United States Government Accountability Office

GAO Report to Congressional Requesters

CLINICAL LAB 

QUALITY 

CMS and Survey 

Organization 

Oversight Should Be 

Strengthened 

June 2006 

 

GAO-06-416 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2006

CLINICAL LAB QUALITY

CMS and Survey Organization Oversight 

Highlights of GAO-06-416, a report to Should Be Strengthened 

congressional requesters 

The Clinical Laboratory

Improvement Amendments of 1988 

(CLIA) strengthened and extended

quality requirements for labs that

perform tests to diagnose or treat 

disease. About 36,000 labs that

perform certain complex tests must

be surveyed biennially by either a 

state or one of six private 

accrediting organizations. CMS 

oversees implementation of CLIA 

requirements and the activities of

survey organizations. GAO was 

asked to examine (1) the quality of

lab testing; (2) the effectiveness of 

surveys, complaint investigations, 

and enforcement actions in

detecting and addressing lab 

problems; and (3) the adequacy of

CMS’s CLIA oversight. 

What GAO Recommends

GAO is making recommendations 

to the CMS Administrator to

improve CLIA oversight including 

(1) standardizing the reporting of

survey deficiencies to permit 

meaningful comparisons across

survey organizations; (2) working

with survey organizations to ensure

that educating lab workers does 

not preclude appropriate 

regulation, such as identifying and 

reporting deficiencies that affect

lab testing quality; and (3) allowing 

the CLIA program to fully use 

revenues generated by the program 

to hire sufficient staff to fulfill its 

statutory responsibilities. CMS 

concurred with 11 of GAO’s 13 

recommendations and noted that 

the report provided insights into 

areas where it can improve,

augment, and reinforce oversight.

Because of limited comparable data from CMS and survey organizations, too 

little is known about the quality of lab testing. For example, a standardized 

assessment of lab quality across survey organizations is not possible because 

of different definitions of what constitutes a serious quality problem. One 

survey organization had no systematic way of identifying the problematic 

labs it inspects. However, GAO’s analysis of an indicator that measures a 

lab's ability to consistently produce accurate test results suggests that lab 

quality may not have improved at hospital labs in recent years.

Based on an analysis of available data and interviews with CMS and survey 

organizations, real and potential lab quality problems are masked by survey,

complaint, and enforcement weaknesses. Because most survey organizations 

announce the timing of biennial surveys, allowing labs to prepare for 

inspections, surveys may not provide a realistic picture of lab quality.

Although two survey organizations that generally inspect hospital labs plan 

to begin unannounced surveys in 2006, they may not be possible at physician 

office labs that have irregular hours. Survey organizations that typically 

inspect such labs, however, provide more advance notice about upcoming 

inspections than CMS allows states to provide. Several other factors suggest 

that surveys and complaints do not present a realistic picture of lab quality. 

Interviews with officials from a sample of states confirmed that some survey 

organizations do not cite all serious deficiencies, as evidenced by variability 

in the limited available lab survey data. Officials said that surveyors may be 

reluctant to cite deficiencies because they view their role as educational, not 

regulatory; moreover, CMS has instructed state surveyors not to cite some 

deficiencies for over 2 years after implementing new lab requirements. 

Finally, lab workers may file complaints infrequently because of concern 

about retaliation and a lack of understanding about how to file a complaint. 

CMS rarely imposes sanctions, even for labs with the same repeat

deficiencies, a reflection of the educational focus of the CLIA program. 

CMS does not require labs to participate in a key quality assurance test as

frequently as CLIA requires. Although funded by lab fees, CMS officials 

indicated that the program has not been allowed to hire sufficient staff to 

carry out the agency’s oversight responsibilities. Moreover, CMS’s principal 

oversight tool, intended to determine if all serious deficiencies were 

identified, lacks independence because many oversight reviews are 

conducted simultaneously with survey organizations. CMS’s presence may 

make surveyors more attentive to survey tasks than when they are not being 

observed. Compared to independent reviews, simultaneous reviews rarely 

identify missed deficiencies. Furthermore, CMS does not collect and analyze 

data on serious deficiencies identified by each survey organization and thus, 

is unable to assess whether lab quality is improving or declining. Nor does 

CMS effectively analyze other key data such as the use of sanctions. To 

improve oversight, CMS is establishing a nationwide complaints database. 

CMS is also instituting annual survey organization performance reviews. 

www.gao.gov/cgi-bin/getrpt?GAO-06-416.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Leslie G. 

Aronovitz at (312) 220-7600 or 

aronovitzl@gao.gov. 
Contents 

Letter 1

Results in Brief 5

Background 7

Insufficient Data Exist to Identify Extent of Serious Lab Quality 

Problems 15

Oversight Weaknesses Mask Quality Problems 19 

CMS Oversight of CLIA Is Inadequate 33 

Conclusions 44

Recommendations for Executive Action 46 

Agency and Accrediting Organization Comments and Our 

Evaluation 47

Appendix I Effects of Lab Errors on Patient Health 58 

Appendix II Labs Surveyed by State Survey Agencies and the 

Percentage with Condition-Level Deficiencies, by 

State in 2004 61 

Appendix III Number of Labs Subject to Surveys by State 

Survey Agencies in 2005 and Number of Labs with 

Sanctions, 1998 to 2004 63 

Appendix IV Comments from the Centers for Medicare & 

Medicaid Services 65 

Appendix V Comments from the College of American 

Pathologists 80 

Appendix VI Comments from COLA 83 

Page i GAO-06-416 Clinical Lab Quality
Appendix VII Comments from the Joint Commission on 

Accreditation of Healthcare Organizations 89 

Appendix VIII GAO Contact and Staff Acknowledgments 93 

Tables 

Table 1: Percentage of Inspection Requirements Classified as 

Serious, by Survey Organization 16 

Table 2: Amount of Advance Notice Given to Labs about Upcoming 

Inspections, by Survey Organization 21 

Table 3: Number of Complaints Received by CAP, 2002-2005 29 

Table 4: Number of Labs Inspected with Principal Only, Principal 

and Alternative, and Alternative Only Sanctions Imposed, 

1998-2004 30

Table 5: Analysis of Results of Simultaneous and Independent

Validation Reviews of State Surveys, Fiscal Years 1999–

2003 39 

Table 6: Analysis of Results of Simultaneous and Independent

Validation Reviews of Accrediting Organizations’ Surveys, 

Fiscal Years 1999–2003 41 

Table 7: Effects of Lab Errors on Patient Health 58 

Figures 

Figure 1: Types of Survey Organizations, Requirements Used to 

Survey Labs, and Percentage of Labs Surveyed by Each 

Organization, as of December 2005 11 

Figure 2: Percentage of Labs with Proficiency Testing Failures 

from 1999 through 2003, by Survey Organization 19 

Page ii GAO-06-416 Clinical Lab Quality
Abbreviations 

AAAB American Association of Blood Banks 

AOA American Osteopathic Association 

ASHI American Society of Histocompatibility and 

 Immunogenetics 

CAP College of American Pathologists 

CLIA Clinical Laboratory Improvement Amendments of 1988 

CMS Centers for Medicare & Medicaid Services 

CMSO Center for Medicaid and State Operations 

ER emergency room 

JCAHO Joint Commission on Accreditation of Healthcare 

 Organizations 

OSCAR On-Line Survey, Certification, and Reporting system 

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Page iii GAO-06-416 Clinical Lab Quality
United States Government Accountability Office

Washington, DC 20548 

June 16, 2006 

The Honorable Charles E. Grassley 

Chairman 

Committee on Finance 

United States Senate 

The Honorable Mark Souder 

Chairman 

The Honorable Elijah E. Cummings 

Ranking Minority Member 

Subcommittee on Criminal Justice, Drug Policy 

 and Human Resources 

Committee on Government Reform 

House of Representatives 

Clinical lab tests are one of the most frequently billed Medicare 

procedures and, according to the American Clinical Laboratory 

Association, affect an estimated 70 percent of medical decisions.1

 To 

improve oversight of clinical labs, Congress passed legislation in 1967;2

renewed concerns about quality, including errors in Pap smear tests used 

to diagnose cervical cancer, resulted in enactment of the Clinical 

Laboratory Improvement Amendments of 1988 (CLIA).3

 In recent years, 

despite CLIA, lab quality problems in several states have raised questions

about the adequacy of lab oversight. Lab oversight is critical because 

inaccurate or unreliable lab tests may lead to improper treatment, 

unnecessary mental and physical anguish for patients, and higher health 

care costs.4

The Centers for Medicare & Medicaid Services (CMS) is responsible for 

overseeing compliance with CLIA requirements. As of December 2005, 

there were approximately 193,000 labs nationwide, ranging from very 

small physician office labs that conduct fewer than 2,000 tests annually to

 1

Medicare is a federal health care program serving the elderly and disabled individuals. 

2

Clinical Laboratories Improvement Act of 1967, Pub. L. No. 90-174, §5, 81 Stat. 533, 536. 

3

Pub. L. No. 100-578, 102 Stat. 2903. 

4

Appendix I provides examples of the effect of lab errors on patient health. 

Page 1 GAO-06-416 Clinical Lab Quality
hospital labs that conduct millions of tests each year. Most clinical labs 

regulated under CLIA must obtain a certificate from CMS but only about 

19 percent—those that conduct moderate- to high-complexity tests—

undergo biennial inspections, which are also referred to as surveys.5

 The 

surveys assess lab compliance with mandated personnel and testing 

standards. In addition, surveyed labs must participate in proficiency

testing, a program that requires them to test samples with unknown 

characteristics that are then graded by an external party. Labs with serious 

deficiencies may be sanctioned, e.g., required to cease testing. Labs have a

choice of being surveyed by (1) their state survey agency, under contract 

with CMS; (2) their state CLIA-exempt program for labs in New York and 

Washington; or (3) one of six private accrediting organizations.

6

 State 

survey agency inspections use CLIA requirements that are intended to help

ensure valid and reliable lab tests; the two state CLIA-exempt programs 

and six accrediting organizations survey labs using their own requirements 

that CMS has determined to be at least equivalent to CLIA’s. Each survey

organization is also responsible for investigating complaints about lab 

quality.7

 Because of the critical importance of accurate lab test results and 

oversight, you asked us to conduct a nationwide assessment of (1) the 

quality of lab testing; (2) the effectiveness of surveys, complaint 

investigations, and enforcement actions in detecting problems and 

ensuring compliance; and (3) the adequacy of CMS oversight of the CLIA 

program. 

To determine what is known about the quality of lab testing, we analyzed

data on serious deficiencies identified during surveys by state survey 

agencies using CMS’s On-Line Survey, Certification, and Reporting system 

 5

Labs obtain a CLIA certificate that corresponds to the complexity of the testing they 

conduct. Generally, each lab has one certificate but a large hospital with multiple labs may 

have a corresponding number of certificates. By regulation, labs that are within a hospital 

campus and under common direction are allowed to file either a single application for a 

certificate or multiple applications for multiple certificates. 

6

CMS contracts with state survey agencies in the District of Columbia and 49 states 

(including New York but not Washington) to survey labs under CLIA requirements. Labs in

Washington are surveyed either by the state’s CLIA-exempt program or by an accrediting 

organization. Labs in New York are surveyed either by the state survey agency or New 

York’s CLIA-exempt program. New York does not authorize accreditation as a basis for lab 

licensure. 

7

Throughout this report, we use the term “survey organizations” when referring collectively 

to state survey agencies, the two state CLIA-exempt programs, and accrediting 

organizations. 

Page 2 GAO-06-416 Clinical Lab Quality
(OSCAR).8

 The CLIA program inspection requirements are classified as 

either “standard-” or “condition-” level. Similarly, deficiencies are also 

characterized as standard- or condition-level, based on the requirement in 

which the deficiency occurs. Because condition-level requirements 

generally consist of one or more standard-level requirements, a deficiency

at the condition-level denotes a serious or systematic problem. We 

requested comparable data on serious deficiencies from state CLIAexempt programs and the three largest accrediting organizations—the 

College of American Pathologists (CAP), COLA, and the Joint Commission 

on Accreditation of Healthcare Organizations (JCAHO)—which together 

survey about 97 percent of accredited labs.9

 CAP, COLA, JCAHO, and 

exempt-state programs each maintain their own separate databases. We 

also analyzed proficiency testing data—another indicator of a lab’s ability 

to produce accurate test results. CMS officials generally recognize OSCAR 

and proficiency testing data to be reliable. We discussed the OSCAR 

database with CMS officials and tailored our analysis to ensure the 

accuracy of our findings. Because exempt states and accrediting 

organizations survey labs using their own requirements, we worked with 

them to develop data comparable to OSCAR deficiency data. We discussed 

our analyses with CMS and each of the survey organizations to ensure that

we had interpreted the data correctly. Based on discussions with officials 

from the three accrediting organizations, we determined that they take 

appropriate steps to ensure the reliability of their data. Because it was not 

practical to independently test the reliability of accrediting organization 

data, we present these data as reported by those organizations. 

To assess the effectiveness of lab surveys, complaint investigations, and 

enforcement mechanisms in detecting problems and securing compliance, 

we reviewed the processes used to ensure the quality of clinical lab testing 

and analyzed available data related to these issues. We also conducted 

structured interviews with officials from (1) CMS, (2) three CMS regional 

 8

In addition to the results of state survey agency lab inspections, CMS’s OSCAR database 

stores other information on labs registered under the CLIA program including: (1) labs’

CLIA certificate history, such as switching from being inspected by accrediting 

organizations to being inspected by state survey agencies; (2) the results of complaint 

investigations; (3) labs’ billing history; and (4) proficiency testing enrollment and 

performance data. 

9

COLA was formerly known as the Commission on Office Laboratory Accreditation. 

Page 3 GAO-06-416 Clinical Lab Quality
offices,10 (3) 10 state survey agencies,11 (4) the New York and Washington 

CLIA-exempt programs, and (5) the three accrediting organizations. We 

judgmentally selected the 10 state survey agencies to include a mixture of 

states whose lab inspections identified a range of serious deficiencies from 

few to many. We also discussed the quality problems discovered at a 

Maryland hospital lab with a Maryland state survey agency official and

interviewed 9 of the 36 CAP surveyors who participated in surveys of this 

lab from 1999 through 2003 to obtain a firsthand perspective on the CAP 

survey process.12 Based on our review and discussions with CMS and 

survey organization officials, we focused on several key issues, including

the rationale for announced surveys, the ability of lab surveys to identify 

serious deficiencies, the balance struck between the regulatory and 

educational goals of lab surveys, the implications of CAP’s use of 

volunteer surveyors from neighboring labs to conduct inspections, how 

survey organizations facilitate the filing of complaints, and the use of 

sanctions to encourage compliance. We analyzed data on the number of 

complaints received by each survey organization from 2002 through 2004 

and discussed CAP’s initiatives to encourage the filing of complaints. In 

addition, we determined the extent to which labs had the same serious 

problems on consecutive surveys and discussed with CMS the steps the 

agency had taken to deter an inconsistent pattern of compliance. 

To assess the effectiveness of CMS oversight of the CLIA program, we 

analyzed the laws and regulations that define CMS’s role and authority. We

also reviewed CMS’s process for determining that the survey requirements 

and procedures of state CLIA-exempt programs and accrediting 

organizations are at least equivalent to those of CLIA. We analyzed the 

results of validation reviews that federal surveyors from CMS regional 

offices conducted for state survey agency lab inspections and that state 

survey agency staff conducted for accrediting organization inspections 

from 1999 through 2003. We also examined other mechanisms that CMS 

uses to hold survey organizations accountable for their performance: 

 10New York, Philadelphia, and Seattle. 

11California, Colorado, Connecticut, Idaho, Louisiana, Michigan, Nebraska, North Carolina,

Pennsylvania, and South Carolina. 

12A 2004 complaint investigation conducted by the Maryland state survey agency found that 

personnel at this lab falsified records to conceal problems with HIV and hepatitis testing 

equipment and that the lab provided hundreds of patients with potentially erroneous test 

results. These problems were not detected during the 2003 CAP inspection or a prior 

complaint investigation conducted by the state survey agency in 2002. 

Page 4 GAO-06-416 Clinical Lab Quality
(1) the collection and analysis of data on surveys, complaints, and 

enforcement actions, including steps taken to address communication and

coordination issues that became evident during a complaint investigation 

at a Maryland hospital lab; and (2) recently developed annual reviews that 

measure state survey agency compliance with CLIA program 

requirements, such as the timeliness of surveys. We conducted our work 

from January 2005 through May 2006 in accordance with generally 

accepted government auditing standards. 

Insufficient data exist to identify the extent of serious quality problems at 

labs. When CMS implemented revised CLIA survey requirements in 2004, it 

modified historical state survey agency findings stored in its OSCAR 

database and, as a result, data prior to 2004 no longer reflect key survey 

requirements in effect at the time of those surveys. In addition, the lack of

a straightforward method to link similar requirements across survey 

organizations makes it virtually impossible to assess lab quality in a 

standardized manner, such as identifying the proportion of labs with 

condition-level deficiencies, which indicate serious or systemic quality 

problems. Although CMS has stated that it believes lab quality has 

improved since the early 1990s, the results of proficiency testing—the one 

available data source that can be used to uniformly compare lab quality 

across survey organizations—suggest that lab quality may not have 

improved at hospital labs and that the improvement for physician office 

labs may be misleading because a significant number of such labs are no 

longer inspected. 

