests or those which pose no reasonable risk of 
harm to the patient if performed incorrectly. Tests sold over the counter for home use 
are included in the waived category. 
The information presented in this report was collected during the inspection titled: CLIA 
Regulation of Unestablished Laboratory Tests, (OEI-05-00-00250). To produce this 
report, we conducted additional analyses of the data gathered. 
FINDINGS 
Significant Vulnerabilities Exist in CLIAs Oversight of Waived and Provider-
Performed Microscopy Laboratories 
State surveyors and CMS studies indicate that there may be widespread problems at 
waived and provider-performed microscopy laboratories. Colorado and Ohio surveyors 
found that about half of waived and provider-performed microscopy laboratories were 
not following manufacturers instructions, did not have manufacturers instructions 
onsite, or were conducting tests they were not authorized to perform. Colorado State 
i 
CLIA Enrollment and Certification  OEI-05-00-00251  surveyors found 90 percent of provider-performed microscopy laboratories lacked written 
procedures or could not demonstrate the accuracy of the test method or the competency 
of testing personnel. These findings have led CMS to initiate a pilot project in eight 
other States to survey a sample of waived and provider-performed microscopy 
laboratories. 
Because waived and provider-performed microscopy laboratories are not routinely 
surveyed, surveyors do not have the opportunity to educate staff, or identify and correct 
problems. Nearly all of our State agency respondents believe that the lack of onsite visits 
of waived and provider-performed microscopy laboratories is a vulnerability. A majority 
of State respondents report that they have found these laboratories performing moderate 
or high complexity tests. We found that 13 percent of waived laboratories and 11 percent 
of provider-performed microscopy laboratories in our sample were denied Medicare 
payment for tests they were not authorized to perform. 
Despite Safeguards, Some Vulnerabilities Also Exist for Moderate and High 
Complexity Laboratories 
Waived and provider-performed microscopy tests are not evaluated during routine 
surveys of moderate and high complexity laboratories. Colorado surveyors found 
significant problems with waived tests conducted at 40 percent of moderate and high 
complexity laboratories. 
The CMSs regulations permit new laboratories to operate for up to 24 months before 
they are visited to ensure compliance with CLIA requirements. Some States have 
expressed concern that laboratories may be performing poorly during this period. 
Although the CLIA regulations allow for 2 years before the initial onsite visit, some 
States report inspecting most laboratories in under a year, and CMS has encouraged 
States to inspect new laboratories three months after the initial application is complete. 
CMSs Reliance on Laboratories to Self-Identify for Enrollment Appears to be a 
Weakness 
We identified 160 laboratories that had offered laboratory tests and yet were not certified 
by CLIA to do so. Despite widespread belief that most laboratories voluntarily enroll in 
the CLIA program, 43 State agencies reported that they have found sites conducting 
laboratory tests without a CLIA certificate. 
Some State Processes Augment Safeguards in the CLIA Program, Although 
Vulnerabilities Remain 
Some State laboratory licensure requirements may mitigate vulnerabilities in the CLIA 
program. About half of the States report having a State laboratory licensure program in 
addition to the CLIA program. Of these, ten State programs survey some or all waived 
and provider-performed microscopy laboratories, and 14 programs require initial onsite 
surveys earlier than the CLIA requirement of 24 months. 
ii 
CLIA Enrollment and Certification  OEI-05-00-00251  RECOMMENDATIONS 
The purpose of this report is to identify vulnerabilities in the CLIA enrollment and 
certification processes. We believe that CMS needs to take some action to reduce the 
vulnerabilities identified in this report. We recognize that resources are limited and that 
implementing some of the following recommendations may require additional funding. 
Regarding waived and provider-performed microscopy laboratories, we 
recommend that CMS: 
C  Provide educational outreach to directors of waived and provider-performed 
microscopy laboratories regarding CLIA requirements. 
C  Require laboratories applying for waived and provider-performed microscopy 
certificates to identify which test systems they will use. 
C  Establish a mechanism whereby Medicare claim denials can be used to inform 
State laboratory surveyors about laboratories billing outside their certificate. 
C  Use periodic paper self-assessment tools to help ensure compliance for 
laboratories that are not routinely visited. 
C	 If CMSs pilot project finds similar problems to those found in the Ohio and 
Colorado studies, we encourage CMS to conduct random onsite inspections of 
some waived and provider-performed microscopy laboratories each year. 
Regarding surveyed laboratories, we recommend that CMS: 
C	 Review waived and provider-performed microscopy testing at moderate and high 
complexity laboratories during routine surveys. 
C  Shorten the time between application and initial onsite visits to new laboratories. 
C  Formally require accreditation agencies to inform CMS about laboratories 
conducting tests in specialties not accredited by the agency. 
C  Establish a workgroup to develop methods to identify uncertified laboratories. 
AGENCY COMMENTS 
We appreciate the assistance and cooperation we received from CMS staff while 
conducting this study. We received comments from them on this report and they 
concurred with our recommendations. The text of their comments can be found in 
Appendix A. 
iii 
CLIA Enrollment and Certification  OEI-05-00-00251  T A B L E  O F  C O N T E N T S  
PAGE

