Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

JANET REHNQUIST 

Inspector General 

AUGUST 2001 

OEI-05-00-00251 

Enrollment and Certification Processes in the 

Clinical Laboratory Improvement 

Amendments Program 
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/ 
EXECUTIVE SUMMARY 

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 CLIA’s Oversight of Waived and ProviderPerformed 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 

CLIA Enrollment and Certification i 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 CMS’s 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. 

CMS’s 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. 

CLIA Enrollment and Certification ii 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 CMS’s 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. 

CLIA Enrollment and Certification iii OEI-05-00-00251 
TABLE OF CONTENTS 

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

CLIA Enrollment and Certification iv OEI-05-00-00251 
INTRODUCTION 

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 inspection’s 

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. 

1

The 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. 

CLIA Enrollment and Certification 1 OEI-05-00-00251 
The Centers for Disease Control and Prevention held this responsibility until January, 2000. 2

This includes about 5,800 laboratories in New York and Washington which are exempt States. 3

States meet CMS requirements to survey and certify laboratories under their State program. 

fee and show CMS that the State program meets or exceeds the requirements for laboratories under CLIA. 

CLIA Enrollment and Certification 2 OEI-05-00-00251

Laboratories enroll in the program by completing an application and paying a certificate

fee to CMS. 

reported on the application. 

changes in testing, laboratory ownership or directorship. 

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. 

Administration (FDA) into the following four categories based on testing complexity: 2

high complexity, moderate complexity, provider-performed microscopy and waived. 

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. About 86,500 3

laboratories (53 percent) have been issued a Certificate of Waiver. 

These

The States must pay a

Fees are based on certificate type, annual volume and types of testing

All laboratories are required to keep CMS informed of major

All CLIA-certified laboratories

All laboratory test methods have been categorized by the Food and Drug

The

Certificates of Waiver
Clinical Laboratory Improvement Amendments of 1988, Pub. L. No. 100-578, sec. 353(d)(3)(B) and sec. 4

353(d)(3)(C) (1988).

CLIA Enrollment and Certification 3 OEI-05-00-00251

are issued to laboratories that use specific test methods approved by the FDA for this

category. 

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. 

complaints are filed against them, but waived laboratories are not routinely surveyed. 

Approximately 36,000 laboratories hold Certificates for Provider Performed Microscopy

Procedures. 

meet CLIA requirements to perform specific moderate-complexity microscopy

procedures. 

laboratories are required to have written procedures for the tests they perform. 

provider-performed microscopy laboratories must have a quality assurance system to

evaluate test method accuracy and a system to assure competency of testing personnel. 

A test may be categorized as a waived test if it is approved by FDA for home

These laboratories may be surveyed if

These certificates are issued to physicians and other approved providers who

Laboratories with these certificates may also conduct waived tests. These

All
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 CMS’s 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 

CLIA Enrollment and Certification 4 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 CMS’s 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 provider5

Clinical 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). 

CLIA Enrollment and Certification 5 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 providerperformed 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 President’s Council on Integrity and Efficiency. 

6

Collectively, 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. 

7

“Waived/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. 

CLIA Enrollment and Certification 6 OEI-05-00-00251 
FINDINGS 

Significant vulnerabilities exist in CLIA’s 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 laboratory’s 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. 

CLIA Enrollment and Certification 7 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 providerperformed 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 providerperformed 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 nonwaived tests and were denied payment for having an inappropriate CLIA certificate. Of 

CLIA Enrollment and Certification 8 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 laboratory’s 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 

CLIA Enrollment and Certification 9 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 laboratory’s 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 laboratory’s 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 providerperformed 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. 

CLIA Enrollment and Certification 10 OEI-05-00-00251 
The CMS’s 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 CLIA’s safeguards, although

vulnerabilities remain 

In most States with laboratory licensure programs, laboratory regulations are identical or 

similar to CLIA’s 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 

8

Department of Health and Human Services, Office of Inspector General, CLIA Regulation of 

Unestablished Laboratory Tests, OEI-05-00-00250, 2001. 

CLIA Enrollment and Certification 11 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. 

CLIA Enrollment and Certification 12 OEI-05-00-00251 
RECOMMENDATIONS 

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 providerperformed 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 CMS’s pilot project to examine the compliance of waived and providerperformed 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 providerperformed 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 CMS’s 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. 

CLIA Enrollment and Certification 13 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. 

CLIA Enrollment and Certification 14 OEI-05-00-00251 
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. 

CLIA Enrollment and Certification 15 OEI-05-00-00251 
APPENDIX A 

Agency Comments

CLIA Enrollment and Certification 16 OEI-05-00-00251 
CLIA Enrollment and Certification 17 OEI-05-00-00251 
CLIA Enrollment and Certification 18 OEI-05-00-00251