Results in Brief 

Weaknesses in surveys, complaint processes, and enforcement mask 

potential quality problems at labs. Lab survey findings may not accurately 

reflect the actual quality assurance process in place on a day-to-day basis 

because of several shortcomings. First, most survey organizations 

announce all surveys, allowing labs to prepare for their inspections. To 

address this problem, accrediting organizations that inspect hospital labs 

began conducting unannounced surveys in 2006. Second, the limited data 

available suggest that state survey agency inspections do not identify all 

serious deficiencies. Third, the balance struck between the CLIA 

program’s educational and regulatory goals is sometimes inappropriately 

skewed toward education, which may also result in understatement of 

survey findings. For example, CMS instructed state survey agencies not to

cite deficiencies for new lab quality control requirements for 2 years, in 

part because of a lack of lab “buy-in” for some of the new policies and 

procedures; CMS then extended this period and gave no specific end date.

Regarding complaint processes, complaints are filed by a variety of 

Page 5 GAO-06-416 Clinical Lab Quality
sources, including lab workers. Few labs were the subject of a complaint 

each year from 2002 through 2004—significantly less than one complaint 

per lab per year. Concern that labs can easily identify the lab workers who 

file complaints and lab workers’ lack of familiarity with how to file a 

complaint may explain why so few workers report problems. Since one 

accrediting organization required each lab it inspects to display a poster 

explaining how to file a complaint, the number of complaints it received 

about lab quality has doubled. Finally, based on the large number of labs 

with proposed sanctions from 1998 through 2004 that were never 

imposed—even for labs with the same serious, condition-level deficiencies 

on consecutive surveys—it is unclear how effective CMS’s enforcement 

process is at motivating labs to consistently comply with CLIA 

requirements. 

CMS’s oversight of clinical lab quality is inadequate to ensure that labs are 

meeting CLIA requirements. The agency requires proficiency testing three 

times each year instead of on a quarterly basis, as required by CLIA. Nor is 

CMS meeting its own requirement to determine in a timely manner the 

continued equivalency of accrediting organization and exempt-state 

inspection requirements and processes. For example, New York’s and 

COLA’s reviews were about 4 years and 3 years past due, respectively, as 

of December 2005. CMS attributed these delays to having too few staff. 

Moreover, CMS allows the implementation of changes to accrediting 

organization and exempt state inspection requirements between periodic 

equivalency determinations before it reviews the proposed changes. 

Validation reviews—one of CMS’s most important oversight tools—do not 

provide an independent assessment of the extent to which surveys identify

all serious deficiencies because many are performed simultaneously with 

such surveys. In addition, CMS’s requirement for validating state survey 

agencies’ inspections is vague, resulting in no validation reviews in some 

states. Finally, CMS does not effectively use data to monitor survey 

organization activities and processes, such as the proportion of labs with 

serious deficiencies, proficiency testing results, or trends in complaints. 

Realizing that its existing oversight activities need to be strengthened,

CMS has begun instituting performance reviews to measure survey 

organization compliance with its requirements and is developing protocols 

to ensure improved communication among survey organizations 

concerning complaints about lab quality. 

We are recommending that the CMS Administrator take actions that will 

standardize survey findings across survey organizations, enable it to 

compare changes over time, and make meaningful comparisons among 

organizations; strengthen survey, complaint, and enforcement processes; 

Page 6 GAO-06-416 Clinical Lab Quality
and improve CMS oversight of the CLIA program. In commenting on a 

draft of this report, CMS endorsed our overall conclusion that quality 

assurance for the nation’s clinical labs should be strengthened and said 

that it would take actions in response to 11 of our 13 recommendations. 

CMS disagreed with our recommendations concerning the frequency of 

proficiency testing and the extent of simultaneous accrediting 

organization validation reviews. We believe that implementing these 

recommendations is necessary to improve oversight of labs and 

accrediting organizations. CMS also provided an alternative assessment of 

lab quality, disagreed with our conclusion about the educational phase-in 

periods for new CLIA requirements, and expressed concern about 

identifying and sanctioning labs with repeat condition-level deficiencies. 

CAP, COLA, and JCAHO also provided comments on a draft of this report. 

CAP indicated that it would identify additional measures it could take to 

strengthen its own oversight, and COLA found merit in our 

recommendations to improve CMS oversight. CAP, COLA, and JCAHO 

disagreed with some of our findings and recommendations to CMS. We 

incorporated technical comments from CMS and the three accrediting 

organizations, as appropriate. 

A clinical lab is generally defined as a facility that examines specimens 

derived from humans for the purpose of disease diagnosis, prevention, and 

treatment, or health assessment of individuals. While hospital and 

interstate labs were previously subject to regulation, CLIA strengthened 

federal requirements and extended them to most other clinical labs, 

including physician office labs. For example, CLIA strengthened personnel 

requirements for lab workers, strengthened proficiency testing that 

evaluates the accuracy of lab testing between surveys, and created a range 

of sanctions to enforce compliance.13

Background 

Most clinical labs regulated under CLIA must obtain a certificate from 

CMS and pay fees every 2 years to cover the costs of administering the 

CLIA program, including surveys and other oversight activities.

14 The fees 

 13Implementation of CLIA was phased in over a number of years. CLIA does not apply to

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 Veterans Administration laboratories. 

14Labs surveyed by either the New York or Washington CLIA-exempt programs do not

obtain a CLIA certificate and do not pay fees to CMS. According to CMS, labs are billed a 

year in advance of the surveys to provide adequate time for them to pay their fees and for 

states to perform surveys prior to the expiration of labs’ CLIA certificates. 

Page 7 GAO-06-416 Clinical Lab Quality
vary based on the complexity and volume of testing performed. Lab tests 

are categorized as waived, moderate, or high complexity.15 Approximately 

81 percent of all labs (about 157,000) are not subject to routine biennial

surveys because they perform (1) “waived” tests, which are examinations 

and procedures that have an insignificant risk of erroneous results, 

including those approved for home use or determined to employ 

methodologies so simple or accurate that the likelihood of erroneous 

results is negligible;16 or (2) tests performed during the course of a patient 

visit with a microscope on specimens that are not easily transportable.17

Surveyed Labs CLIA establishes more stringent requirements for the 19 percent (about 

36,000) of labs performing moderate- or high-complexity testing, including 

the requirement for a survey and participation in routine proficiency 

testing. Since the early 1990s, the number and proportion of labs subject to

surveys have declined, while the number and proportion conducting 

waived tests have increased.18 Surveys examine lab compliance with CLIA 

program requirements in several areas including: personnel qualifications, 

proficiency testing, quality control, quality assurance, and recordkeeping. 

• Personnel: CLIA sets minimum qualifications for all persons performing or 

supervising moderate- or high-complexity lab tests and specifies 

responsibilities for each position. 

• Proficiency testing: Surveyed labs must participate in an approved 

external proficiency testing program, which evaluates the accuracy of 

laboratory testing. Under this requirement, labs purchase samples with 

unknown characteristics several times each year from an approved 

 15In January 2000, the Food and Drug Administration assumed responsibility for 

categorizing tests conducted by labs from the Centers for Disease Control and Prevention. 

16Pregnancy and blood sugar screenings are examples of such tests. Labs conducting 

waived tests are only required to follow manufacturers’ instructions and to limit testing to 

Food and Drug Administration-approved or cleared methods. 

17Known as provider-performed microscopy procedures, such tests must be performed by a 

physician or other qualified provider as defined in CLIA regulations. Labs conducting such

tests are required to have written procedures for the tests they perform and must also 

satisfy applicable proficiency testing requirements and have a system to ensure the

competency of testing personnel. These labs and those performing waived tests are subject 

to complaint investigations. See 42 C.F.R. § 493.1773(f)(2005). 

18From 1998 through December 2005, the proportion subject to surveys has declined from

about 30 percent to about 19 percent, while the proportion of labs that are not surveyed 

because they perform waived testing has increased from 70 percent to 81 percent. 

Page 8 GAO-06-416 Clinical Lab Quality
proficiency testing provider.19 The lab is required to test the samples with 

its routine patient testing, and the results are returned to the testing 

provider to be graded. A proficiency testing failure is defined as 

unsatisfactory performance on two consecutive or two out of three testing 

events. The results of proficiency testing for all inspected labs are 

transmitted to CMS and maintained in a database. 

• Quality control: Labs must have a process for routinely monitoring 

personnel, testing equipment, and the testing environment to ensure 

proper operation and accurate results. 

• Quality assurance: Labs must follow their plan to monitor the overall 

operation of the laboratory on an ongoing basis and must resolve 

identified problems that affect the quality of their testing. 

• Recordkeeping: Labs must maintain an audit trail of testing that 

documents specimen integrity and test performance for all phases of the 

test process from the test order to the test report. 

In general, labs have a choice of who conducts their surveys—state survey 

agencies using CLIA inspection requirements or other survey

organizations that use requirements CMS has determined to be at least 

equivalent to CLIA’s.20 CMS contracts with state survey agencies in most 

states to inspect labs against CLIA requirements.21 CLIA established an 

approval process to allow states and private accrediting organizations to 

use their own requirements to survey labs.22 As noted earlier, New York 

and Washington operate CLIA-exempt programs and CMS has approved 

six private, nonprofit accrediting organizations to survey labs—the 

American Association of Blood Banks (AABB), the American Osteopathic 

Association (AOA), the American Society of Histocompatibility and 

Immunogenetics (ASHI), CAP, COLA, and JCAHO. The requirements of 

both state CLIA-exempt programs and accrediting organizations must be 

reviewed by CMS at least every 6 years to ensure CLIA equivalency, but 

may be more stringent than those of CLIA. For example, when inspecting 

Survey Organizations 

 19Proficiency testing providers are private companies or state lab departments and are

approved by CMS annually. 

20Some labs, including Indian Health Service labs, are surveyed by federal surveyors

located in CMS’s regional offices. 

21CMS contracts with state survey agencies in the District of Columbia and 49 states 

(including New York but not Washington) to survey labs under CLIA requirements. 

22Prior to CLIA, CMS was not required to routinely determine the equivalency of accrediting 

organization and state CLIA-exempt program requirements. 

Page 9 GAO-06-416 Clinical Lab Quality
labs engaged in moderate- and high-complexity testing, New York and 

some accrediting organizations also look at the labs’ procedures for 

conducting “waived” tests, which is not required under CLIA. Figure 1 lists

the three types of survey organizations and indicates whether they survey 

labs under CLIA requirements, or use their own CLIA-equivalent 

requirements. It also shows the percentage of labs performing moderateto high-complexity testing surveyed by each type of organization. In 

general, state survey agencies, COLA, and Washington’s CLIA-exempt 

program survey physician office labs, while New York’s CLIA-exempt 

program, CAP, and JCAHO survey hospital labs. 

Page 10 GAO-06-416 Clinical Lab Quality
Figure 1: Types of Survey Organizations, Requirements Used to Survey Labs, and Percentage of Labs Surveyed by Each

Organization, as of December 2005 

Source: GAO.

CLIAequivalent

requirements

CLIAequivalent

requirements

CLIA

requirements

State survey agencies in 49 states and 

the District of Columbia surveyed 55% 

(about 19,700) of regulated labs.

a

Two state CLIA-exempt programs

surveyed 3% (about 1,100) of 

regulated labs.

b

Six private accrediting organizations

surveyed 42% (about 15,200) of 

regulated labs.

c

State survey agencies State CLIA-exempt 

programs

JCAHO

CAP

COLA

AOA

ASHI

AABB

Private accrediting

organizations

NY (2%)

WA (1%)

AOA 

ASHI (1%)

AABB

JCAHO (9%)

CAP (15%)

COLA (17%)

State survey 

agencies (55%)

a

Washington is not included as it has only a CLIA-exempt program.

b

New York uses CLIA-equivalent requirements to inspect larger hospital labs under the state’s CLIAexempt program and CLIA requirements to inspect smaller labs, including physician office labs. Only 

the labs in the CLIA-exempt program are counted here. 

c

Some labs are counted more than once because labs may be accredited by more than one 

organization. While some labs in New York may be accredited, they are still subject to biennial 

surveys by the state survey agency or the state CLIA-exempt program, because New York does not 

authorize accreditation as the basis for lab licensure. 

Page 11 GAO-06-416 Clinical Lab Quality
Survey organizations (1) conduct surveys and complaint investigations, 

and (2) monitor proficiency test results submitted by surveyed labs three 

times a year. Surveys are typically conducted by former or current lab 

workers, who assess lab compliance with CLIA or CLIA-equivalent 

requirements. Most lab inspections are announced, that is, the lab has 

advance notice of when the survey will occur. Generally, surveyors verify 

that lab personnel are appropriately qualified to conduct testing, evaluate

proficiency test records, check equipment and calibration to ensure that 

appropriate quality control measures are in place, and determine whether 

the lab has a quality assurance plan and uses it to, among other things, 

appropriately identify and resolve problems affecting testing quality. 

Surveys also include an educational component to assist labs in 

understanding how to comply with CLIA requirements. The duration of a 

survey generally depends on the size—in terms of the number of tests 

conducted—and complexity of a lab as well as the number of surveyors. 

Thus, a survey conducted at a small lab may only take a few hours to 

complete, while a survey at a large hospital lab may take a survey team a 

full week or more. 

Surveys and Complaint 

Investigations 

In addition to inspections, survey organizations are responsible for 

determining the seriousness of and investigating all complaints. For those 

complaints that are determined to pose immediate jeopardy—an imminent 

and serious threat to patient health and a significant hazard to public 

health—CMS requires that the investigation be initiated within 2 working 

days. Complaints may be investigated on-site or through communications 

between the survey organization and the lab. Complaint investigations for 

all survey organizations are unannounced. 

Lab survey requirements are classified as either “standard-” or “condition-” 

level. Generally, condition-level requirements are made up of one or more 

related standard-level requirements. For example, the condition-level 

requirement on enrollment and testing of samples through a proficiency 

testing program has two related standard-level requirements: 

(1) enrollment, which includes requirements for the lab to provide the

name of the program it has enrolled in to the Department of Health and

Human Services and authorize the release of testing data to the 

department; and (2) testing, which specifies that the samples must be 

tested in the same manner as any specimen and prohibits referring the test 

samples to another lab for analysis. 

Deficiencies are also characterized as standard- or condition-level based 

on the requirement in which the deficiency occurs. Deficiencies in 

standard-level requirements, that is, standard-level deficiencies, denote 

Page 12 GAO-06-416 Clinical Lab Quality
problems that generally are not serious, while condition-level deficiencies

are cited when the problems are serious or systemic in nature. A serious 

problem is defined as an inadequacy in a lab’s quality of services that 

adversely affects, or has the potential to adversely affect, the accuracy and 

reliability of patient test results. When deficiencies are found during 

surveys or complaint investigations, labs are required to submit a plan of

correction, detailing how and when they will address the deficiencies. 

Additionally, CMS can impose principal or alternative sanctions, or both.23

Principal sanctions include revocation of a CLIA certificate, cancellation

of the right to receive Medicare payments, or limits on testing. Revocation 

of a CLIA certificate is equivalent to termination from the CLIA program. 

Alternative sanctions are less severe and include civil money penalties or 

on-site monitoring.24 For condition-level deficiencies that do not involve 

immediate jeopardy, labs have an opportunity to correct the deficiencies,

which we refer to as a grace period, before the sanctions are imposed. If a 

lab is unable to correct a deficiency during this grace period, CMS 

determines whether to impose a sanction and the type of sanction. 

CMS Oversight CMS, including its 10 regional offices, oversees state and accrediting 

organization survey activities.25 CMS reviews and approves initial and 

subsequent applications from exempt-state programs and accrediting 

organizations to ensure CLIA equivalency. Validation reviews are one of

CMS’s primary oversight tools. Federal surveyors in CMS regional offices 

are responsible for conducting validation reviews of state survey agency 

and exempt-state program inspections, but state survey agency staff 

 23State survey agencies may propose the imposition of sanctions for noncompliance but

only CMS can impose sanctions. Accrediting organizations and exempt-state programs may 

revoke accreditation or remove a lab’s state license, respectively, for noncompliance with 

their CLIA-equivalent requirements. While CMS regional office staff determine whether loss 

of accreditation should also result in revocation of a lab’s CLIA certificate, loss of state 

licensure is tantamount to CLIA certificate revocation. 

24Because of congressional concern that available remedies were too limited and could 

dissuade CMS from enforcement, CLIA gave CMS additional tools, called alternative 

sanctions, to help motivate labs to comply with quality requirements. 

25The Centers for Disease Control and Prevention is also responsible for carrying out

certain CLIA-related tasks, including (1) developing and evaluating technical standards for 

lab testing components; (2) working with CMS and the Food and Drug Administration to 

determine the regulatory impact of lab technical standards; (3) conducting lab research and 

analysis; and (4) facilitating the CLIA Advisory Committee, which makes recommendations 

to improve the CLIA program.

Page 13 GAO-06-416 Clinical Lab Quality
conduct the validation reviews of accrediting organization inspections.26

An objective of these reviews is to determine if all condition-level 

deficiencies were identified.27 These reviews are conducted within 60 days 

of a state’s or 90 days of an accrediting organization’s survey of a lab. 

Starting in 1999, CMS required that at least one validation review be 

conducted simultaneously with an accrediting organization’s survey, a step 

intended to encourage an exchange of ideas and approaches among 

surveyors. CMS also encourages the use of simultaneous reviews of state 

survey agency inspections. By law, the number of labs selected for 

validation reviews must be sufficient to allow a reasonable estimate of the 

performance of each accrediting organization being assessed.28 CMS 

requires fewer validation reviews of state survey agency lab surveys 

(1 percent) than for those of exempt-state programs or accrediting 

organizations (5 percent). 