EXECUTIVE SUMMARY

INTRODUCTION ............................................................. 1

FINDINGS

Significant CLIA Vulnerabilities in Waived and Microscopy Laboratories ........... 7

Despite Safeguards, Surveyed Laboratories Have Some Vulnerabilities  ............. 9

Self-Identification for Enrollment Appears to be a Weakness  .................... 11

Some State Processes Augment CLIA Safeguards  ............................. 11

RECOMMENDATIONS  .....................................................  13

AGENCY COMMENTS  .....................................................  15

APPENDICES

A:  Text of Agency Comments  ............................................ 16

iv 
CLIA Enrollment and Certification  OEI-05-00-00251  I N T R O D U C T I O N  
PURPOSE 
To identify vulnerabilities in the Clinical Laboratory Improvement Amendments program 
enrollment and certification processes. 
BACKGROUND 
The information presented in this report was collected during the inspection titled: CLIA 
Regulation of Unestablished Laboratory Tests, (OEI-05-00-00250). That inspections 
purpose was to examine how the Centers for Medicare and Medicaid Services (CMS) 
regulate laboratories conducting unestablished laboratory tests. During the course of that 
inspection, we found information not only about unestablished tests, but also about 
vulnerabilities in CLIA enrollment and certification processes that apply to all 
laboratories. This report was written to outline those vulnerabilities, and includes 
additional analyses of the original data gathered. 
In 1988, Congress enacted the Clinical Laboratory Improvement Amendments (CLIA). 
The CLIA established quality standards for all laboratory testing to ensure the accuracy, 
reliability and timeliness of patient test results regardless of where the test was 
performed. The CMS is responsible for implementing CLIA, including laboratory 
registration, fee collection, onsite surveys and enforcement. The CMS contracts with 
State agencies and private accreditation agencies to carry out the provisions of the 
Clinical Laboratory Improvement Amendments. 
Under current law, all laboratories must be certified under CLIA to perform testing on 
human specimens.1  In addition, Medicare and Medicaid require CLIA certification as a 
condition of payment. The CLIA regulations define a laboratory as: 
[A] facility for the . . . examination of materials derived from the human 
body for the purpose of providing information for the diagnosis, 
prevention or treatment of any disease or impairment of, or the 
assessment of the health of, human beings. These examinations also 
include procedures to determine, measure, or otherwise describe the 
presence or absence of various substances or organisms in the body. 
1The regulations allow for some exceptions, including forensic laboratories, research laboratories that do 
not report patient-specific results, drug testing laboratories certified by the Substance Abuse and Mental Health 
Services Administration, and some Federal laboratories. 
1 
CLIA Enrollment and Certification  OEI-05-00-00251  Laboratories enroll in the program by completing an application and paying a certificate
fee to CMS.  Fees are based on certificate type, annual volume and types of testing
reported on the application.  All laboratories are required to keep CMS informed of major
changes in testing, laboratory ownership or directorship.  All CLIA-certified laboratories
must also comply with all State laws governing laboratories.
Types of CLIA Certificates
Each laboratory must have a certificate appropriate for the complexity of the testing
conducted.  All laboratory test methods have been categorized by the Food and Drug
Administration2 (FDA) into the following four categories based on testing complexity:  
high complexity, moderate complexity, provider-performed microscopy and waived.  The
type of CLIA certificate issued relates to the complexity of testing conducted at the
laboratory (see Figure 1). 
As of July 2000, nearly 170,000 laboratories were registered under CLIA.3  About 86,500
laboratories (53 percent) have been issued a Certificate of Waiver.  Certificates of Waiver
2The Centers for Disease Control and Prevention held this responsibility until January, 2000.
3This includes about 5,800 laboratories in New York and Washington which are exempt States.  These
States meet CMS requirements to survey and certify laboratories under their State program.  The States must pay a
fee and show CMS that the State program meets or exceeds the requirements for laboratories under CLIA. 
2
CLIA Enrollment and Certification                                                                                                                                            OEI-05-00-00251 are issued to laboratories that use specific test methods approved by the FDA for this
category.  A test may be categorized as a waived test if it is approved by FDA for home
use, or if it is determined to have an insignificant risk of erroneous result, including those
that: 
C are so simple and accurate as to render the likelihood of erroneous results
negligible, or 
C the Secretary has determined pose no reasonable risk of harm to the
patient if performed incorrectly.4  
Under the Clinical Laboratory Improvement Amendments, waived laboratories are only
required to follow manufacturers instructions for waived tests and to limit testing to
methods approved by the FDA as waived.  These laboratories may be surveyed if
complaints are filed against them, but waived laboratories are not routinely surveyed. 