Beginning in 2003, CMS regional offices began reviewing the activities of 

state survey agencies against a set of 13 performance standards. The 

standards cover areas such as the timeliness of lab inspections, surveyor 

personnel qualifications and training, CLIA data management, and the 

handling of complaints. CMS’s goal is to evaluate each state survey 

agency’s ability to carry out its CLIA responsibilities and to make 

improvements. CMS is also developing performance standards for other 

survey organizations that inspect labs using their own CLIA equivalent 

requirements. 

 26Unlike validation reviews of accrediting organization surveys, CMS refers to the

validation of state surveys as Federal Monitoring Surveys. Because of their similar 

objective, we refer to all such surveys as validation reviews in this report. We refer to 

validation reviews that occur at the same time as the lab survey as simultaneous. 

Conversely, validation reviews that occur after the lab survey are referred to as 

independent validations. 

27According to CMS, the criterion for identifying a missed deficiency is the reasonableness

of concluding that a condition-level deficiency was present at the time a survey 

organization conducted its survey but the survey organization’s findings did not note the

deficiency. 

28See 42 U.S.C. § 263a(e)(2)(D)(2000). By regulation, a similar requirement applies to 

validation reviews of labs under exempt-state programs. 42 C.F.R. § 493.563(b)(2)(2005). 

Page 14 GAO-06-416 Clinical Lab Quality
The extent of serious quality problems at labs is unclear because CMS has 

incomplete data on condition-level deficiencies identified by state survey

agencies prior to 2004. We also found that the lack of a straightforward 

linkage between CLIA requirements and the CLIA-equivalent requirements 

of some survey organizations makes it virtually impossible to assess lab 

quality in a standardized manner, such as identifying the proportion of labs

with condition-level deficiencies. Such deficiencies indicate serious or 

systemic quality problems. Proficiency testing results—the one available 

data source that can be used to uniformly compare lab quality across 

survey organizations—raise questions about whether lab quality has 

improved in recent years. 

CMS’s OSCAR database contains limited data on the quality of labs 

inspected by state survey agencies and, as a result, it is not possible to 

analyze changes in the quality of lab testing over time. In January 2004, 

CMS implemented revised CLIA survey requirements and modified the 

existing OSCAR data—state survey agency findings—to reflect the 

changes.29 The revisions affected approximately two-thirds of the CLIA 

condition-level requirements.30 As a result of the data modifications, the 

findings for surveys conducted prior to 2004 no longer reflect all key

condition-level requirements in effect at the time of those surveys.31 Based 

on the available 2004 OSCAR data (which represent about one half of all

labs surveyed by state survey agencies), we found that 6.3 percent of labs 

had condition-level deficiencies (see app. II for data on all state survey 

agencies, including the District of Columbia).32 As will be discussed below, 

similar data are not available for labs surveyed by other survey

organizations. 

Insufficient Data 

Exist to Identify 

Extent of Serious Lab 

Quality Problems 

Limited Data Are Available 

on the Quality of Labs 

Inspected by State Survey 

Agencies

 29CMS published the regulations for the new requirements in January 2003 and surveyors

began using the new requirements on January 12, 2004.

30For example, some condition-level requirements were reorganized and some were 

consolidated. 

31When we asked for access to backup files, CMS told us that it did not have backup files of 

the original pre-2004 survey data. 

32We excluded survey results for the period January 1 through January 11, 2004, because 

CMS modified OSCAR data for findings prior to January 12, 2004, to reflect revised CLIA 

requirements. 

Page 15 GAO-06-416 Clinical Lab Quality
Differences between the inspection requirements that state survey 

agencies use to measure lab quality and those of exempt-state programs 

and accrediting organizations make it virtually impossible to measure lab 

quality in a standardized manner. Because exempt-state programs and 

accrediting organizations do not classify inspection requirements and 

related deficiencies as either standard- or condition-level, they cannot

easily identify the number of CLIA condition-level deficiencies cited at the 

labs they survey or the proportion of surveyed labs with condition-level 

deficiencies.33

Quality of Labs Inspected 

by Other Survey 

Organizations Is Very 

Difficult to Measure in a 

Standardized Manner 

We asked exempt-state programs and accrediting organizations what 

percentage of their requirements, and any deficiencies cited for failure to 

meet those requirements, indicated serious problems that were equivalent 

to CLIA condition-level deficiencies. While only 8 percent of CLIA 

requirements used by state survey agencies are classified as conditionlevel and therefore serious, the proportion of requirements that exemptstate programs and accrediting organizations classify as serious ranged 

from 20 percent up to 100 percent (see table 1). 

Table 1: Percentage of Inspection Requirements Classified as Serious, by Survey 

Organization 

Organization 

Percentage of requirements

classified as serious

State survey agencies 8

New York CLIA-exempt program a

Washington CLIA-exempt program a

COLA 20

CAP 80

JCAHO 100

Sources: GAO analysis of information provided by CMS, New York, Washington, CAP, COLA, and JCAHO. 

a

This state’s CLIA-exempt program does not distinguish between serious and nonserious 

requirements. 

 33Although CMS reviews the requirements of exempt-state programs and accrediting 

organizations to ensure that they are at least equivalent to CLIA’s, there is not necessarily a

one-to-one match with CLIA requirements. Thus, one CLIA condition-level requirement

may equal several accrediting organization requirements or vice versa. For example, CMS’s 

condition-level requirement for successful lab participation in approved proficiency testing 

corresponds to at least 19 CAP, 3 COLA, and 4 JCAHO requirements. 

Page 16 GAO-06-416 Clinical Lab Quality
CAP and COLA crosswalked their recent survey findings to CLIA 

condition-level requirements.34 Although their analysis suggested that from 

about 56 to 68 percent of labs surveyed during 2004 had a deficiency in at 

least one condition-level requirement, they acknowledged that these 

proportions overstated the subset of labs with serious problems. JCAHO 

did not crosswalk its inspection requirements to those of CLIA because 

staff would have had to manually review each survey report to determine 

which deficiencies were equivalent to deficiencies in CLIA condition-level 

requirements. However, JCAHO did tell us that in 2004, about 90 percent 

of the labs it surveyed had a deficiency in at least one requirement and, as

previously noted, JCAHO classifies all its requirements as serious. 

Despite the difficulty of identifying CLIA equivalent condition-level 

deficiencies, two of the three accrediting organizations we reviewed have

systems to identify labs they survey that have serious quality problems. 

COLA estimated that about 9 percent of labs it surveyed in 2004 were 

subject to closer scrutiny because of the seriousness of the problems 

identified. According to JCAHO, about 5 percent of the labs it surveyed in 

2004 were not in compliance with a significant number of requirements. 

The third accrediting organization, CAP, has criteria for identifying labs

that warrant greater scrutiny, but CAP officials told us that identifying 

such labs had to be accomplished on a case-by-case basis rather than 

through a database inquiry. As a result, CAP plans to spend in excess of 

$9 million during 2006 and 2007 to develop an integrated data system that 

pulls together multiple factors—survey results, complaints, proficiency 

testing, findings of other inspection bodies, and changes in lab directors—

to enable it to readily identify problem labs. According to CAP officials, 

such labs will be targeted for greater monitoring, and CMS and other 

survey organizations will be notified about CAP’s actions. 

Proficiency Testing Results 

Suggest that Quality Has 

Not Improved at Hospital 

Labs in Recent Years 

Although CMS noted that proficiency testing trend data show a decrease in 

failures for labs as a whole, the data suggest that lab quality may not have

improved at hospital labs for the period 1999 through 2003. Proficiency 

testing is an important oversight tool for survey organizations because it is

an objective indicator of a lab’s ability to consistently produce accurate

test results and is conducted more frequently than surveys—three times a 

year versus once every 2 years. In the absence of comparable survey data,

 34This effort took CAP and COLA about 4 months to complete. 

Page 17 GAO-06-416 Clinical Lab Quality
proficiency testing results provide a uniform way to assess the quality of 

lab testing across survey organizations. 

Our analysis of CMS proficiency testing data for 1999 through 2003

suggests that there has been an increase in proficiency testing failures for 

labs inspected by CAP and JCAHO, which generally inspect hospital labs, 

and a decrease in such failures for labs surveyed by state survey agencies 

and COLA, which tend to inspect physician office labs (see fig. 2). CMS 

defines failures as unsatisfactory performance in two consecutive or two 

out of three proficiency testing events. For example, the percentage of 

labs with proficiency testing failures surveyed by CAP and JCAHO from 

1999 through 2003 increased from 4.1 percent to 6.8 percent and from 

6.6 percent to 7.8 percent, respectively. It is unclear, however, whether the

decrease in failures for physician office labs represents an actual 

improvement in lab quality or reflects the fact that some problematic labs 

are no longer surveyed. Specifically, many physician office labs now 

perform waived tests and therefore are no longer surveyed or participate

in proficiency testing. Between 1998 and 2005, the percentage of labs 

subject to surveys and proficiency testing decreased from about 

30 percent to about 19 percent. 

Page 18 GAO-06-416 Clinical Lab Quality
Figure 2: Percentage of Labs with Proficiency Testing Failures from 1999 through 

2003, by Survey Organization

0 

5 

10 

15 

Percentage of JCAHO-inspected labs with proficiency testing failures

Percentage of CAP-inspected labs with proficiency testing failures

Percentage of COLA-inspected labs with proficiency testing failures

Percentage of state-inspected labs with proficiency testing failures

1999 2000 2001 2002 2003

Year 

Percent 

Source: GAO analysis of CMS proficiency testing data. 

Note: Data include labs affiliated with each organization during each year. 

Weaknesses in surveys, complaint processes, and enforcement mask real 

and potential quality problems at labs. Survey weaknesses include: 

(1) inspections that most organizations announce ahead of the visit, which 

allows labs to prepare for their inspections and portray themselves in a

manner that may not accurately reflect their day-to-day quality assurance 

processes; (2) variability in the proportion of labs with condition-level 

deficiencies in 2004, which suggests surveys are not conducted in a 

consistent manner; and (3) the goal of educating lab workers during 

surveys taking precedence over, or precluding, the identification and 

reporting of deficiencies. Furthermore, the significant increase in 

complaints since CAP took steps to help ensure that lab workers know 

how to file a compliant suggests that some quality problems at labs 

inspected by other survey organizations may not be reported. Finally,

sanctions are not being used effectively as an enforcement tool to promote 

labs’ compliance with CLIA requirements, as evidenced by the relatively

Oversight Weaknesses 

Mask Quality 

Problems 

Page 19 GAO-06-416 Clinical Lab Quality
few labs with repeat condition-level deficiencies on consecutive surveys 

from 1998 through 2004 that had sanctions imposed. 

Announced Surveys May 

Result in Unrealistic 

Picture of Lab Quality 

Because labs can and do prepare for surveys, CMS regional office officials 

and most of the state survey agencies acknowledged that announced 

surveys may not always provide a realistic picture of lab quality.35 As 

shown in table 2, the amount of advance notice for surveys varies from as 

little as 2 weeks up to 12 weeks; until recently, only the New York CLIAexempt program conducted unannounced surveys. Survey agency officials 

in two states told us that surveyors had inspected labs where records 

documenting the implementation of periodic quality control procedures 

were completed in the same handwriting using the same colored pen. This 

degree of uniformity raises a concern about whether the quality control 

occurred at all, or as frequently as the records suggested. A CAP surveyor 

told us that the pathologist at one lab had cleaned up, and signed off on, 

about 3-months worth of quality control records the night before the 

survey. In hearings on the questionable test results at a Maryland hospital 

lab, a worker testified that lab staff prepared frantically for their 

announced inspections. 

 35CMS does require unannounced surveys for: (1) complaint investigations, (2) follow-up

surveys conducted to verify correction of deficiencies, and (3) nonroutine surveys 

conducted when there is reason to believe a lab is operating in a manner that constitutes a 

risk to human health. In contrast, all nursing home surveys are required to be unannounced

to help ensure that homes do not cover up problems that may exist when surveyors are not

present. See GAO, California Nursing Homes: Care Problems Persist Despite Federal and

State Oversight, GAO/HEHS-98-202 (Washington, D.C.: July 27, 1998).

Page 20 GAO-06-416 Clinical Lab Quality
Table 2: Amount of Advance Notice Given to Labs about Upcoming Inspections, by

Survey Organization

Survey organization Amount of advance noticea

New York CLIA-exempt program None

State survey agencies Up to 2 weeksb

Washington CLIA-exempt program 4 weeks

JCAHO 4 weeksc

CAP 7 weeksd

COLA 12 weekse

Sources: CMS, New York CLIA-exempt program, Washington CLIA-exempt program, CAP, COLA, and JCAHO. 

a

These numbers reflect stated policy and may not represent actual practice. 

b

Advance notice permitted by CMS guidance. 

c

In January 2006, JCAHO stopped providing labs advance notice about upcoming inspections. 

d

Average actual notice provided to CAP labs for 2004. In 2006, CAP began conducting unannounced

inspections. 

e

COLA confirms the survey date about 8 weeks in advance. 

In 2006, both CAP and JCAHO began conducting unannounced inspections 

at most of the hospital labs they survey.36 Both CAP and JCAHO officials 

told us that the unannounced surveys will occur as early as 6 months prior 

to the anniversary of a lab’s prior survey. CMS and survey organizations 

that inspect physician office labs provided several justifications for 

continuing to announce inspections at such labs, including (1) ensuring 

that the lab is open and that appropriate personnel are available to answer

surveyor’s questions, and (2) minimizing disruptions to patient care. These 

justifications appear to be reasonable because they reflect the operating

tempo at physician office labs. It may not be appropriate, however, to 

provide such labs with 4 to 12 weeks advance notice, given that CMS 

currently limits the advance notice provided by state survey agencies to no 

more than 2 weeks. 

 36JCAHO implemented its unannounced surveys in January 2006 and CAP began phasing in 

unannounced inspections in the spring of 2006. CAP and JCAHO will continue to provide

Department of Defense and prison labs that they survey with advance notice to enable 

surveyors to obtain the security clearances required to enter such facilities. 

Page 21 GAO-06-416 Clinical Lab Quality
Variability in OSCAR data for state survey agency inspections conducted 

in 2004 suggests that labs are not surveyed in a consistent manner, and 

interviews with CMS and state survey agency officials confirmed this 

hypothesis. As a result, available data likely understate the extent of 

serious quality problems at labs. In 2004, the percentage of labs that state 

survey agencies reported with condition-level deficiencies varied 

considerably by state, ranging from none in 6 states to about 25 percent of

labs in South Carolina. These data only included findings for about onehalf of the labs surveyed by state survey agencies. Of the 33 states that 

survey more than 100 labs, 16 found condition-level deficiencies at fewer 

than 5 percent of labs, while 6 states identified such serious deficiencies in

more than 10 percent of the labs they surveyed (see app. II).37

Variability in Reported 

Survey Deficiencies 

Suggests that Labs Are Not 

Surveyed Consistently 

Based on interviews with CMS and 10 state survey agencies, it appears 

that at least some of this variability is due to differences in states’ 

approaches to surveys as opposed to true differences in lab quality. For 

example, CMS told us that, because there is not a prescriptive checklist to 

guide the survey process, the reliance on state surveyor judgment will 

result in variations in the citing of deficiencies. To compensate for the 

unstructured nature of the state survey process, officials we interviewed 

from 2 state survey agencies told us that they created checklists to help 

ensure that surveyors looked at all of the critical elements during lab 

surveys.38 Furthermore, while some of the state survey agencies we spoke 

with told us that their surveyors always cite condition-level deficiencies 

that are identified during surveys, officials in other states said that there 

are circumstances under which condition-level deficiencies would not be 

cited. For example, according to officials from a state survey agency we 

interviewed, surveyors prefer not to cite condition-level deficiencies. 

Rather, surveyors in this state prefer to cite multiple standard-level 

deficiencies instead of a condition-level deficiency because it allows the 

imposition of state law sanctions, avoiding what was characterized as a 

 37Our analysis excluded state survey agencies that inspect fewer labs because even a small 

change in the number of labs with condition-level deficiencies can produce a large

percentage point change. 

38While checklists may be useful, some state survey agencies told us that use of the

checklists may result in insufficient probing and observation. CAP officials told us that they

plan to move beyond their current emphasis on requiring documentation of lab processes

with probing techniques that require direct interaction with lab staff, observation of testing, 

and new survey tools to guide inspectors in assessing compliance with requirements. 

COLA’s survey process includes a list of questions that surveyors must answer by asking 

probing questions of, and interacting with, lab staff. JCAHO’s process, introduced in 2004, 

uses computer-based algorithms when making compliance determinations. 

Page 22 GAO-06-416 Clinical Lab Quality
less efficient federal sanctions process.39 Additionally, officials from 

2 other state survey agencies explained that surveyors consider a lab’s 

compliance history when determining what deficiencies to cite, while 

officials from a third state told us that surveyors will educate lab workers, 

particularly new lab workers, about the CLIA requirements rather than 

citing CLIA condition-level deficiencies.40

Balance Between 

Educational and 

Regulatory Roles by CMS 

and Survey Organizations 

Appears to Be 

Inappropriate 

The goal of educating lab workers sometimes takes precedence over, or 

precludes, the identification and reporting of deficiencies that affect the 

quality of lab testing. As a result, data on the quality of lab testing and 

trends in quality over time may be misleading. Although CLIA neither 

requires nor precludes an educational role for surveyors, the preamble to 

CMS’s implementing regulation noted that surveys are intended, in part, to 

provide an opportunity for on-site education regarding accepted 

laboratory procedures. In addition, CMS guidance and training encourage 

state surveyors to play an educational role.41 Many state survey agency 

officials we interviewed also told us that their surveyors play a major 

educational role. As noted earlier, surveyors from one state survey agency

do not cite condition-level deficiencies when lab workers are new but 

prefer to educate the new staff. Because CMS revised its OSCAR database 

in 2004, it is not possible to identify states that have consistently not cited 

condition-level deficiencies, data that would help to quantify the extent to

which an educational role is substituting for appropriate regulation of 

labs.42

 39When state survey agencies cite condition-level deficiencies, the CMS regional office for 

that state determines what, if any, sanctions should be imposed. 