Approximately 36,000 laboratories hold Certificates for Provider Performed Microscopy
Procedures.  These certificates are issued to physicians and other approved providers who
meet CLIA requirements to perform specific moderate-complexity microscopy
procedures.  Laboratories with these certificates may also conduct waived tests.  These
laboratories are required to have written procedures for the tests they perform.  All
provider-performed microscopy laboratories must have a quality assurance system to
evaluate test method accuracy and a system to assure competency of testing personnel. 
4Clinical Laboratory Improvement Amendments of 1988, Pub. L. No. 100-578, sec. 353(d)(3)(B) and sec.
353(d)(3)(C) (1988).
3
CLIA Enrollment and Certification                                                                                                                                            OEI-05-00-00251 All provider-performed microscopy tests must be performed by a physician or other 
qualified provider as defined in CLIA regulations. No other laboratory employee is 
permitted to conduct these tests. As with waived laboratories, laboratories with a 
provider-performed microscopy certificate may be surveyed if complaints are filed, but 
are not otherwise routinely inspected by CLIA surveyors. 
The remaining 41,500 laboratories conduct moderate or high complexity testing. When 
these laboratories initially apply for CLIA certification, they are issued a Certificate of 
Registration and a CLIA number. Laboratories with a Certificate of Registration can 
conduct testing and bill Medicare and Medicaid until they are inspected. Onsite 
inspections occur within 24 months of filing an application and are used to verify 
compliance with CLIA standards. Once the laboratory has proven to surveyors that it 
meets all requirements, it is issued a Certificate of Compliance or a Certificate of 
Accreditation. These laboratories are revisited every 2 years to verify compliance with 
CLIA standards. 
Surveys:  State Agencies, Accreditation Agencies and CMS Regional Offices 
The majority of moderate and high complexity laboratories are surveyed by State 
agencies. The CMS contracts with State survey agencies to carry out the oversight 
provisions of CLIA, including routine visits to laboratories as required under CLIA law. 
State agencies also investigate complaints and maintain laboratory application and survey 
records in CMS databases. 
Laboratories can elect to be surveyed by an accreditation agency that has been approved 
by CMS. The CMS has contracts with six such agencies to provide surveys of 
laboratories. Some accreditation agencies review all specialties and subspecialties, while 
other agencies only accredit some of them. Accreditation agencies tend to serve specific 
types of laboratories. For example, the Commission on Office Laboratory Accreditation 
primarily accredits physician office laboratories. Every 2 years, States conduct 
validation surveys of 5 percent of the accredited laboratories in their State. 
The CMSs regional offices assist States in their oversight functions. Regional office 
staff perform onsite surveys of federally operated laboratories, State laboratories and 
some county laboratories. Regional office surveyors also conduct monitoring surveys of 
laboratories that the State has inspected to ensure the accuracy of State surveyor 
inspections. In addition to surveys, regional offices provide advice to States and 
laboratories regarding CLIA regulations, processes and procedures. 
Specialties and Subspecialties 
The CMS has divided all laboratory tests into nine testing specialties: 
Histocompatibility, Microbiology, Diagnostic Immunology, Chemistry, Hematology, 
Immunohematology, Pathology, Radiobioassay and Clinical Cytogenetics. Six of these 
specialties are further divided into a total of 21 subspecialties. All laboratories, except 
4 
CLIA Enrollment and Certification  OEI-05-00-00251  those applying for a Certificate of Waiver, must report their intended testing specialties 
and subspecialties on their CLIA application. All CLIA-certified laboratories are 
required to notify CMS of any changes to their specialties and subspecialties. 
Waived Laboratories and CMSs Pilot Studies 
In 1999, Colorado and Ohio State surveyors received permission from CMS to conduct 
random inspections of about 100 waived and provider-performed microscopy laboratories 
in their respective States. After reviewing these State studies, CMS concluded that, 
significant quality and certification problems were identified in over 50 percent of these 
laboratories. Consequently, CMS has begun similar pilot projects in eight additional 
States to determine whether problems found in Colorado and Ohio exist elsewhere. 
The number of waived laboratories and waived tests has increased significantly since the 
beginning of the CLIA program. In 1992, waived laboratories accounted for about 20 
percent of all CLIA-certified laboratories. Today, 53 percent of all laboratories are 
waived. In 1992, the waived category covered nine tests such as urine pregnancy, 
glucose and urine dipstick or tablet analysis. Currently there are about 40 tests in the 
waived category. Test systems are created by manufacturers and given brand names, 
resulting in multiple test systems for each type of test. There were 250 waived test 
systems in 1995, which increased to approximately 840 test systems by September 2000. 
Waived laboratories are exempted from routine site visits in CLIA law and regulations,5 
although States are not prohibited from requiring site visits to waived laboratories. The 