40One example cited by a state survey agency involved a complaint investigation of a 

transfusion-related fatality, the result of a lab worker mixing up patient samples. Because 

the lab had already instituted extensive corrective actions by the time the surveyor arrived, 

the survey agency cited a standard-level deficiency for documentation errors rather than a

condition-level deficiency. We discussed this case with CMS officials who told us that

because the problem had been addressed, there was essentially no condition-level 

deficiency to cite. 

41While combining the roles of educator and regulator may not be unique, it is different 

from the exclusively regulatory role state surveyors under contract with CMS play for other 

provider groups, such as nursing homes and home health agencies. 

42Using OSCAR trend data, we were able to identify state survey agencies that educated 

instead of regulated home health agencies. See Medicare Home Health Agencies: 

Weaknesses in Federal and State Oversight Mask Potential Quality Issues, GAO-02-382 

(Washington, D.C.: July 19, 2002). 

Page 23 GAO-06-416 Clinical Lab Quality
An inappropriate balance between the educational and regulatory role is

also evident in some accrediting organization practices. One of the CAP 

surveyors we interviewed with over 30 years of lab experience estimated

that the majority of pathologists—individuals who generally serve as CAP 

survey team leaders—view surveys as educational, rather than as 

assessments of compliance with lab requirements. Another surveyor told 

us that CAP’s survey process focuses heavily on education, and that some 

survey team leaders emphasize education more than others. For COLA, the 

process of educating labs begins even prior to a survey. For example, 

COLA encourages labs to submit a self-assessment for review prior to the 

scheduled survey so that the labs can identify COLA requirements with 

which they are not in compliance. About 20 percent of all labs surveyed 

during 2004 submitted a self-assessment (616 labs) and, compared to labs 

that did not submit a self-assessment, fewer deficiencies were identified at

these labs during on-site surveys.43

CMS appears to be inappropriately stressing education over regulation in

its implementation of (1) 2003 lab quality control requirements for the 

CLIA program and (2) proficiency testing for lab technicians who interpret 

Pap smears, a test for cervical cancer. When state surveyors began 

assessing compliance with new lab quality control requirements in January 

2004, they were instructed to note deficiencies on a cover letter to labs 

rather than on the survey report itself for a period of 2 years. Thus, such 

deficiencies are not recorded in the OSCAR database. In part because of a 

lack of lab “buy-in” for some of the new policies and procedures, CMS 

officials have extended the educational period for about another 2 years. 

CMS has taken a similar educational approach to Pap smear proficiency 

testing, which began in 2005. CMS will not cite deficiencies or impose 

sanctions against labs in which staff fail the new Pap smear proficiency 

testing in 2005 or 2006, as long as the labs and individuals involved 

complete such testing, including following the regulatory protocol for 

subsequent testing in the case of an initial failure. According to CMS, this 

educational focus allows labs and their staff to become familiar with the 

proficiency testing program and to prepare themselves for such testing, 

since there was about a 13-year time lag between the 1992 regulations that

implemented CLIA and the 2005 implementation of Pap smear proficiency 

 43This percentage includes both labs preparing for their initial survey and those with prior

surveys. According to COLA officials, newer labs are most likely to perform the selfassessment; over time, they believe that the vast majority of COLA-inspected labs have

completed the self-assessment. 

Page 24 GAO-06-416 Clinical Lab Quality
testing.44 This educational approach seems questionable given CMS’s 

concern about some of the high initial proficiency test failure rates. 

Use of Volunteer Surveyors 

by CAP Raises Concerns 

Although state survey agencies, exempt-state programs, COLA, and 

JCAHO employ dedicated staff surveyors, CAP relies primarily on 

volunteer teams consisting of lab workers from other CAP-inspected labs 

to conduct surveys.45 In contrast to the mandatory training and continuing 

education programs in place for the staff surveyors of other survey 

organizations, training for CAP’s volunteer surveyors is currently optional. 

CAP plans to establish a mandatory training program beginning in mid2006.

46 As a condition of accreditation, labs inspected by CAP must survey 

another CAP-accredited lab of similar size and composition at least once

every 2 years. According to data provided by CAP, two-thirds of volunteer 

surveyors who had recently participated in a survey had no formal training 

in the 3 to 5 years preceding the survey. Two CAP surveyors we 

interviewed told us that they had not completed any training because it 

was optional. Two other surveyors told us that they had never been 

notified about the existence of optional CAP training. While full-time 

surveyors employed by other survey organizations conduct from 30 to 

about 200 surveys per year, CAP volunteer surveyors have much less 

experience conducting surveys because they only survey about one lab

each year. 

 44Because of lab testing errors that led to women’s deaths from cervical cancer, Congress 

required a specific type of proficiency testing for individuals who interpret the results of

Pap smear tests, which requires examining glass slides under a microscope. Although CLIA

was enacted in 1988, CMS told us that cost, the inability to find a national testing provider, 

and other technical issues delayed establishing a Pap smear proficiency testing program 

until 2005. 

45As of November 2005, CAP also employed 11 full-time surveyors. Historically, CAP staff 

surveyors were responsible for inspections of smaller labs that conduct less complex tests. 

Increasingly, staff surveyors will (1) accompany survey teams assigned to labs with a large

number of deficiencies on their prior survey, and (2) assist teams in conducting either a

lab’s initial survey or the team leader’s initial survey. Staff surveyors will also conduct more 

nonroutine surveys, such as investigating a complaint or following up on performance

concerns raised during surveys.

46Currently, CAP volunteer surveyors are encouraged to participate in surveyor training at

least once every 3 years. In July 2006, CAP plans to begin requiring survey team leaders to 

complete mandatory training. Mandatory training for survey team members is targeted to 

begin in 2007. 

Page 25 GAO-06-416 Clinical Lab Quality
Three of the nine CAP surveyors we interviewed stated that they believed

that mandatory training was important, but some surveyors wondered 

when lab workers would have time to complete the courses because of 

their demanding work schedules. According to CAP officials, however, the 

required training will take only 1 to 2 days and surveyors will have a 

choice of live seminars and workshops or e-learning completed at their 

own computers.47 For ongoing training requirements, CAP plans to give 

surveyors a choice of taking additional training or passing a competency

evaluation. CAP will track compliance with its new training requirements 

to ensure that surveyors successfully complete training and demonstrate 

competency within 2 years of participating in a survey. CAP’s required 

training is less extensive than that required by other survey organizations. 

For example, state survey agency inspectors must complete 5 days of 

basic training and periodic advanced courses afterwards while COLA staff 

inspectors participate in a 5-week orientation program and an annual 

20 hours of continuing education. 

The use of volunteer inspectors by CAP also raises concerns about the 

appearance of a conflict of interest. These concerns arise because of the 

way CAP survey teams are structured. CAP’s Commission on Laboratory 

Accreditation policy manual specifies that the inspection team leader is 

the individual responsible for the conduct of an ongoing site inspection, 

and must not be in a business, professional, or personal relationship that 

would preclude an objective inspection. Furthermore, the manual states 

that the inspection team leader is usually responsible for determining the 

size of, and assembling, the inspection team. However, until April 2006, 

CAP policy did not preclude competing labs from surveying one another or

lab survey team members from soliciting business, such as referrals, from 

a lab at the conclusion of the survey.48 The policy was also silent about 

survey team members’ business, professional, or personal relationships 

that could cloud their independence.49 Typically, inspection team leaders 

are pathologists who direct other labs in the community, and the 

inspection team is comprised of several employees from the team leader’s

lab. 

 47In contrast, CAP staff surveyors complete a 6-month training program before they are 

allowed to conduct surveys independently. 

48In explaining this policy, CAP notes that it believes team leaders and inspectors will 

conduct the inspection of a competing lab professionally and in an objective manner. 

49In April 2006, CAP issued a revised conflict of interest policy that addresses these 

concerns. 

Page 26 GAO-06-416 Clinical Lab Quality
We believe that the use of volunteers, including those from nearby labs, 

and the personal and professional relationships that may exist among lab 

staff and survey team members, creates the appearance of a conflict of 

interest and could undermine the integrity of the survey process.50

Comments from some CAP surveyors we interviewed raise a concern 

about having survey team leaders who are also the day-to-day supervisors 

of team members. For example, lack of agreement about the seriousness 

of a deficiency could result in the team leader instructing the team to 

downgrade the deficiency to a recommendation, a less serious finding that 

does not appear in the inspection report. Team members who are 

subordinates to the team leader may feel that they have no other recourse 

than to follow the team leader’s instructions. Recognizing that team 

members’ objectivity may be compromised in this situation, CAP’s revised 

conflict of interest policy instructs all parties to be cautious to retain 

objectivity in fact finding throughout the inspection process. 

In discussing these findings with CAP officials, they told us that they plan

to institute a number of initiatives to help ensure survey objectivity, 

including (1) resurveying the same lab by an independent team to assess 

the consistency of inspections, (2) centralizing survey team assignments 

performed by CAP staff, (3) not announcing surveys, and (4) not notifying

labs of the survey team composition prior to the survey. 

Lab Workers Who File 

Complaints About Quality 

Problems in Lab Testing 

Not Afforded Whistleblower Protections

Some lab workers may not be filing complaints about quality problems at 

their labs because of anonymity concerns or because they may not be 

familiar with filing procedures. Complaints about labs can come from a 

variety of sources, including lab workers. Complaints are an important 

tool in detecting quality problems between lab surveys. For example, 

complaints about testing at a hospital lab were crucial because 

information had been concealed, complicating the detection of quality

problems during the lab’s surveys. As a result of a complaint, surveyors 

were able to substantiate inadequate calibration of testing equipment that 

could adversely affect patient care. 

 50According to CAP, 57 percent of surveys in 2004 were conducted by surveyors who

worked in nearby labs. For example, surveyors who inspected a Maryland hospital lab from

1999 through 2003 worked in labs that were from 5 to 42 miles away. The remaining 

43 percent were conducted by surveyors who did not work in nearby labs and who 

therefore required air travel to carry out the survey. 

Page 27 GAO-06-416 Clinical Lab Quality
Based on OSCAR data and data obtained from exempt-state programs and 

accrediting organizations for 2002 through 2004, few complaints were 

received about lab testing relative to the number of labs—significantly less 

than one complaint per lab per year.51 The low volume of lab complaints 

may be related to complainants’ concerns about anonymity and fear of 

retaliation for filing a complaint. It may be easy for a lab to determine the 

source of a complaint filed by a lab worker. For example, in some cases, 

either the nature of the complaint or the piece of testing equipment in 

question could narrow the list of possible complainants. Two CAP 

surveyors we interviewed commented that, in their opinion, it would be 

easy to determine the identity of a complainant. During congressional 

hearings in 2004, a Maryland hospital lab worker testified that she and her 

colleagues feared losing their jobs because of the complaints they filed.

Because of the difficulty of protecting the anonymity of lab workers who 

file complaints, whistle-blower protections for such individuals are 

particularly important. Two of the three accrediting organizations we 

interviewed have whistle-blower protections—CAP and JCAHO.52 For 

example, CAP implemented a comprehensive whistle-blower protection 

policy in July 2004 that includes revocation of accreditation or other 

appropriate action for any lab that directly or indirectly threatens, 

intimidates, or retaliates against a lab worker. While officials from New 

York and Washington’s exempt-state programs told us that whistle-blower 

laws in their states provide some protection for lab workers who file 

complaints, officials in most of the other 10 states we interviewed told us 

that they did not have any whistle-blower protections or were unable to 

identify specific protections that applied to lab workers in their state. 

Currently, there are no federal whistle-blower protections specifically for

workers in labs covered by CLIA. In 2005, legislation was introduced to 

provide whistle-blower protections to workers in labs covered by CLIA.53

We also found that lab workers may not know how to file a complaint. 

CAP experienced a significant increase in the number of complaints it 

received since October 2004, when it began requiring CAP-inspected labs 

 51The modifications to OSCAR did not affect data on the number of complaints. The 

complaint information in OSCAR excludes complaints that do not require an on-site survey. 

52COLA does not have a formal whistle-blower policy. COLA officials told us that they

promptly investigate all complaints, many of them from former lab employees, and keep

the identity of the complainants anonymous.

53H.R. 686, 109th Cong. (2005). 

Page 28 GAO-06-416 Clinical Lab Quality
to display posters on how to file complaints. Specifically, from October 

through December 2004, CAP received an average of 22 complaints per 

month, compared to an average of 11 complaints per month in the 

9 months preceding the poster requirement. As a result, the number of 

complaints about the quality of lab testing more than doubled in 2004 and 

the number substantiated increased by more than 40 percent—even 

though the poster was only displayed for the last 3 months of 2004 (see 

table 3).54 In September 2005, COLA also began requiring labs to display a 

complaints poster similar to CAP’s. It is too early, however, to determine 

the impact of COLA’s new complaints poster on the number, type, and 

substantiation rate of complaints. Neither CMS nor JCAHO plans to 

require a similar complaints poster.55

Table 3: Number of Complaints Received by CAP, 2002-2005 

Year Received Substantiated

2002 82 39

2003 84 40

2004 170 70

2005 290a74 (preliminary)

b

Source: CAP. 

a

This number is as of November 30, 2005, and thus does not include complaints received in 

December. 

b

As of November 30, 2005, CAP had substantiated 74 complaints; over 100 complaints were still 

under active investigation. 

Lab Sanctions Are Rarely 

Imposed 

Few labs were sanctioned by CMS from 1998 through 2004—even those 

with the same condition-level deficiencies on consecutive surveys—

because many proposed sanctions are never imposed. Our analysis of CMS 

enforcement data from 1998 through 2004 found that 501 labs were 

sanctioned, which equates to less than 3 percent of labs inspected by state 

survey agencies.56 The most common were principal sanctions, which may 

result in suspension or limitation of testing or termination from the CLIA 

 54CAP plans to hire an additional staff person to investigate complaints. 

55Effective July 2005, JCAHO required labs to educate staff on how to report concerns 

about lab quality to the Joint Commission, but does not specify use of a poster to do so. 

56According to CMS, sanctions generally result from deficiencies identified during an

inspection by a state survey agency. 

Page 29 GAO-06-416 Clinical Lab Quality
program; few labs were subjected to alternative sanctions, such as 

directed plans of correction or civil monetary penalties (see table 4). 

Appendix III shows the number of labs surveyed by state survey agencies 

and the number of sanctioned labs from 1998 through 2004. 

Table 4: Number of Labs Inspected with Principal Only, Principal and Alternative, and Alternative Only Sanctions Imposed, 

1998-2004 

Sanction Description Number of labs

Principal only • Revocation of CLIA certificate (termination) 

• Cancellation of approval to receive Medicare payments 

• Limits placed on testing 

• Suspension of testing 

269

Principal and alternative • At least one principal sanction plus at least one alternative sanction 170

Subtotal 439

Alternative only • Directed plans of correction 

• Civil money penalties 

• State on-site monitoring 

• Partial or full suspension of Medicare payments 

62

Total 501

Source: GAO analysis of CMS lab registries. 

Although few labs were sanctioned from 1998 through 2004, over 9,000 

labs had sanctions proposed during that same time period.57 Before 

sanctions go into effect, labs are given a grace period to correct conditionlevel deficiencies, unless the deficiencies involve immediate jeopardy, that

is, an imminent threat to patient health and significant hazard to public 

health. Most labs correct the deficiencies within the grace period. CMS 

officials told us that it was appropriate to give labs an opportunity to 

correct such deficiencies within a prescribed time frame and thus avoid 

sanctions.58 However, a principal objective of the enforcement process—

one reflected in CMS guidance—is to motivate labs to comply with CLIA 

 57Since CMS data lists only the number of labs with proposed sanctions by year, this

number may double-count labs that had proposed sanctions in multiple years.

58Labs surveyed by states have 23 days to correct immediate jeopardy deficiencies, 90 days 

to correct all other condition-level deficiencies, and up to 12 months to correct standardlevel deficiencies. CAP and COLA give labs 30 days to correct all deficiencies, and effective 

July 1, 2005, JCAHO reduced the time labs have to correct deficiencies from 90 to 45 days. 

Labs may also appeal proposed sanctions, and depending on the outcome of such appeals,

sanctions may be dismissed. 

Page 30 GAO-06-416 Clinical Lab Quality
requirements, thereby helping to ensure the provision of accurate and 

reliable test results. Based on the large number of labs with proposed 

sanctions that were never imposed, it is unclear how effective the 

enforcement process is at motivating labs to consistently comply with 

CLIA requirements. 

The number of labs with the same repeat condition-level deficiencies from

one survey to the next also raises questions about the overall effectiveness 

of the CLIA enforcement process. From 1998 through 2004, 274 labs 

surveyed by state survey agencies had the same condition-level deficiency 

cited on consecutive surveys and 24 of these labs had the same conditionlevel deficiency cited on more than two surveys.59 This analysis may 

understate the percentage of labs with repeat condition-level deficiencies

because OSCAR data prior to 2004 no longer reflect about two-thirds of 

condition-level requirements and associated deficiencies at the time of 

those surveys. We found that only 30 of the 274 labs with repeat conditionlevel deficiencies had sanctions imposed—either principal, alternative, or

both. According to the CLIA legislative history, congressional concern 

about labs with repeat deficiencies led to alternative sanctions to provide 

an enforcement option short of principal sanctions to encourage 

compliance.