main reason these laboratories are not site visited is because waived tests are those that 
are simple, accurate and unlikely to pose harm to the patient if performed incorrectly. 
For laboratories conducting these simple tests, waived (and later provider-performed 
microscopy) categories minimized regulatory and financial burdens. Without the cost of 
surveys, CMS was able to set CLIA fees for waived and provider-performed microscopy 
laboratories very low. 
METHODOLOGY 
As noted earlier, the information presented in this report was collected during the 
inspection titled: CLIA Regulation of Unestablished Laboratory Tests, (OEI-05-00-
00250). For this report, we conducted additional analyses of the enrollment and 
certification information gathered during the study on unestablished tests. 
To estimate the extent of laboratories conducting tests not authorized by their certificates, 
we looked at CLIA enrollment and certification data to identify waived and provider-
5Clinical Laboratory Improvement Amendments of 1988, Pub. L. No. 100-578, sec. 353(d)(2)(C) (1988). 
Laboratory Requirements, 42 C.F.R., sec. 493.1775 (1992). 
5 
CLIA Enrollment and Certification  OEI-05-00-00251  performed microscopy laboratories. We compared these lists to a 5 percent sample of 
Medicare Part B claims billed in 1999. We examined billing by waived and provider-
performed microscopy laboratories for laboratory tests that they were not authorized to 
perform. 
We reviewed CLIA regulations, policies and procedures. We interviewed CMS central 
office staff and regional office staff in five regions. We contacted State agencies in all 50 
States, the District of Columbia and Puerto Rico. We conducted in-person interviews 
with State agency staff in the District of Columbia and 11 States: Arizona, California, 
Delaware, Illinois, Kansas, Maryland, Missouri, New Jersey, New York, Pennsylvania 
and Wisconsin. The remaining 39 States and Puerto Rico completed written surveys. 
Overall, 52 State agencies participated in this study.6 
In our interviews and written surveys, we asked questions about enrollment and 
certification processes and obtained information about respondents experiences with the 
CLIA program. We also asked respondents for their opinions on certain CLIA 
enrollment and certification processes. 
Similar discussions were held with representatives from the following three accreditation 
agencies: the College on Office Laboratory Accreditation, the Joint Commission on 
Accreditation of Healthcare Organizations and the College of American Pathologists. 
These organizations were contacted because they have deemed status from CLIA to 
provide survey and certification services for some laboratories. These three agencies 
survey over 95 percent of the accredited laboratories in the CLIA program. 
We also interviewed staff at the Centers for Disease Control and Prevention (CDC) and 
at the FDA. These agencies play a role in advising and assisting CMS in carrying out the 
provisions of the CLIA law. 
As part of this study, we performed a secondary analysis of results from two studies of 
waived and provider-performed microscopy laboratories conducted by CLIA surveyors in 
Colorado and Ohio.7  These reports were initiated by the States and conducted with the 
permission of CMS. 
We conducted our review in accordance with the Quality Standards for Inspections 
issued by the Presidents Council on Integrity and Efficiency. 
6Collectively, the respondents from the 50 States, the District of Columbia, and Puerto Rico will be 
referred to as State agencies or States in this inspection report. 
7Waived/Provider-Performed Microscopy Procedure Laboratory Certificate Verification Surveys" 
conducted by the Ohio Department of Health, Division of Quality Assurance, Bureau of Diagnostic Safety and 
Personnel Certification, Laboratory Certification Program. A special CLIA project to evaluate the compliance for 
non routinely inspected tests in both sites that receive routine inspections and in sites without routine inspections, 
conducted by the Colorado Department of Public Health and Environment, Laboratory and Radiation Services 
Division, CLIA Program. Both studies were conducted in Fiscal Year 1999. 
6 
CLIA Enrollment and Certification  OEI-05-00-00251  F I N D I N G S  
Significant vulnerabilities exist in CLIAs oversight of waived
and provider-performed microscopy laboratories 
Lack of onsite visits of waived and provider-performed microscopy laboratories 
is a program vulnerability 
Waived and provider-performed microscopy laboratories, which account for 75 percent 
of all CLIA-certified laboratories, are not surveyed. Therefore, surveyors do not have the 
opportunity to identify and correct problems, and educate untrained laboratory staff at 
these laboratories. During routine visits of moderate and high complexity laboratories, 
CMS employs an educational survey process where surveyors educate non-compliant 
laboratories about the CLIA requirements applicable for their particular setting. 
When surveyors have visited waived and provider-performed microscopy laboratories 
they report finding compliance problems. About 90 percent of State respondents believe 
that the lack of routine site visits to waived and provider-performed microscopy 
laboratories presents program vulnerabilities. About half of our State agency respondents 
report experiencing problems with waived and provider-performed microscopy 
laboratories in their State. Fifteen States mentioned concerns about testing at waived and 
provider-performed microscopy laboratories such as: 
C  laboratories not following manufacturers instructions, 