From 1998 through 2004, less than 1 percent of accredited labs (81) lost 

their accreditation; few of these labs were subsequently sanctioned by 

CMS and many still participate in the CLIA program.60 Our analysis of CMS 

reports on sanctioned labs found that only 9 of the 81 labs had either 

principal and/or alternative sanctions imposed and that 1 of the 9 still 

 59Thirty-three states and the District of Columbia had at least one lab with the same repeat 

condition-level deficiency. 

60Twenty CAP-, 51 COLA-, and 10 JCAHO-inspected labs had their accreditation revoked. 

After notice of revocation of accreditation, a lab retains its CLIA certificate and may

continue to test specimens for 45 days while a state survey agency inspects the lab and 

makes a recommendation concerning the lab’s continued participation in the CLIA program 

to the responsible CMS regional office, unless CMS takes action sooner. Potential 

outcomes include (1) termination from the CLIA program; (2) determination that the lab 

meets CLIA requirements because they are less stringent than those of the accrediting 

organization, resulting in the lab switching to state survey agency oversight; (3) the lab’s 

return to compliance and reapplication to be surveyed by an accrediting organization; or 

(4) cessation of moderate- to high-complexity testing and assumption of a CLIA certificate 

that only allows less complex, waived testing. 

Page 31 GAO-06-416 Clinical Lab Quality
performs moderate- to high-complexity testing.61 Based on a review of its 

CLIA certificate database, CMS officials told us that about half of the 81 

labs still perform moderate- to high-complexity testing but could not 

describe the actions taken by CMS regional offices in response to the loss 

of accreditation. We contacted state survey agencies or CMS regional 

office officials to determine why 3 labs that COLA concluded had cheated 

on proficiency testing by referring the samples to another lab to be tested 

had no sanctions imposed. The purpose of proficiency testing is to provide 

an objective, external evaluation of the accuracy of a lab’s test results, 

which is negated when another lab analyzes the sample. By statute, the

intentional referral of samples to another lab for proficiency testing is a 

serious deficiency that should result in automatic revocation of a lab’s 

CLIA certificate for at least 1 year.62 Based on our interviews, we found 

that the 3 labs were allowed to continue testing because they had initiated 

corrective actions; in effect, these labs were given an opportunity to 

correct a deficiency that appears to have required a loss of their CLIA 

certificate for at least 1 year. A fourth lab was ultimately sanctioned for 

proficiency testing cheating by CMS but was allowed to continue testing 

for almost 2 years after having its accreditation revoked. 

We also attempted to analyze data on other actions, short of revoking 

accreditation, used by accrediting organizations to encourage lab 

compliance and, in particular, how they respond to labs with serious 

repeat deficiencies. According to CMS, this information is dispersed 

across CMS regional offices. CAP officials told us that they could initiate 

four intermediate actions including probation (lab is closely watched to 

ensure correction of problems), accreditation with conditions (nonroutine 

inspection to be scheduled), suspension of a lab section, and cessation of 

a specific type of testing; suspension and probation were instituted in 

2004. According to CAP, in 2005, 28 labs were on probation, 106 labs were

accredited with conditions, 1 lab was suspended, and 7 labs were required 

to cease a specific type of test. In 2004, JCAHO awarded conditional 

accreditation to 3 percent of the labs it inspects because they were not in

substantial compliance with its survey requirements, as evidenced by the

number of requirements not met; JCAHO conducts an on-site follow-up 

survey at such labs. From 2002 through 2004, COLA required about 30 labs 

 61We created a database for the sanctions data contained in CMS’s annual lab registry 

reports to Congress from 1998 through 2004 and were able to identify labs that both lost

accreditation and had a sanction imposed. 

62Pub. L. No. 100-578, § 2, 102 Stat. at 2911, codified at 42 U.S.C. § 263a(i)(4)(2000). 

Page 32 GAO-06-416 Clinical Lab Quality
per year to cease testing due to issues identified during surveys and about

217 labs per year to cease testing certain tests or specialties due to 

unsuccessful proficiency testing.63

CMS’s oversight is not adequate to help ensure that labs meet CLIA 

requirements. While CLIA requires proficiency testing quarterly, CMS only 

requires such testing three times each year. In addition, the agency is not 

meeting its responsibility to determine that accrediting organization and 

exempt-state requirements and processes continue to be at least 

equivalent to CLIA’s. CMS attributed the delay in making equivalency 

determinations to having too few staff. Further, ongoing CMS validation 

reviews do not provide an independent assessment of the extent to which

surveys identify all condition-level deficiencies—primarily due to their 

timing. Finally, CMS does not adequately use data, such as the results of 

surveys, to monitor survey organization activities and processes. Realizing 

that its existing oversight activities need to be strengthened, CMS has 

begun instituting performance reviews to measure survey organization 

compliance with its standards and is developing protocols to ensure 

improved communication among survey organizations concerning 

complaints about lab quality. 

CMS’s decision to require proficiency testing for almost all laboratory tests 

only three times a year is inconsistent with the statutory requirement. 

CLIA requires that proficiency testing be conducted “on a quarterly basis, 

except where the Secretary determines for technical and scientific reasons 

that a particular examination or procedure may be tested less frequently 

(but not less often than twice per year).”64 The committee report on the bill 

that forms the basis for much of CLIA indicated that “proficiency testing 

should be the central element in determining a laboratory’s competence, 

since it purports to measure actual test outcomes rather than merely 

gauging the potential for accurate outcomes.”65

CMS Oversight of 

CLIA Is Inadequate 

CMS’s Implementation of 

Proficiency Testing Is 

Inconsistent with CLIA 

 63In addition to suspension of or limits on testing, COLA uses directed plans of corrections, 

such as requiring a lab to hire a consultant or participate in specific training. 

64Pub. L. No. 100-578, § 2, 102 Stat. 2903, 2907-08, 42 U.S.C. § 263a(f)(3)(2000). 

65H.R. Rep. 100-899 at 28 (1988) reprinted in 1988 U.S.C.C.A.N. 3828, 3849.

Page 33 GAO-06-416 Clinical Lab Quality
In CMS’s 1992 rule implementing CLIA, the agency provided a rationale for 

reducing the frequency of proficiency testing, but did not provide a 

technical and scientific basis for reducing the frequency for particular 

procedures or tests.66 According to CMS’s justification, experts were 

divided on the appropriate frequency of proficiency testing generally. In 

addition, requiring fewer events of proficiency testing would give 

laboratories more time to analyze the causes of test failures before the 

next event of proficiency testing and also enhance proficiency testing’s 

value as an educational tool. Because CLIA increased the number of labs 

that were required to undergo proficiency testing, CMS believed that the 

number of organizations that provided proficiency testing services would 

not have been able to meet the anticipated increase in demand for testing 

services. To help avoid anticipated delays in completing proficiency 

testing and reporting requirements, CMS reduced the frequency of testing 

events to three times per year.67

CMS’s requirement for proficiency testing does not meet the conditions 

specified in the statute that must be satisfied in order to require testing 

less frequently than quarterly. The language of the statute, as well as 

relevant legislative history, indicate that a decision to reduce the 

frequency of testing should be in the nature of an exception made with 

regard to a particular test, not the norm for all tests, and must be based on 

“technical and scientific” considerations related to that particular test.68

The reasons that CMS gave for requiring only three events per year were 

not based on scientific and technical considerations relevant to particular

tests. Instead, CMS’s decision was based on concerns of an administrative 

and logistical nature that CMS wanted to alleviate by reducing the 

frequency of testing events. 

 66See 57 Fed. Reg. 7002, 7128-29 (1992). Prior to 1992, CMS required proficiency testing 

quarterly. See 55 Fed. Reg. 9538 (1990). 

67According to a CMS official, the adoption of less frequent proficiency testing was

accompanied by an increase in the number of specimens subject to proficiency testing 

from two every 3 months to five every 4 months. 

68The committee report provided examples of technical and scientific considerations 

justifying an exception to the quarterly testing requirement. Those examples also stress the 

significance of excepting tests from the quarterly testing requirement on the basis of 

circumstances presented by the individual test. See H.R. Rep. 100-899 at 29 (1988), 1988

U.S.C.C.A.N. at 3850. That quarterly testing is intended to be the norm is further evidenced

by the committee report’s recommendation that the number of quarters that a laboratory

had failed to pass proficiency testing determine the severity of sanctions imposed. See id. 

at 30, 1988 U.S.C.C.A.N. at 3851. 

Page 34 GAO-06-416 Clinical Lab Quality
We found that CMS has been late in determining that exempt states’ and 

accrediting organizations’ inspection requirements and processes are at 

least equivalent to CLIA’s. CMS must verify their equivalency and, by 

regulation, CMS requires such survey organizations to seek reapproval at

least once every 6 years, or more frequently if deemed necessary. CMS 

establishes the time frames for when the next reapproval should occur, 

which have ranged from about 15 months to about 6 years. However, CMS 

has not completed its equivalency reviews within these time frames and 

accrediting organizations and exempt state programs have continued to 

operate without proper approval. Equivalency reviews for CAP, COLA, 

JCAHO, and Washington due to be completed between November 1, 1997,

and April 30, 2001, were an average of about 40 months late. In August 

1995, CMS determined that New York’s next equivalency review should be 

completed by June 30, 2001, but was over 4 years past due as of December 

2005. Similarly, COLA’s equivalency review was about 3 years past due. 

CMS Is Late in Ensuring 

CLIA Equivalency of 

Exempt States’ and 

Accrediting Organizations’ 

Inspection Requirements 

and Processes 

Because accrediting organizations and exempt-state programs may choose 

to make changes to their inspection requirements between periodic 

equivalency reviews (1) accrediting organizations are required to submit 

changes to their inspection requirements and policies 30 days prior to 

changing their standards69 and (2) exempt-state programs are required to 

provide notice when they change their licensure or inspection 

requirements. Although federal regulations require CMS to review 

equivalency when an accrediting organization or exempt-state program 

adopts new requirements, a CMS official told us that the agency is not 

required to review such changes before their implementation to ensure 

equivalency.

70 As a result, such survey organizations may introduce 

changes that are inconsistent with CLIA requirements. For example, 

JCAHO made a significant change to its inspection requirements in 

January 2004 but did not receive CMS approval until 6 months later; CMS 

did not begin an in-depth review of JCAHO’s revised requirements until 

 69For example, CAP typically reorganized, consolidated, or changed its requirements two 

times a year. As a result of these changes, about 1,000 requirements were removed and 

about 1,200 requirements were added over 5 years. COLA has changed its requirements five 

times since it was first approved by CMS in 1993. JCAHO officials stated that they make 

changes to their requirements each year. 

70See 42 C.F.R. § 493.573(a)(3)(2005). 

Page 35 GAO-06-416 Clinical Lab Quality
early 2005—over a year after they were implemented by JCAHO.71

According to CMS, their review has identified several critical areas where 

JCAHO standards are less stringent than those of CLIA. JCAHO 

acknowledged the need to make some adjustments to its revised 

requirements. 

CMS officials attributed delays in making equivalency determinations and

reviewing interim changes to having too few staff. The CLIA program, 

located in CMS’s Center for Medicaid and State Operations (CMSO), 

currently has approximately 21 full-time-equivalent positions compared to 

a peak of 29 such positions several years ago. The reduction occurred over 

time through attrition. As required by statute, the CLIA program is funded 

by lab fees and since its inception the program’s fees have exceeded 

expenses. As of September 30, 2005, the CLIA program had a carryover 

balance of about $70 million—far more than required to hire an additional 

six to seven staff members. However, CMS officials told us that because 

the CLIA program staff are part of CMSO, they are subject to the personnel 

limits established for CMSO, regardless of whether or not the program has 

sufficient funds to hire more staff. Although CMSO is at its authorized 

personnel allocation, the CLIA program could hire additional staff with 

approval from the Administrator. We were told that CMSO has not 

requested such approval.

We also noted issues that raise a question about the thoroughness of CMS 

equivalency reviews because some survey organizations’ procedures or 

policies appear to be less stringent than those required by CMS for the 

CLIA program. For example: 

• Accrediting organizations provide labs more advance notice about 

upcoming surveys than CMS allows state survey agencies to give to the 

labs they inspect. 

• JCAHO surveyors focus their review of lab testing on the 12 months prior 

to the survey. CMS requires that state surveyors review the entire 

24 months of testing since the last survey.72

 71On January 1, 2004, JCAHO launched a new accreditation process, which included a

substantial consolidation of lab requirements. Additionally, JCAHO began using new

methodologies, including a new software program that analyzes data to help focus on-site 

surveys on priority areas and a tracer methodology to track patients and specimens 

through the continuum of lab services.

72According to JCAHO, the organization plans to change its survey process to include a 

review of a random sample of the other records and documents over the entire 24-month

period. 

Page 36 GAO-06-416 Clinical Lab Quality
• While CMS requires initial and advanced surveyor training, CAP 

encourages but does not require its volunteer surveyors to participate in 

surveyor training.73

• As of August 2005, CAP’s policy manual indicates that complaint 

investigations may be announced or unannounced. CMS guidance requires 

that complaint investigations be unannounced. 

Prior to 2005, CMS’s equivalency determination reviews focused on the 

inspection requirements themselves, and not the procedures and policies 

used by accrediting organizations and exempt-state programs in carrying 

out oversight of labs; this focus on inspection requirements may explain 

the divergence from the policies and procedures CMS requires for state 

survey agencies. During 2006, CMS is simultaneously reviewing the 

equivalency of COLA and JCAHO inspection requirements and, for the first 

time, incorporating on-site observations of accrediting organization 

policies and systems into the review and approval process. For example, 

CMS is checking to ensure that accrediting organizations have adequate 

systems in place to track such things as (1) complaints, (2) correction of 

deficiencies, and (3) proficiency testing. 

CMS validation reviews that are intended to evaluate lab surveys 

conducted by both states and accrediting organizations do not provide 

CMS with an independent assessment of the extent to which surveys 

identify all serious—that is, condition-level or condition-level equivalent—

deficiencies. CMS requires its regional offices to conduct validation 

reviews of 1 percent of labs inspected by state survey agencies in a year. In

contrast, validation reviews of 5 percent of labs inspected by accrediting 

organizations during a year are conducted by state survey agency 

personnel. CMS does not specifically require that validations occur in each 

state and some states do not have validation reviews each year. 

Furthermore, many validation reviews occur at the same time a survey 

organization conducts its inspection and, in our view, the collaboration 

Many CMS Validation 

Reviews Lack 

Independence and 

Reviews Skip Some State 

Survey Agencies 

 73As noted earlier, CAP plans to begin requiring mandatory surveyor training in mid-2006. 

Page 37 GAO-06-416 Clinical Lab Quality
among the two teams during these simultaneous surveys prevents an 

independent evaluation.74

The requirement to validate 1 percent of labs surveyed by state survey 

agencies in a year—roughly 100 validation reviews each year—does not 

ensure sufficient oversight of state survey agencies. The validation review

requirement, which is included in CMS regional office annual budget 

memorandums, does not specify how many validation reviews must be 

conducted in each state. While the 10 CMS regional offices generally 

validated 1 percent of the state survey agency inspections within their 

region, they often did not validate 1 percent of inspections within each

state and, in fact, performed none in some states. From 1999 through 2003, 

federal surveyors: 

Validation of State Survey

Agency Lab Surveys 

• validated less than 1 percent of labs surveyed by state survey agencies in 

an average of about 25 percent of states, ranging from 7 states in 2002 to 

17 states in 2003; and 

• did not conduct any validation reviews in an average of 16 percent of 

states per year, ranging from 3 states in 2002 to 12 states in 1999. 

In 11 states, no validation reviews were conducted in multiple years. For 

example, no validation reviews were conducted in Michigan and 

Washington, D.C. during 4 of 5 years from 1999 through 2003. Without 

validating at least some surveys in each state, CMS is unable to determine 

if the states are appropriately identifying deficiencies. 

Seventy-five percent of validations of state lab surveys were conducted 

simultaneously from fiscal years 1999 through 2003.75 According to CMS 

officials, the large proportion of simultaneous validation reviews provides 

an opportunity for federal surveyors to share information with state 

surveyors, monitor their conformance with CLIA inspection requirements, 

and identify training and technical assistance needs. However, we found 

 74Simultaneous surveys resemble “observational” federal oversight surveys conducted at 

nursing homes. We previously reported that such surveys, in which federal surveyors

accompany and observe state surveyors during the routine inspection of a nursing home,

are not a realistic assessment of state surveyor performance because CMS’s presence may 

make state surveyors more attentive to their survey tasks than when they are not being 

observed, a phenomenon known as the Hawthorne effect. See GAO, Nursing Home Care:

Enhanced Oversight of State Programs Would Better Ensure Quality, GAO/HEHS-00-6 

(Washington, D.C.: Nov. 4, 1999). 

75These validation reviews include both exempt-state and state survey agency lab surveys.

Page 38 GAO-06-416 Clinical Lab Quality
that such reviews do not provide an accurate assessment of state 

surveyors’ ability to identify condition-level deficiencies. Of the 13 

validation reviews that identified missed condition-level deficiencies, only 

1 was a simultaneous review (see table 5). Validations of state surveys 

typically utilize one federal surveyor for either independent or

simultaneous validation reviews;76 therefore, increasing the proportion of 

independent validation reviews to strengthen CMS oversight likely would 

not require additional federal surveyors. Moreover, conducting

independent validation reviews eliminates the extra effort required to 

coordinate schedules to ensure that the validation reviews occur at the 

same time as the state survey. 

Table 5: Analysis of Results of Simultaneous and Independent Validation Reviews of State Surveys, Fiscal Years 1999–2003 

Conducted simultaneously Conducted independently

Fiscal year 

Number of 

validation

reviews Number 

Number with 

condition-level 

deficiencies state 

surveyors missed Number 

Number with 

condition-level 

deficiencies state 

surveyors missed

1999 223 141 0 82 2

2000 224 135 0 89 5

2001 218 184 1 34 0

2002 240 199 0 41 4

2003 195 167 0 28 2

Total 1,100 826 1 274 13

Source: CMS. 

According to CMS guidance, at least one validation review of an 

accrediting organization’s survey of labs should be conducted

simultaneously each year, but not all validation reviews should be 

simultaneous because a combination of simultaneous and independent 

reviews provides a balanced view of surveyor performance. CMS officials 

were unable to tell us exactly how many of the roughly 275 validation 

reviews conducted each year from fiscal year 1999 through fiscal year 2003 

were simultaneous.77 However, one of the three accrediting organizations

we reviewed told us that a significant proportion of their validation 

reviews are conducted simultaneously. JCAHO estimated that 33 percent 

Validation of Accrediting 

Organizations’ Lab Surveys 

 76State survey agencies employ 96 full-time-equivalent staff to survey labs. 

77CMS did not begin tracking this information until August 2003.

Page 39 GAO-06-416 Clinical Lab Quality
of its validation reviews were conducted simultaneously. COLA estimated 

that 9 percent of validation reviews conducted in 2004 and 2005 were 

simultaneous. Finally, CAP officials told us that, from 2002 through 2004, 

11 percent of validation reviews of CAP-accredited labs were conducted

simultaneously. 

Given the limitations of simultaneous reviews, conducting independent 

validation reviews are a more effective way of ensuring the equivalency of

accrediting organization inspection requirements and processes between 

the equivalency determinations. CMS officials told us that the agency’s 

intent in instituting simultaneous reviews was for state and accrediting 

organization surveyors to share best practices, to promote understanding 

of each other’s programs, and to foster accrediting organization 

improvement. They indicated that they considered it a learning experience 

both if an accrediting organization surveyor added a deficiency noted by a 

state surveyor to a survey report and vice versa. However, most of the 

state survey agency officials we interviewed told us that simultaneous 

validation reviews do not provide a realistic evaluation of the adequacy of

accrediting organizations’ inspection process. In fact, CMS guidance 

encourages surveyors to discuss the survey findings prior to concurrent 

conferences with lab personnel to review their findings. 

From fiscal years 1999 through 2003, state survey agency surveyors found 

condition-level deficiencies missed by accrediting organization surveyors 

on 64 validation reviews, but only 6 of these validation reviews were 

simultaneous.78 In contrast, 58 (91 percent) of the validation reviews that 

identified serious deficiencies missed by accrediting organizations were 

independent validation reviews. (See table 6.) 

 78Both survey organizations submit their findings to CMS, which then compares the 

findings to determine whether accrediting organization surveyors missed any conditionlevel deficiencies. Examples of condition-level deficiencies missed by accrediting 

organizations include: (1) lab did not correctly calculate the results of tests used to monitor 

patients using a blood-thinning medication, which could result in serious medical 

complications such as internal bleeding; (2) lab did not follow manufacturer’s instructions 

for calibrating checks of certain test equipment; and (3) lab director failed to provide

overall management and direction of lab, such as ensuring timely enrollment in a

proficiency testing program and corrective actions following a proficiency testing failure. 

Page 40 GAO-06-416 Clinical Lab Quality
Table 6: Analysis of Results of Simultaneous and Independent Validation Reviews

of Accrediting Organizations’ Surveys, Fiscal Years 1999–2003 

Validation reviews that found condition-level 

deficiencies missed by accrediting organizations’ 

surveyors 

Fiscal year 

Number of 

validation

reviews Total

Number 

conducted 

simultaneously 

Number 

conducted 

independently

1999 227 8 0 8

2000 265 17 3 14

2001 214 8 1 7

2002 317 14 1 13

2003 348 17 1 16

Total 1,371 64 6 58

Source: CMS. 

Note: While our analysis covered validation reviews for all six accrediting organizations, CAP, COLA, 

and JCAHO account for the vast majority of such reviews. CMS officials were unable tell us the total 

number of validation reviews conducted simultaneously and independently during each fiscal year. 

CMS Use of Data for 

Oversight of CLIA Program 

Is Limited 

CMS does not routinely collect and analyze data essential for effective 

oversight of the CLIA program but has initiatives to automate some 

available data to make them more accessible for analysis. Using data to

analyze activities across survey organizations can be a powerful tool in 

improving CMS oversight of the CLIA program. Such analyses include 

identifying and addressing inconsistencies in how surveys are conducted.

Although CMS tracks the most frequently cited deficiencies at labs in an 

effort to improve quality, it does not routinely track the proportion of labs, 

by state, in which state survey agencies identify condition-level 

deficiencies—those that denote serious or systemic problems. According 

to a CMS official, the agency has not evaluated variability in such 

deficiencies since 1999.79 As noted earlier in this report, variability in 

survey findings suggests inconsistencies in how surveys are conducted.

CMS also does not require exempt-state programs and accrediting 

organizations to routinely submit data on serious deficiencies identified at

the labs they inspect, unless the deficiencies pose immediate jeopardy to 

 79Our nursing home work found a similar absence of analysis by CMS regarding trends in 

serious problems identified by state surveyors. See GAO, Nursing Home Quality:

Prevalence of Serious Problems, While Declining, Reinforces Importance of Enhanced

Oversight, GAO-03-561 (Washington, D.C.: July 15, 2003). 

Page 41 GAO-06-416 Clinical Lab Quality
the public or an individual’s health.80 As noted earlier, the lack of a 

common vocabulary on what constitutes a serious deficiency would make 

it virtually impossible for CMS to analyze such data. 

We also found that CMS does not effectively use available data to assess 

clinical lab quality in areas such as proficiency testing, sanctions, and 

complaints. For example, CMS’s analysis of proficiency testing data for all

labs showed improvements over time. As reported earlier, proficiency 

testing failures have increased for labs surveyed by CAP and JCAHO. 

Comprehensive analysis of the proficiency testing database is particularly 

valuable because it provides a uniform way to assess the quality of lab 

testing across survey organizations, which is not currently available for 

survey results. CMS is now in the process of automating the annual 

registry of sanctioned labs, which should help it identify important trends, 

such as the infrequent use of alternative sanctions. Automating the 

registry, however, will not address the lack of data on (1) steps taken by

state survey agencies and regional offices when labs have their 

accreditation revoked or (2) interim steps, short of revocation of 

accreditation, that accrediting organizations take to help encourage lab

compliance. CMS also lacks a complaints database, and therefore was 

unable to assess the impact of CAP’s decision to require labs to

prominently display a poster on how to file a complaint. CMS is 

developing, and plans to launch, a complaints database in March 2006.81

 80Officials from a state survey agency told us that, while they do not want to receive routine

survey reports from accrediting organizations, they do want to receive information when

accrediting organizations identify problem labs—before a lab loses its accreditation and 

becomes the responsibility of the state survey agency. When an accrediting organization 

revokes a lab’s accreditation, the state survey agency becomes responsible for determining

whether to recommend revocation of the lab’s CLIA certificate to the appropriate CMS 

regional office. 

81In response to communication problems highlighted by the complaint investigations at a 

Maryland hospital lab, CMS has been meeting regularly with officials from exempt-state 

programs, accrediting organizations, state survey agencies, and its regional offices to 

discuss and improve coordination and data sharing—particularly the handling of 

complaints. The Maryland state survey agency identified deficiencies during a 2004 

complaint investigation but did not inform CAP, the organization responsible for surveys of

the Maryland hospital lab. CAP officials told us that they first learned about the 2004

complaint investigation that revealed problems with HIV and hepatitis testing equipment 

from newspapers.

Page 42 GAO-06-416 Clinical Lab Quality
CMS has implemented performance reviews for state survey agencies and 

is in the process of developing such reviews for accrediting organizations. 

First implemented in 2004, the annual CLIA state performance reviews 

evaluate each survey agency’s ability to accomplish its lab oversight 

responsibilities.82 The reviews, conducted on-site by CMS regional office 

staff, measure performance in 13 areas, such as the timely conduct of 

surveys and the appropriate documentation of any deficiencies identified.83

According to CMS, the reviews are based on the performanceimprovement model that characterizes much of the administration of the 

CLIA program.84 Consequently, the primary role of regional offices in 

conducting the reviews is to provide education and support for state 

survey agency improvement. For the 2004 reviews, 38 states were 

required to submit corrective action plans to their respective CMS regional 

offices in at least 1 of the 13 areas examined. Three areas required the 

most corrective action plans: principles of documentation, proficiency 

testing desk reviews, and survey time frames.85

CMS Implementing 

Performance Reviews for 

Survey Organizations 

• Principles of documentation. CMS found that some state survey agencies

lacked the supervisory personnel to conduct internal reviews intended to 

ensure the appropriate documentation of deficiencies. It also found that 

some state survey agencies did not follow the protocol instructions on 

how to quantify such reviews. 

• Proficiency testing desk reviews. Because of personnel shortages, some 

state survey agencies were unable to perform proficiency testing desk 

 82According to a CMS official, the Seattle regional office was in the forefront of developing

a set of performance standards for Washington’s CLIA-exempt program. The standards,

though not identical to those implemented for state survey agencies, have been in place for

several years. As of November 2004, the New York regional office is developing similar 

performance standards for the New York CLIA-exempt program. 

83The 13 areas are personnel qualifications, financial management, completion of workload 

targets, survey selection and scheduling, outcome-oriented survey process, acceptable plan

of correction, complaints, ongoing training activities, data management, survey time 

frames, proficiency testing desk review, principles of documentation, and enforcement.

84In explaining the purpose of the performance reviews to state survey agencies, CMS 

noted that they were designed to serve as an additional opportunity to further the agency’s

educational and supportive efforts of state survey agencies. The goal is to promote optimal

performance by identifying areas needing improvement and corrective action. Survey 

agencies are expected to have systems in place for monitoring and evaluating the efficiency

of their corrective actions. 

85During desk reviews, state survey agency staff track the proficiency testing results of labs 

using data reports from proficiency testing providers and request that labs initiate 

corrective actions when the results are below certain thresholds with some frequency. 

Page 43 GAO-06-416 Clinical Lab Quality
reviews between surveys, waiting instead until the next on-site survey to

address unsuccessful proficiency testing. CMS plans to provide additional 

surveyor training on desk review requirements. 

• Survey time frames. CMS regional office staff were inconsistent in scoring

whether state survey agencies met the established time frames for initial 

surveys. While some regions were lenient if a state missed the time frame 

by just 1 day or provided a reasonable explanation—such as staff turnover

or illness—other regions were more stringent in scoring states against the 

standard. 

However, it is not yet clear to what extent the 2004 scores represent state 

survey agency shortcomings or a learning curve for the states in 

understanding the performance review protocols. 

In partnership with the accrediting organizations, CMS is developing 

performance standards comparable to, but different from, those 

implemented in 2004 for state survey agencies. For example, both the state 

survey agency review protocols and those proposed for accrediting 

organizations measure the timeliness of the surveys, but those proposed 

for the latter would also focus on several areas that are unique to 

accrediting organizations. The performance standards would include 

(1) timely and consistent information sharing and (2) alerting CMS about 

decisions to limit or remove accreditation in a timely manner. According

to a CMS official, the agency plans to phase in the performance standards, 

starting with a standard on complaints. For example, if the CLIA 

complaints database is activated in March 2006, CMS could begin to 

monitor accrediting organization responsiveness to, and outcomes of, 

complaints. Because the database will contain national lab complaint data, 

CMS will be able to compare the volume and outcome of complaints 

across survey organizations. According to CMS, implementation of the 

accrediting organization performance standards will be a central—not 

regional—office responsibility. 

Clinical labs play a pivotal role in the nation’s health care system by 

diagnosing many diseases, including potentially life-threatening diseases, 

so that individuals receive appropriate medical care. Given this important 

role, lab tests must be accurate and reliable. CMS and survey organization

oversight is intended to ensure that labs produce reliable test results, a key 

objective of CLIA. Our work demonstrated that the oversight of clinical

labs needs to be strengthened in several areas. 

Conclusions 

Page 44 GAO-06-416 Clinical Lab Quality
Determining the quality of lab testing is difficult because it is virtually 

impossible to crosswalk inspection requirements across survey 

organizations. Without standardized survey findings across all survey 

organizations, CMS cannot tell whether the quality of lab testing has 

improved or worsened over time or whether deficiencies are being 

appropriately identified.

Lab oversight has weaknesses that make it difficult to determine the 

quality of lab testing because they mask quality problems. To help surveys

provide a realistic picture of day-to-day operations, CAP and JCAHO began 

unannounced surveys of the labs they survey—generally hospital labs—in 

2006. While unannounced surveys at physician office labs may not be 

practical, Washington’s exempt program and COLA currently give such

labs more advance notice than the 2 weeks CMS prescribes for labs 

inspected by state survey agencies. Similarly, the greater weight that CMS 

and survey organizations sometimes place on their educational, as 

opposed to their regulatory role may lead to survey findings that do not 

accurately reflect lab quality. Educating labs to ensure high-quality testing 

should complement but not replace the enforcement of CLIA inspection 

requirements. The low number of lab complaints may be the result of a 

lack of information about how to file a complaint and lab workers’ fear of 

retaliation. Because protecting the anonymity of lab workers who file 

complaints is difficult, whistle-blower protections for such individuals are 

particularly important. Finally, labs with the same serious deficiencies on

consecutive surveys often escape sanctions, even though Congress 

authorized alternative sanctions to give CMS more flexibility to achieve 

lab compliance. Without the threat of real consequences, labs may not be 

sufficiently motivated to comply with CLIA inspection requirements. 

CMS’s oversight is not adequate to enforce CLIA requirements. The agency

is not requiring labs to participate in proficiency testing on a quarterly 

basis, as required by CLIA. Furthermore CMS is not conducting CLIAequivalency determinations within the time frames it established for such 

reviews, nor has it always reviewed changes to exempt-state and 

accrediting organizations’ inspection requirements before their 

implementation, even though it requires their submission to ensure 

continued CLIA equivalency of their requirements. Although the CLIA 

program has generated funds, CMS agencywide staffing limitations have 

prevented the program from hiring sufficient staff to complete equivalency

reviews in a timely manner. Many validation reviews are conducted at the 

same time a survey organization conducts its survey, and such

simultaneous reviews may not provide a true assessment of surveyor 

performance. Independent validation reviews of accrediting organization

Page 45 GAO-06-416 Clinical Lab Quality
surveys are critical because CMS has not conducted equivalency reviews 

within the time frames it established. We also found that few validation 

reviews of state survey agency lab inspections are conducted each year 

and that none occurred in some states. Because state surveyors conduct 

validation reviews of accrediting organizations to ensure the continuing 

CLIA equivalency of their inspection requirements, conducting an 

appropriate number of validation reviews of state survey agency lab 

inspections is critical. CMS also has not yet taken the lead in ensuring the 

availability and use of data from survey organizations to help it monitor 

their performance—particularly the consistency with which surveys are 

conducted. CMS is creating a new complaint database, but its plan to 

automate the existing sanctions registry will not address the lack of data 

on enforcement actions taken by state survey agencies and regional offices

when labs have their accreditation revoked. 

To enable CMS to track the nature and extent of lab quality problems 

across survey organizations, we recommend that the CMS Administrator 

take the following action: 

Recommendations for 

Executive Action 

• Work with exempt-state programs and accrediting organizations to 

standardize their categorization and reporting of survey findings in a way

that tracks to CLIA inspection requirements and allows for meaningful 

comparisons across organizations, such as the analysis of trends in the 

citation of condition-level deficiencies. 

To ensure consistency in the oversight of labs by survey organizations, we 

recommend that the CMS Administrator take the following four actions: 

• Ensure that the advance notice of upcoming surveys provided to physician

office labs is consistent with CMS’s policy for advance notice provided by

state survey agencies. 

• Ensure that regulation of labs is the primary goal of survey organizations 

and that education to improve lab quality does not preclude the 

identification and reporting of deficiencies that affect lab testing quality. 

• Impose appropriate sanctions on labs with consecutive condition-level 

deficiencies in the same requirements. 

• Require all survey organizations to develop, and require labs to

prominently display, posters instructing lab workers on how to file 

anonymous complaints. 

Page 46 GAO-06-416 Clinical Lab Quality
To improve oversight of labs and survey organizations, we recommend 

that the CMS Administrator take the following eight actions: 

• Consistent with CLIA, require quarterly proficiency testing, except when

technical and scientific considerations suggest that less frequent testing is

appropriate for particular examinations or procedures. 

• Ensure that evaluations of exempt-state and accrediting organization 

inspection requirements take place prior to expiration of the period for 

which they are approved in order to ensure the continued equivalency of 

their requirements with CLIA’s. 

• Ensure that changes to the inspection requirements of exempt states and

accrediting organizations be reviewed prior to implementation, as required

by regulation, to ensure that individual changes do not affect the overall

CLIA equivalency of each organization. 