C  failure to identify incorrect results, 

C  testing beyond the laboratorys CLIA certificate,

C  untrained staff, 

C  lack of quality controls, 

C  poor equipment, 

C  poor storage of reagents, 

C  poor record keeping, and

C  misunderstanding of CLIA requirements. 

One respondent calls the lack of site visits for waived laboratories a huge black hole in 
the integrity of the CLIA program. If no one ever checks on them . . . they can 
essentially do whatever they want. For the most part, State respondents only have 
contact with waived and provider-performed microscopy laboratories over the telephone 
and in onsite surveys resulting from complaints. Therefore, it is difficult for surveyors to 
estimate the extent of problems at these laboratories. 
7 
CLIA Enrollment and Certification  OEI-05-00-00251  In two States, about half of waived and provider-performed microscopy 
laboratories may be non-compliant 
State surveyors in Colorado surveyed a random sample of waived and provider-
performed microscopy laboratories and found that 56 percent were of out of compliance 
with CLIA requirements. Ohio surveyors conducted a similar survey and found 45 
percent of waived and provider-performed microscopy laboratories out of compliance. 
Colorado and Ohio surveyors found similar compliance problems in the laboratories they 
surveyed. Compliance problems for waived laboratories include the following: 
C  not following manufacturers instructions, 
C  not having manufacturers instructions available for referencing when 
visited onsite, and 
C  testing outside their certificate level. 
Both States also found problems with provider-performed microscopy laboratories. 
Colorado found 90 percent of provider-performed microscopy laboratories lacked written 
procedures or could not demonstrate the accuracy of the test method or the competency 
of testing personnel. In both States, non-compliant provider-performed microscopy 
laboratories were found to have the following deficiencies: 
C  expired reagents and controls, 

C  no written procedures for tests conducted, 

C  no quality assurance methods, 

C  no proficiency testing, 

C  no quality assurance of staff competency, and 

C  testing outside their certificate level. 