• Allow the CLIA program to utilize revenues generated by the program to 

hire sufficient staff to fulfill its statutory responsibilities. 

• Ensure that federal surveyors validate a sufficient number of inspections

conducted by each state survey agency to allow a reasonable estimate of 

their performance, including a minimum of one independent validation

review for each state survey agency surveyor. 

• Require that almost all validation reviews of each accrediting 

organizations’ surveys be an independent assessment of performance. 

• Collect and routinely review standardized survey findings and other 

available information for all survey organizations to help ensure that CLIA

requirements are being enforced and to monitor the performance of each 

organization.

• Establish an enforcement database to monitor actions taken by state 

survey agencies and regional offices on labs that lose their accreditation.

We provided a draft of this report to CMS, and to CAP, COLA, and 

JCAHO—the three laboratory accrediting organizations included in our 

review. CMS strongly endorsed our overall conclusion that quality 

assurance for the nation’s clinical labs should be strengthened and noted

that the report provided insights into areas where it can improve, augment, 

and reinforce oversight of both labs and accrediting organizations to 

ensure quality testing. Overall, CMS concurred with 11 of our 13 

recommendations. Despite this endorsement, however, CMS (1) provided

an alternative assessment of lab quality, (2) disagreed that the phase-in of 

certain CLIA requirements inappropriately stressed education as opposed 

to regulation, (3) expressed concern about how to identify and sanction 

labs with repeat condition level deficiencies, (4) disagreed with our 

recommendation regarding the frequency of proficiency testing, and 

(5) stated that it was already meeting our recommendation to conduct 

Agency and 

Accrediting 

Organization 

Comments and Our 

Evaluation 

Page 47 GAO-06-416 Clinical Lab Quality
almost all validation reviews of each accrediting organization

independently. We continue to believe that implementation of these 

recommendations is necessary for the effective oversight of labs. (CMS’s 

comments are reproduced in app. IV.) CAP indicated that it took seriously 

our findings and recommendations and intended to determine if there 

were additional measures it could take to strengthen its own oversight. 

COLA said that our recommendations to improve CMS oversight of survey 

organizations had merit. Nonetheless, CAP, COLA, and JCAHO disagreed 

with some of our findings and recommendations to CMS. (CAP, COLA, and 

JCAHO’s comments are reproduced in app. V, VI, and VII, respectively.) 

Our evaluation first responds to CMS’s and related accrediting 

organizations’ comments and then addresses additional comments by 

accrediting organizations. 

CMS and COLA commented that lab performance has improved since the 

enactment of CLIA. In particular, CMS pointed to the substantial decline—

from about 80 percent to about 42 percent—in the percentage of labs 

nationwide with deficiencies between 1994 and 2004. It is important to 

note that CMS’s data (1) do not distinguish between serious conditionlevel deficiencies and less serious standard-level deficiencies,

86 (2) include 

the early start-up period when physician office labs were first regulated,

87

and (3) exclude deficiency data on the substantial number of labs 

surveyed by accrediting organizations and state CLIA-exempt programs. 

Due to these shortcomings, we do not believe that CMS’s data provide an

accurate assessment of lab quality nationwide. 

Based on the limited data available on state survey agency inspections of 

labs since 1998 and the lack of any comparable data on accrediting 

Assessment of Lab Quality 

 86We asked CMS officials to provide the data points for fig. 1 in the agency’s comments on 

our draft report. The data provided by CMS show that the percentage of labs with 

condition-level deficiencies remained relatively constant over time—fluctuating between 6

and 8 percent from 1996 through 2005. However, the pre-2004 and post-2004 data are not 

comparable because CMS revised CLIA survey requirements in January 2004. Additionally, 

the data likely understate the actual number of condition-level deficiencies. As noted

earlier, state survey agencies do not consistently cite all condition-level deficiencies 

identified during inspections and CMS has instructed states not to include deficiencies 

related to the new 2003 lab quality control requirements in a lab’s survey report. 

87Generally, our analysis focused on the period 1998 through 2004, recognizing that the 

early years of CLIA implementation were probably atypical because the law expanded 

oversight to previously unregulated physician office labs and many labs shifted from more

complex testing that required routine inspections to less complex testing that did not. 

Page 48 GAO-06-416 Clinical Lab Quality
organization and exempt-state program survey findings, we concluded that 

insufficient data existed to identify the extent of serious quality problems 

at labs. CMS did not retain backup files of pre-2004 data on deficiencies 

identified by state survey agencies. Although CMS has determined that 

accrediting organization and exempt-state program lab requirements are at

least equivalent to CLIA’s, there is no agreement across survey 

organizations on how to distinguish serious from less serious deficiencies.

While CMS concurred with our recommendation to standardize the 

categorization and reporting of survey findings in a way that tracks to 

CLIA and allows meaningful comparisons across survey organizations, it 

noted that a straightforward linkage of requirements is limited by CMS’s 

authority under the statute—that is, survey organizations are permitted by 

statute to have different requirements—and that it will approach 

implementation of our recommendation cautiously. JCAHO said that it 

agreed with the need for a common, agreed upon, taxonomy that could be

used by all survey organizations to track serious deficiencies, but 

commented that it thought CMS’s implementation of our recommendation 

would require a revamping of JCAHO’s accreditation system. That was not 

the intent of our recommendation and it is clear from CMS’s comments 

that its implementation of our recommendation would not require an

overhaul of accrediting organizations’ systems. CAP acknowledged the 

complexity and inherent challenges in measuring the quality of lab testing, 

but noted that it is committed to working to develop better systems to 

detect labs with serious quality problems—those that impact patient care.

The statutory authority that permits standards different from CMS’s 

(provided they are at least as stringent) does not impair the ability to 

develop a crosswalk that allows for meaningful comparisons across survey 

organizations—such as an analysis of trends in the citation of conditionlevel deficiencies. In fact, CMS regulations already require accrediting 

organizations and exempt-state programs to submit a crosswalk—detailed 

comparisons of their individual accreditation or licensure approval 

requirements with comparable CLIA condition-level requirements—when 

they apply and reapply for approval from CMS.88 Such a comparison is 

possible because CMS already identifies instances when accrediting 

organizations have missed condition-level requirements during validation 

reviews. For example, CMS should require survey organizations to 

(1) indicate which of their requirements relate to each CLIA conditionlevel requirement, and (2) explain which deficiencies in their 

 88See 42 C.F.R. § 493.553(a)(1)(2005). 

Page 49 GAO-06-416 Clinical Lab Quality
requirements, if cited, should be considered equivalent to CLIA conditionlevel deficiencies. 

CMS also pointed to the steady increase in successful proficiency testing 

across all labs as an indication of improvements in lab quality. Our 

analysis of proficiency testing results suggested that lab quality had not 

improved at hospital labs in recent years. CMS correctly noted that the 

overall proportion of labs with no test failures increased from about 

88 percent in 1998 to about 93 percent in 2003—that is, fewer labs failed 

proficiency testing. However, by focusing on overall proficiency testing 

results, CMS data mask trends in failure rates for subsets of labs such as 

hospital labs. For example, from 1999 through 2003, the percentage of 

CAP-surveyed labs with proficiency testing failures increased from 

4.1 percent to 6.8 percent; CAP generally inspects hospital labs. CMS also 

commented that the overall improvement cannot be dismissed as a result 

of some labs being granted waived status because the more dramatic 

improvements predated the recent increase in the number of waived labs.

It further commented that removing waived labs from the data would not 

result in improved performance rates. First, the number of waived labs—

those performing waived tests or provider-performed microscopy—

increased by about 26,600 from 1993 though 1998 and then increased by 

another approximately 33,700 labs from 1998 through 2004. Second, CMS’s 

comment suggested that it had conducted an analysis of the impact of 

removing waived labs from the proficiency testing data. However, it did

not provide any data analysis when we subsequently asked to see the 

evidence behind its assertion. COLA also addressed this issue, and did not

challenge our conclusion that the decrease in proficiency testing failures 

for physician office labs might not represent an actual improvement in lab 

quality, but instead could reflect the fact that some problematic labs are

no longer surveyed. 

CMS agreed that it was important to maintain an appropriate balance 

between its regulatory and educational approaches to CLIA 

implementation. While CMS noted that objective review and feedback are 

the bedrock of education, it emphasized that the educational approach 

does not preclude surveyors from identifying lab deficiencies. CAP and 

COLA offered similar comments. However, we found evidence that the 

goal of educating lab workers sometimes takes precedence over, or 

precludes, the identification and reporting of deficiencies and 

recommended that CMS take steps to ensure that regulation remains the 

primary goal of surveys. To address this problem, CMS stated that it will 

provide additional state agency surveyor training, improve guidance,

Educational Focus of CLIA 

Page 50 GAO-06-416 Clinical Lab Quality
develop an action plan to promote greater consistency among surveyors, 

and institute periodic performance and consistency reviews. CMS’s 

comments did not address evidence we presented that an educational 

emphasis may also prevent fulfillment of regulatory responsibilities by 

some accrediting organizations. 

CMS disagreed that the extended phase-in periods for new quality control 

requirements and proficiency testing for lab technicians who interpret Pap

smears were inappropriate. COLA noted that federal requirements in many 

regulated industries are phased in to allow them time to understand and 

effectively implement the requirements. CMS reaffirmed that, in the case 

of significant new requirements and for the time period specified by CMS, 

the educational approach may result in identified deficiencies being 

communicated to laboratories without a concomitant citation, as is the 

case with quality control and Pap smear testing requirements. As 

discussed in the report, we believe that CMS’s educational phase-in 

periods are excessive. We found that the phase-in period for new quality 

control requirements was extended from 2 years to about 4 years, in part 

because of the lack of lab “buy-in” for some of the new policies and 

procedures. Similarly, the phase-in period for Pap smear proficiency 

testing is 2 years, despite (1) CMS’s concern about some of the high initial

test failure rates, (2) the consequences of inaccurate test results on 

patients’ diagnoses and treatment, and (3) the approximately 13-year time 

lag between the 1992 implementation of the CLIA regulations and the 

commencement of Pap smear proficiency testing.

In commenting on our recommendation to appropriately sanction labs 

with repeat condition-level deficiencies, CMS acknowledged the need to 

carefully monitor repeat deficiencies but expressed concern that focusing

on the condition cited may not indicate a true repeat deficiency because 

the underlying failures could have been different in the two consecutive 

surveys for those labs.89 CMS’s assertion is inconsistent with its own policy 

on serious, repeat deficiencies for other providers, such as nursing homes. 

In general, immediate sanctions must be imposed on nursing homes with

consecutive serious deficiencies, regardless of whether the deficiencies 

are in the same care area. As we have previously reported, allowing 

providers to avoid sanctions by correcting serious deficiencies contributes 

to an up-and-down pattern of compliance and undermines the deterrent 

Sanctioning Labs with 

Serious, Repeat 

Deficiencies 

 89JCAHO expressed a similar concern.

Page 51 GAO-06-416 Clinical Lab Quality
effect of sanctions.90 According to the CLIA legislative history, 

congressional concern about labs with repeat deficiencies led to the 

introduction of alternative sanctions such as civil money penalties as a 

substitute for more severe principal sanctions, which include termination 

from the CLIA program. 

CMS disagreed with our recommendation that it require quarterly 

proficiency testing except when technical and scientific considerations 

indicate that less frequent testing is justified for particular tests; CMS 

insisted that proficiency testing three times a year was “appropriate.” CMS 

stated that CMS and the Centers for Disease Control and Prevention had 

together determined that the reduced frequency was based on technical 

and scientific grounds. We asked for a record of the agencies’ deliberation 

supporting that decision. CMS supplied a brief, undated narrative, which it 

attributed to the Centers for Disease Control and Prevention. It was not 

clear to us that this narrative was contemporaneous with the decision to 

reduce the frequency of proficiency testing. Moreover, the narrative 

focused on the relative costs and benefits of proficiency testing at various 

intervals. There was no analysis of technical and scientific considerations 

with regard to particular tests that presented a basis for reducing the 

frequency. 

Based on CMS’s response, we maintain that CMS’s decision to require 

proficiency testing three times a year is not authorized by CLIA. CMS did 

not dispute that, according to CLIA, it must base the decision to reduce the

frequency of proficiency testing on scientific and technical considerations 

relevant to particular tests, and that the decision to reduce the frequency

is in the nature of an exception to the norm of quarterly testing. CMS also 

acknowledged that the “public explanation” contained in the preamble to 

the rule setting the proficiency testing requirement at three times a year 

referred only to general concerns about the perceived burden associated

with quarterly testing. For example, CMS stated in its final rule that the

prospect of reduced frequency would provide a “needed respite” to both 

laboratories and proficiency test providers. In sum, CMS has not adhered 

to the conditions set out in the statute for reducing the frequency of 

proficiency testing and has implemented a policy that is not supported by 

statutory authority. 

Proficiency Testing 

Frequency 

 90See GAO, Nursing Homes: Additional Steps Needed to Strengthen Enforcement of 

Federal Quality Standards, GAO/HEHS-99-46 (Washington, D.C.: Mar. 18, 1999).

Page 52 GAO-06-416 Clinical Lab Quality
CMS acknowledged the need to complete timely equivalency reviews of 

accrediting organization and exempt-state requirements, which were an 

average of about 40 months late for the 3-1/2-year period we examined. 

Regarding interim changes made between periodic equivalency reviews, 

CMS agreed with our recommendation and stated it would review such 

interim changes for both accrediting organizations and exempt-state 

programs prior to implementation, as required by regulation.

91

Furthermore, CMS indicated that changes to accrediting organization 

requirements did not necessarily impact CLIA equivalency determinations 

because accrediting organizations may have more stringent requirements 

than CLIA’s. While possibly true, CMS must review the changes to 

determine whether CLIA equivalency is affected. For example, in 2005, 

when it reviewed JCAHO’s revised standards a year after they were 

implemented, CMS identified several critical areas where JCAHO’s 

standards were less stringent than those of CLIA. 

CMS acknowledged that a significant increase in workload and the decline 

in CLIA program staff were factors which contributed to delays in making 

equivalency determinations and reviewing interim changes. Although CMS 

stated that it reserved the right to manage the work within available 

resources and its assessment of priorities, it also made a commitment to 

explore our recommendation to utilize revenues generated by the CLIA 

program to hire sufficient staff to fulfill its responsibilities. We believe that 

additional staff would not only improve the timeliness of equivalency 

reviews, but also their thoroughness. 

CMS stated that, consistent with our recommendation, 88 percent of 

accrediting organization validation reviews were conducted independently

in calendar year 2005. However, our recommendation was to require that

almost all validation reviews of each accrediting organizations’ surveys be

conducted independently. CMS’s comments do not indicate the proportion 

of independent validation reviews conducted for each accrediting 

organization. Because CMS did not begin collecting data on the number of 

simultaneous accrediting organization validation reviews performed until 

Equivalency of Accrediting 

Organization and Exempt 

State Programs 

Accrediting Organization 

Validation Reviews 

 91CMS’s comments explained that its regulations require 30-day advanced notice by 

accrediting organizations but not by exempt-state programs. 

Page 53 GAO-06-416 Clinical Lab Quality
August 2003, we relied on estimates from accrediting organizations.92 CMS 

did not challenge JCAHO’s estimate that 33 percent of its validation 

reviews were simultaneous, compared to about 10 percent for CAP and 

COLA. We do not believe that performing an estimated 33 percent of 

JCAHO’s validation reviews simultaneously is consistent with our 

recommendation. 

COLA commented that simultaneous validation reviews are useful in 

assuring consistency and in providing an understanding of processes 

across survey organizations. It also questioned the accuracy of most of the 

missed condition-level deficiencies identified by CMS during independent

validation reviews. We did not assess the process CMS uses to identify 

such missed deficiencies but based on a discussion with CMS officials it 

appears that the process is thorough and time consuming. JCAHO 

commented that we had misinterpreted the results of simultaneous and 

independent validation reviews of accrediting organizations because, by 

JCAHO’s estimate, the proportion of missed condition-level deficiencies is

roughly equivalent for both types of surveys. We did not find the 

assumptions behind JCAHO’s estimate convincing, given the lack of data 

on the actual number of simultaneous versus independent validation 

reviews conducted for each accrediting organization. Furthermore, most 

of the state survey agency officials we interviewed, whose inspectors 

conduct accrediting organization validation reviews, told us that 

simultaneous validation reviews do not provide a realistic evaluation of 

the adequacy of accrediting organizations’ inspection processes. 

Additional CAP comments. CAP commented that we underestimated 

the value of using lab professionals in the inspection process and that we 

provided no factual evidence that their use was less effective than other 

models. In contrast to CAP, other survey organizations employ dedicated 

staff surveyors who have mandatory and continuing education 

requirements. In addition, such dedicated surveyors conduct from 30 to 

about 200 surveys per year compared to CAP’s lab professionals who 

volunteer to perform about 1 survey per year. CAP partially addressed our 

concern about the lack of mandatory training for its volunteer surveyors. 

It plans to begin requiring training for survey team leaders in July 2006 and 

Additional Comments by 

Accrediting Organizations 

 92Our analysis of accrediting organization validation reviews covered fiscal year 1999 

through fiscal year 2003. We excluded fiscal year 2004 because CMS had not yet completed 

its analysis of condition-level deficiencies missed by accrediting organizations. 

Page 54 GAO-06-416 Clinical Lab Quality
for survey team members in 2007. However, CAP’s proposed new 

mandatory training is much less extensive than that required by other 

survey organizations. 