Some laboratories are testing outside of their waived or provider-performed 
microscopy certificates 
Some surveyors have found laboratories testing outside their certificates. The Ohio State 
agency study found that about 10 percent of waived and provider-performed microscopy 
laboratories were conducting tests not authorized under their CLIA certificate. A 
majority of our State respondents report that they have found waived and provider-
performed microscopy laboratories conducting moderate or high complexity tests. 
Twenty-two States estimate that a small percent of all applications for Certificates of 
Waivers or provider-performed microscopy certificates are submitted by laboratories 
conducting higher complexity testing. The exact number of laboratories testing beyond 
their certificate is unknown. 
In looking at a 5 percent sample of laboratory tests billed to Medicare, we found about 
1,700 waived laboratories out of about 13,000 (13 percent) billed Medicare for non-
waived tests and were denied payment for having an inappropriate CLIA certificate. Of 
8 
CLIA Enrollment and Certification  OEI-05-00-00251  the 13,444 provider-performed microscopy laboratories in our sample, 11 percent were 
denied payment for tests they were not authorized to perform. 
When a laboratory bills Medicare for tests not covered by their CLIA certificate, it may 
be an indicator that the laboratory is conducting higher complexity testing. Several State 
respondents believe that when laboratories have their Medicare claims denied for 
inappropriate CLIA certification, the laboratories are likely to seek out an appropriate 
certificate so that they can get Medicare and Medicaid reimbursement. Some Medicare 
carriers notify State agencies when a laboratory bills for services outside their CLIA 
certificate. However, no formal mechanism exists for Medicare or Medicaid fiscal agents 
to report laboratories billing outside their certificate level to CMS or State agencies. 
Despite safeguards, some vulnerabilities also exist for
moderate and high complexity laboratories 
Onsite surveys and Medicare denials are the most important tools that CMS has to ensure 
that laboratories meet CLIA requirements. Onsite visits are used to verify that a 
laboratory meets all requirements and has correctly reported testing information to CMS. 
State agency respondents believe that Medicare and Medicaid denials of services not 
authorized under a laboratorys CLIA certificate are strong motivation for laboratories to 
correct any errors in their CLIA certification. 
Waived and provider-performed microscopy tests conducted at moderate and 
high complexity laboratories are vulnerable to noncompliance 
Routine surveys of moderate or high complexity laboratories do not include reviews of 
waived and provider-performed microscopy testing. Therefore, any problems with these 
tests would not be identified and corrected through the routine CLIA survey process. 
Colorado surveyors found 40 percent of moderate and high complexity laboratories failed 
to follow manufacturers instructions for waived tests. Surveyors had expected to find 
few compliance problems with waived and provider-performed microscopy tests in 
moderate and high complexity laboratories since these laboratories are routinely surveyed 
to ensure quality testing. They also found one-third of the moderate and high complexity 
laboratories had no written microscopy procedures or quality assurance for their 
microscopy methods. Laboratories with major compliance problems such as failure to 
follow manufacturers instructions and lack of quality assurance may produce incorrect 
test results and thus impact patient health. 
Allowing new laboratories to operate and bill Medicare and Medicaid for up to 24 
months before they are surveyed may be a vulnerability 
Although onsite surveys provide some safeguards, moderate and high complexity 
laboratories that have newly registered for Certificates of Registration may operate 
9 
CLIA Enrollment and Certification  OEI-05-00-00251  without being surveyed for up to 24 months. Laboratories are assigned a CLIA number 
when their application is accepted, which allows them to receive reimbursement from 
Medicare and Medicaid during this period. 
A majority of State agencies reported that this 2 year period may be a vulnerability in the 
CLIA program. Specifically, laboratories may be providing incorrect results, may have 
poor quality laboratory practices or may be performing tests outside of their certificate. 
Under current policy, onsite visits to laboratories are not made until survey fees are paid. 
Although the CLIA regulations allow for 2 years before the initial onsite visit, some 
States report inspecting most laboratories in under a year, and CMS has encouraged 
States to inspect new laboratories three months after the initial application is complete. 
Accreditation agencies do not report laboratories testing in specialties outside 
their CLIA certificate 
Over 60 percent of State agencies reported that they would not know if a laboratory was 
performing work in a specialty not covered by the laboratorys chosen accrediting body. 
Accreditation agencies are not required to notify CMS when they find a laboratory 
testing in specialties that they do not examine. When an accreditation agency determines 
that a laboratory is performing a test that is not covered by the agency, they inform the 
laboratory that it is the laboratorys responsibility to seek certification or accreditation for 
the testing from CLIA or from another accreditation agency. It is left to the laboratory to 
follow through and register with CLIA or another accreditation agency to review their 