Moreover, we reported that some CAP surveyors we interviewed raised a

concern about having survey team leaders who are also the day-to-day

supervisors of team members. For example, lack of agreement about the 

seriousness of a deficiency could result in the team leader instructing the 

team to downgrade the deficiency to a recommendation, a less serious 

finding that does not appear in the inspection report. Team members who 

are subordinates to the team leader may feel that they have no other 

recourse than to follow the team leader’s instructions. CAP recently 

revised its conflict-of-interest policy which now instructs all parties to be 

cautious to retain objectivity in fact finding throughout the inspection 

process. We do not believe that this change in CAP’s conflict-of-interest 

policy addresses the concerns raised by the CAP surveyors we 

interviewed. In its comments, CAP indicated that it would continue to 

closely monitor this issue to determine if further actions were necessary. 

Additional COLA comments. COLA disagreed with our assertion that 

announced surveys may result in an unrealistic picture of lab quality—a 

conclusion supported by CMS regional office staff and most state survey 

agency officials we interviewed. We acknowledged that unannounced 

surveys of the physician office labs typically surveyed by COLA and state 

survey agencies were not practical given the unpredictable operating 

hours of such labs and need to minimize disruptions to patient care. 

However, we recommended that the advanced notice be limited to the 

2 weeks permitted by CMS for state survey agencies. COLA currently 

provides up to 12 weeks advanced notice. COLA contends that providing 

up to 6 months of advanced notice before a survey would only improve the 

lab’s operation more quickly if the lab took that opportunity to review 

COLA’s self assessment questions and correct any missing or incorrect 

processes or documentation. We believe that COLA’s example 

underscores the importance of our recommendation; such actions should 

be an ongoing process at labs—not a reaction to an upcoming inspections. 

Additional JCAHO comments. JCAHO said that our recommendation 

that all survey organizations develop and require labs to prominently 

display posters that instruct lab workers on how to file anonymous 

complaints was too narrow and prescriptive and may inadvertently limit 

organizations from using other, more effective ways to educate lab 

workers on this topic. JCAHO did not explain how implementing our 

recommendation would limit other initiatives. In fact, CMS’s comments 

Page 55 GAO-06-416 Clinical Lab Quality
identified a number of promising approaches that it believed could 

supplement posters. JCAHO also said that our analysis of the increase in 

CAP complaints after it required posters in the labs it inspects failed to 

recognize a broad national trend. JCAHO indicated that it also experienced 

a dramatic increase in lab complaints between 2004 and 2005 without the 

use of posters.93 This increase may be related to JCAHO’s July 2005 

requirement for labs to educate staff on how to report concerns. CAP told 

us that during the 3 months after they required a poster to be displayed 

they observed an immediate increase in the number of complaints. Thus, 

CAP lab complaints increased by over 100 percent in 2004 compared to 

2003 and by another approximately 71 percent in 2005. We continue to 

believe that CAP’s experience suggests that complaint posters can be an 

important way to encourage lab workers to communicate their concerns. 

CMS, CAP, COLA, and JCAHO also provided technical comments which 

we incorporated as appropriate. 

As arranged with your offices, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after its 

issue date. At that time, we will send copies to the Administrator of the 

Centers for Medicare & Medicaid Services and appropriate congressional 

committees. We will also make copies available to others upon request. In

addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

 93JCAHO miscalculated the increase in complaints from 2004 to 2005. According to the data 

provided by JCAHO, the increase was 57 percent, not 64 percent. JCAHO’s 2005 complaint

data were not available when we initially collected data on complaints received and 

substantiated by survey organizations. 

Page 56 GAO-06-416 Clinical Lab Quality
If you or your staff have any question s about this report, please contact 

me at (312) 220-7600 or aronovitzl@gao.gov. Contact points for our Offices 

of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff who made major contributions to this report 

are listed in appendix VIII. 

Leslie G. Aronovitz 

Director, Health Care 

Page 57 GAO-06-416 Clinical Lab Quality
Appendix I: Effects of Lab Errors on Patient 

Health 

This appendix contains examples of lab errors and their consequences, 

illustrating the importance of the quality of lab testing and the effects of

lab errors on patient health. The examples in table 7 are summarized from 

case studies in the journal Laboratory Errors and Patient Safety. 

Table 7: Effects of Lab Errors on Patient Health

Description of lab error Effects of error on patient health 

Example 1: Delayed reporting of elevated lab value 

• A 59-year-old woman with a history of a rapid and irregular

heart beat and stroke is taking coumadin, a blood thinning 

agent. Her primary care physician has lab tests completed

regularly to ensure that the coumadin dose is sufficient to 

maintain a lab value in the range of 2-3. The results of one 

Friday’s test was 5.7, a high value out of her target range, 

indicative that her blood is too thin and clots too slowly. 

This lab test value was documented but the patient’s primary

care physician was not notified about the elevated value. The 

following Monday morning a lead technologist noticed that the 

physician had not been called and immediately contacted a

nurse at the physician’s office. The nurse, alarmed that both 

the physician’s office and the patient had not previously been

notified, tried to contact the patient at home. The patient had

gone to the emergency room (ER) and was admitted to the 

hospital with an even higher blood clotting value of 7.2. With 

hospital treatment, her blood clotting value was reduced to 

2.3 and she was discharged 3 days later. 

• The physician ordering the test did not receive notice of the

high blood clotting lab value for 3 days, even though the lab 

result was documented within an hour of collection. In addition, 

the lab failed to follow up on the situation within an appropriate 

time frame. 

• There was a delay in the diagnosis of a critically elevated blood 

clotting level. 

• The patient took coumadin inappropriately for 2 days. 

• The patient experienced significant bleeding in her digestive

tract related to her impaired blood clotting status. 

• The patient had to be hospitalized to stabilize her health 

condition. 

• The patient was exposed to blood products, putting her at risk 

for a transfusion reaction and exposure to infectious agents.

Appendix I: Effects of Lab Errors on Patient 

Health 

Page 58 GAO-06-416 Clinical Lab Quality
Appendix I: Effects of Lab Errors on Patient 

Health 

Description of lab error Effects of error on patient health 

Example 2: Human recording and data entry error 

• A 60-year-old man with a history of chronic liver disease went 

to the ER with a 36-hour history of chest pain. The ER 

physician ordered a cardiac blood test that resulted in the 

patient’s being diagnosed with a heart attack. The patient was 

started on multiple medications and admitted to the cardiac 

intensive care unit at the hospital. After 10 hours in intensive 

care, a second cardiac blood test was run and because of 

significant discrepancy in the results compared to the first test, 

a rapid investigation of the situation ensued. The investigation 

revealed that the results of the original ER test were recorded 

inaccurately. The patient was retested by cardiac specialty 

physicians, reevaluated, and thought to be stable. He was 

removed from heart monitors, taken off all cardiac medications, 

discharged from the hospital, and asked to return for a routine 

appointment in 2 days. The patient continued to have mild

chest pain during the 2 days after he was discharged. During 

his return visit, the patient was found to have a stomach ulcer. 

The patient’s chest pain was really referred pain caused by the 

ulcer. The patient was then treated correctly.

• An investigation of the error revealed that it was a human 

recording and data entry error. The result from a different 

patient’s blood test had been entered incorrectly into this 

patient’s record because the two patients’ blood tests had 

been run within a few minutes of each other. 

• The patient inappropriately received several unnecessary 

medications. 

• The patient was unnecessarily admitted to the cardiac intensive 

care unit, endured the painful placement of intravenous lines, 

and was attached to several heart monitors. 

• The patient suffered significant anxiety related to thinking that 

he had suffered a heart attack. 

• During the 2-day delay between hospital admission and followup appointment, the patient remained symptomatic for his 

actual condition—an ulcer. 

• If the patient’s ulcer had been more severe and had started to 

bleed internally, the inappropriate administration of heart attack 

medications could have had harmful or even catastrophic 

effects on the patient’s health.

Example 3: Inaccurate review of lab test results 

• A woman who had been using birth control was referred to a 

dermatologist for severe acne. The dermatologist wanted to

prescribe a drug known to cause birth defects so she ordered 

two pregnancy tests, one initially and the second 2 weeks later. 

The first test came back negative. When the dermatologist 

called for the results of the second test, a lab worker incorrectly 

told her that the pregnancy test was negative. The patient was 

given a prescription for the acne drug and advised to avoid 

pregnancy while taking this medication. Three days after the 

patient started taking the prescription, the dermatologist saw in 

the patient’s record that the second pregnancy test for this 

patient was actually positive. Upon instruction, the patient 

stopped taking the medication and her number of prenatal 

visits was increased so she could be monitored for possible 

birth defects. 

• The investigation revealed that the laboratory employee, an

experienced technician who was busy when the incident 

occurred, reported the result of the patient’s first pregnancy 

test when asked for results from the second pregnancy test. 

Both the physician and the technician neglected to follow lab 

policies to include the date and time of the test when orally 

communicating results. 

• The patient inappropriately received a drug known to cause 

birth defects. 

• This necessitated increased monitoring of the patient’s 

pregnancy. 

• Although the patient’s pregnancy was ultimately unaffected, 

she experienced anxiety throughout. She continues to worry 

that her child is or will be negatively affected in the future 

because she took this drug early in her pregnancy. 

Page 59 GAO-06-416 Clinical Lab Quality
Appendix I: Effects of Lab Errors on Patient 

Health 

Description of lab error Effects of error on patient health 

Example 4: Inappropriate judgment concerning a microbiology lab test result 

• After returning from a trip to West Africa, a 30-year-old woman 

went to the ER after experiencing high fever, chills, and a 

headache. The woman was tested for malaria, a potentially 

deadly disease transmitted via mosquito bites. The test result 

was negative and the patient was sent home on ibuprofen. 

Four days later she returned to the ER suffering from continued 

high fever, listlessness, and a severe headache. She was 

tested again for malaria. This time the lab test result was 

positive for a moderate case of the disease. 

• The laboratory director reviewed the testing from the initial ER 

visit and found that the tests had been positive for malaria. The 

cause for not identifying malaria initially was inappropriate 

judgment. Since there was a low pretest probability of a 

positive result, technicians assumed that there would be a 

negative result. 

• The patient experienced fever and other significant symptoms 

during the 4-day delay in receiving appropriate care. 

• After the malaria diagnosis was made, the patient was admitted 

to the hospital and successfully treated. There was no 

permanent disability. 

Sources: All examples were summarized from case studies in the journal Laboratory Errors and Patient Safety. Example 1: Volume 2,

Issue 1(2005): 10; Example 2: Volume 1, Issue 4(2005): 6; Example 3: Volume 1, Issue 3(2004): 6; Example 4: Volume 1, 

Issue 1(2004): 5.

Page 60 GAO-06-416 Clinical Lab Quality
Appendix II: Labs Surveyed by State Survey

Agencies and the Percentage with ConditionLevel Deficiencies, by State in 2004 

StateaNumber of labs surveyed 

Percentage of labs surveyed

with reported conditionlevel deficiencies

Alabama 236 3.4

Alaska 24 12.5

Arizona 122 4.1

Arkansas 197 9.1

California 666 3.9

Colorado 173 10.4

Connecticut 140 0.0

Delaware 18 0.0

District of Columbia 15 13.3

Florida 664 4.1

Georgia 369 4.3

Hawaii 57 5.3

Idaho 89 0.0

Illinois 292 7.5

Indiana 112 9.8

Iowa 141 2.1

Kansas 156 2.6

Kentucky 217 3.2

Louisiana 157 12.1

Maine 32 0.0

Maryland 180 3.3

Massachusetts 217 4.6

Michigan 192 2.6

Minnesota 155 3.2

Mississippi 202 7.9

Missouri 238 2.9

Montana 41 7.3

Nebraska 127 8.7

Nevada 98 4.1

New Hampshire 22 9.1

New Jersey 302 9.9

New Mexico 50 10.0

New Yorkb545 8.1

North Carolina 321 13.4

Appendix II: Labs Surveyed by State Survey 

Agencies and the Percentage with ConditionLevel Deficiencies, by State in 2004 

Page 61 GAO-06-416 Clinical Lab Quality
Appendix II: Labs Surveyed by State Survey

Agencies and the Percentage with ConditionLevel Deficiencies, by State in 2004 

StateaNumber of labs surveyed 

Percentage of labs surveyed

with reported conditionlevel deficiencies

North Dakota 30 10.0

Ohio 221 5.9

Oklahoma 158 10.8

Oregon 147 4.1

Pennsylvania 354 1.4

Rhode Island 36 0.0

South Carolina 143 25.2

South Dakota 66 1.5

Tennessee 403 10.7

Texas 651 6.5

Utah 95 6.3

Vermont 33 0.0

Virginia 271 5.2

West Virginia 85 7.1

Wisconsin 226 9.7

Wyoming 23 8.7

Nation 9,509 6.3

Source: GAO analysis of OSCAR data as of May 15, 2006. 

a

Washington is not included because it operates only a CLIA-exempt program. 

b

Excludes labs surveyed under the state’s CLIA-exempt program. 

Note: Includes surveys conducted from January 12, 2004, through December 31, 2004. We excluded

surveys conducted from January 1 to January 11, 2004, because surveyors began using new CLIA 

inspection requirements on January 12. 

Page 62 GAO-06-416 Clinical Lab Quality
Appendix III: Number of Labs Subject to 

Surveys by State Survey Agencies in 2005 and 

Number of Labs with Sanctions, 1998 to 2004 

StateaNumber of labs (2005) 

Number of labs with 

sanctions (1998-2004)

Alabama 491 1

Alaska 50 0

Arizona 265 7

Arkansas 398 14

California 1,570 134

Colorado 310 6

Connecticut 246 0

Delaware 46 0

District of Columbia 35 6

Florida 1,268 5

Georgia 737 5

Hawaii 81 4

Idaho 203 0

Illinois 517 15

Indiana 274 1

Iowa 281 1

Kansas 279 0

Kentucky 386 0

Louisiana 396 7

Maine 89 0

Maryland 467 28

Massachusetts 409 0

Michigan 387 62

Minnesota 274 1

Mississippi 441 0

Missouri 394 5

Montana 93 4

Nebraska 254 4

Nevada 159 3

New Hampshire 89 1

New Jersey 533 16

New Mexico 113 3

New York 1,125 75

North Carolina 676 1

Appendix III: Number of Labs Subject to 

Surveys by State Survey Agencies in 2005 and 

Number of Labs with Sanctions, 1998 to 2004 

Page 63 GAO-06-416 Clinical Lab Quality
Appendix III: Number of Labs Subject to 

Surveys by State Survey Agencies in 2005 and 

Number of Labs with Sanctions, 1998 to 2004 

StateaNumber of labs (2005) 

Number of labs with 

sanctions (1998-2004)

North Dakota 74 0

Ohio 428 12

Oklahoma 292 6

Oregon 270 0

Pennsylvania 749 7

Rhode Island 75 1

South Carolina 315 0

South Dakota 116 2

Tennessee 705 0

Texas 1,854 26

Utah 201 13

Vermont 46 0

Virginia 540 17

West Virginia 143 6

Wisconsin 480 1

Wyoming 54 1

Total 19,678 501

Source: GAO analysis of CMS lab registries and CLIA database. 

a

Washington is not included because it operates only a CLIA-exempt program. 

Page 64 GAO-06-416 Clinical Lab Quality
Appendix IV: Comments from the Centers for Appendix IV Medicare & Medicaid Services : Comments from the Centers for 

Medicare & Medicaid Services 

Page 65 GAO-06-416 Clinical Lab Quality
Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

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Appendix IV: Comments from the Centers for 

Medicare & Medicaid Services 

Page 79 GAO-06-416 Clinical Lab Quality
Appendix V: Comments from the College of Appendix V American Pathologists : Comments from the College of 

American Pathologists 

Page 80 GAO-06-416 Clinical Lab Quality
Appendix V: Comments from the College of 

American Pathologists 

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Appendix V: Comments from the College of 

American Pathologists 

Page 82 GAO-06-416 Clinical Lab Quality
Appendix VI: Comments from COLA Appendix VI: Comments from COLA 

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Appendix VI: Comments from COLA

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Appendix VI: Comments from COLA

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Appendix VI: Comments from COLA

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Appendix VI: Comments from COLA

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Appendix VI: Comments from COLA

Page 88 GAO-06-416 Clinical Lab Quality
Appendix VII: Comments from the Joint Commission Appendix VII: Comments from the Joint on Accreditation of Healthcare Organizations 

Commission on Accreditation of Healthcare 

Organizations 

Page 89 GAO-06-416 Clinical Lab Quality
Appendix VII: Comments from the Joint Commission 

on Accreditation of Healthcare Organizations 

Page 90 GAO-06-416 Clinical Lab Quality
Appendix VII: Comments from the Joint Commission 

on Accreditation of Healthcare Organizations 

Page 91 GAO-06-416 Clinical Lab Quality
Appendix VII: Comments from the Joint Commission 

on Accreditation of Healthcare Organizations 

Page 92 GAO-06-416 Clinical Lab Quality
Appendix VIII: 

A

GAO Contact and Staff 

cknowledgments 

Page 93 GAO-06-416

Appendix VIII: GAO Contact and Staff 

Acknowledgments 

GAO Contact Leslie G. Aronovitz (312) 220-7600 or aronovitzl@gao.gov 

In addition to the contact named above, Walter Ochinko, Assistant 

Director; Lucia P. Fort; Dan Lee; Kevin Milne; Dean Mohs; Elizabeth T. 

Morrison; Michelle Rosenberg; and Elizabeth Scherer made key 

contributions to this report. 

Clinical Lab Quality

Acknowledgments 

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