tests. Some States reported that they check applications to identify cases where a 
laboratory intends to conduct testing in a specialty not accredited by the agency selected. 
Laboratories may downgrade their certificate to avoid CLIA requirements 
According to some State surveyors, some moderate and high complexity laboratories 
may seek to avoid site visits by downgrading their certificate to waived or provider-
performed microscopy before their scheduled survey. These laboratories can conduct 
moderate and high complexity tests and bill Medicare or Medicaid until they downgrade 
their certificates. Downgrading means that potentially out-of-compliance laboratories 
agree to cease moderate and high complexity testing and can avoid correction processes. 
Anecdotal information from States indicates that a few laboratories have taken advantage 
of this vulnerability in the past and gamed the CLIA certification and Medicare 
reimbursement systems. A few States mentioned pursuing cases where a laboratory 
cycled between moderate complexity testing and waived testing. These laboratories 
would conduct moderate complexity laboratory tests while under a Certificate of 
Registration for up to 24 months before switching to waived testing. After receiving a 
Certificate of Waiver, the laboratory would switch back to moderate complexity testing 
under a new Certificate of Registration and resume moderate complexity testing without 
achieving compliance with CLIA requirements. While this vulnerability exists, we do 
not know if it is widespread. 
10 
CLIA Enrollment and Certification  OEI-05-00-00251  The CMSs reliance on laboratories to self-identify for
enrollment appears to be a weakness 
During a recent study, we identified 160 laboratories that had offered tests without a 
CLIA certificate.8  We specifically attempted to identify only laboratories offering 
unestablished laboratory tests, which are not reimbursable by Medicare. Respondents 
believe that laboratories conducting these types of tests bill the patient directly and do not 
have the same incentives that traditional laboratories have to enroll in CLIA. It appears 
likely that there are additional, unidentified laboratories conducting established and 
unestablished laboratory testing without CLIA certification. 
Despite widespread belief that most laboratories voluntarily enroll in CLIA, 43 State 
agencies (81 percent) reported that they have found laboratories conducting testing 
without a CLIA certificate. The exact number of non-certified laboratories is unknown. 
Some respondents believe that most laboratories voluntarily enroll in CLIA because they 
plan to bill Medicare and Medicaid and they must have appropriate CLIA certification 
for the tests they bill. 
Non-certified laboratories come to the attention of State surveyors in several ways. 
States report that they identify uncertified laboratories via complaints from the public, 
referrals from other State agencies and leads from local insurance companies. Some 
States report that they have seen advertising for non-certified laboratories. While 
conducting CLIA site visits, a few States routinely ask whether any additional 
laboratories are in the building or owned by the same company. Additionally, some 
States report that local Medicare or Medicaid contractors refer non-certified laboratories 
to the State agency. 
Some State processes augment CLIAs safeguards, although
vulnerabilities remain 
In most States with laboratory licensure programs, laboratory regulations are identical or 
similar to CLIAs regulations. However, there are some exceptions. Some States have 
processes that go beyond CLIA regulations. Although these States are still exposed to 
some vulnerabilities in the CLIA program, their additional processes may mitigate CLIA 
program vulnerabilities to some extent. 
Some State laboratory licensure requirements may mitigate CLIA vulnerabilities 
About half of States surveyed report having a State laboratory licensure program in 
addition to CLIA. Many State programs parallel CLIA, but some allow States to take 
8Department of Health and Human Services, Office of Inspector General, CLIA Regulation of 
Unestablished Laboratory Tests, OEI-05-00-00250, 2001. 
11 
CLIA Enrollment and Certification  OEI-05-00-00251  additional actions that minimize CLIA program vulnerabilities. Ten State programs 
require surveys of some or all waived and provider-performed microscopy laboratories. 
Four States also require that all accredited laboratories be surveyed by their program. 
Fourteen State programs require that surveyors inspect laboratories earlier than the CLIA 
requirement of 24 months. Five of these States reported that site visits must occur before 
a laboratory is allowed to test or before a license is issued. Seven States report that sites 
must be visited within 10, 30, 60 or 90 days of the application. Two States require 
annual surveys even though the CLIA program requires visits every 2 years. 
Maryland is an example of a State with regulations and processes that bolster surveyors 
ability to ensure compliance. Surveyors visit laboratories quicker than the 24 months 
permitted by CLIA. In Maryland, initial visits to laboratories are usually made within 90 
days to 1 year of application. Moreover, Maryland routinely conducts initial surveys of 
all accredited laboratories, and routine surveys of some waived and provider-performed 
microscopy laboratories. Unlike most States, Maryland also reviews waived and 
provider-performed microscopy testing conducted at moderate and high complexity 
laboratories. Maryland staff report finding the same types of deficiencies in waived and 
provider-performed microscopy testing that were found in the Colorado and Ohio studies. 
They report that repeated surveys are effective in bringing laboratories into compliance. 
However, when laboratory staff turns over deficiencies often occur again due to lack of 
training and poor administrative oversight in the laboratory. 
A majority of States require lists of tests on applications;  some believe this has 
improved the accuracy of certificate and specialty categorization 
Lists of tests are not required as part of the standard CLIA application form. However, 
36 States ask laboratories to submit a list of tests that they intend to perform and/or 
laboratory equipment that they intend to use as part of the CLIA application process. 
These test lists further supplement the list of specialties and subspecialties required by 
CLIA. About two-thirds of these States report that most laboratories are disclosing the 
full range of testing and/or equipment that they intend to use. However, because 
laboratories often change the testing they conduct, these lists are used as an initial 
indicator for State agencies. Some respondents noted that some laboratories neglect to 
submit the list of tests with the application. Several States indicated that the list of tests 
is useful to help ensure that the laboratory receives the correct certificate. 
In the past, there has been opposition to requirements for laboratories to disclose 
information on CLIA applications about their laboratory practices, including the number 
and name of tests and test methodologies used. Those opposed felt that requiring 
laboratories to report this information would be burdensome for laboratories that conduct 
extensive testing. 
12 
CLIA Enrollment and Certification  OEI-05-00-00251  R E C O M M E N D A T I O N S  
The purpose of this report is to identify vulnerabilities in the CLIA enrollment and 
certification processes. We did not initially intend to focus on waived and provider-
performed microscopy laboratories. Our findings indicate that further study in this area 
is warranted. We believe that CMS needs to take some action to reduce the 
vulnerabilities identified in this report. We recognize that resources are limited and that 
implementing some of the following recommendations may require additional funding. 
Waived and Provider-Performed Microscopy Laboratories 
We believe that CMSs pilot project to examine the compliance of waived and provider-
performed microscopy laboratories in eight additional States will be integral to any 
regulatory or legislative changes needed to address vulnerabilities associated with these 
types of laboratories. With regard to waived and provider-performed microscopy 
laboratories, we recommend that CMS: 
C	 Provide educational outreach to laboratory directors of waived and provider-
performed microscopy laboratories. Directors should be periodically informed 
about the CLIA requirements for the testing they conduct, as well as the 
limitations involved in the waived and provider-performed microscopy 
certificates. This could include establishing a newsletter, a toll-free phone 
number, and/or disseminating information through professional groups. 
C	 Require laboratories applying for waived and provider-performed microscopy 
certificates to identify which tests they plan to conduct and which test systems 
they will use. This could be a test checklist on the CLIA application. 
C	 Establish a mechanism whereby Medicare claim denials can be used to inform 
State laboratory surveyors about laboratories billing Medicare outside their 
certificate. Specify a threshold of the number of incorrect claims billed by a 
laboratory that would result in a referral to surveyors. 
C	 Use periodic paper self-assessment tools to help ensure compliance for 
laboratories that are not routinely visited. This could be a checklist of compliance 
requirements for waived and provider-performed microscopy laboratories. 
C	 If CMSs pilot project shows that the extent of problems in waived and 
provider-performed microscopy laboratories is similar to that found in the Ohio 
and Colorado studies, we would encourage CMS to conduct random surveys of 
some waived and provider-performed microscopy laboratories each year. 
13 
CLIA Enrollment and Certification  OEI-05-00-00251  Moderate and High Complexity Laboratories 
We recommend that CMS take the following actions regarding moderate and high 
complexity laboratories: 
C	 Review the waived and provider-performed microscopy tests conducted at 
moderate and high complexity laboratories during routine surveys to ensure 
compliance with CLIA regulations. 
C	 Shorten the length of time allowed between application and surveys for new 
laboratories. 
C	 Formally require accreditation agencies to inform CMS about laboratories 
conducting tests in specialties not accredited by the agency. 
C	 Establish a workgroup to develop methods that can be used to identify uncertified 
laboratories. Methods could include collaboration with State and local licensing 
bodies. 
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CLIA Enrollment and Certification  OEI-05-00-00251  A G E N C Y  C O M M E N T S  
We appreciate the assistance and cooperation we received from CMS staff while 
conducting this study. We received comments from them on this report and they 
concurred with our recommendations. The text of their comments can be found in 
Appendix A. 
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CLIA Enrollment and Certification  OEI-05-00-00251  APPENDIX A 
Agency Comments

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CLIA Enrollment and Certification  OEI-05-00-00251  17 
CLIA Enrollment and Certification  OEI-05-00-00251  18 
CLIA Enrollment and Certification  OEI-05-00-00251