United States Government Accountability Office

GAO Testimony 

Before the Subcommittee on Criminal 

Justice, Drug Policy and Human 

Resources, Committee on Government 

Reform, House of Representatives

CLINICAL LABS 

CMS and Survey 

Organization Oversight Is 

Not Sufficient to Ensure 

Lab Quality 

Statement of Leslie G. Aronovitz 

Director, Health Care 

For Release on Delivery

Expected at 2:00 p.m. EDT

Tuesday, June 27, 2006

 

GAO-06-879T 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 27, 2006

CLINICAL LABS

CMS and Survey Organization Oversight 

Highlights of GAO-06-879T, a testimony Is Not Sufficient To Ensure Lab Quality 

before the Subcommittee on Criminal 

Justice, Drug Policy and Human 

Resources, Committee on Government 

Reform, House of Representatives

Today’s hearing focuses on

oversight of clinical labs. The 

Clinical Laboratory Improvement 

Amendments of 1988 (CLIA) 

strengthened 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 a state survey agency, 

a state CLIA-exempt program, or a 

private accrediting organization. 

CMS oversees implementation of

CLIA requirements, which includes

determining the CLIA equivalency

of the inspection requirements 

used by exempt states and

accrediting organizations. GAO was 

asked to discuss (1) the quality of

lab testing and (2) the adequacy of

CLIA oversight. To examine these

issues, GAO analyzed data on lab 

performance and reviewed the 

procedures used by CMS and 

survey organizations to implement 

CLIA and oversee lab performance.

This testimony is based on the GAO

report, Clinical Lab Quality: CMS 

and Survey Organization 

Oversight Should Be Strengthened, 

GAO-06-416 (June 16, 2006). 

What GAO Recommends

In a report released today, GAO

made numerous recommendations 

to the CMS Administrator that

would strengthen program

oversight. CMS noted that the 

report provided insights into areas 

where it can improve oversight and 

said that it would implement 11 of

GAO’s 13 recommendations. 

In summary, 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 and, as a result, 

data prior to 2004 no longer reflect key survey requirements in effect at the 

time of those surveys. The limited data available suggest that state survey 

agency inspections do not identify all serious deficiencies. 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. Furthermore, CMS does not effectively use available 

data, such as the proportion of labs with serious deficiencies or proficiency 

testing results, to monitor lab quality. Proficiency testing is an objective

measurement of a lab’s ability to consistently produce accurate test results. 

GAO’s analysis of proficiency testing data suggests that lab quality may not 

have improved at hospital labs in recent years. 

Oversight of clinical lab quality is not adequate to ensure that labs are 

meeting CLIA requirements. Weaknesses in five areas mask real and 

potential quality problems at labs. First, the balance struck between the 

CLIA program’s educational and regulatory goals is sometimes 

inappropriately skewed toward education, which may result in 

understatement of survey findings. For example, even though the initial test 

failure rates were high, CMS instructed state survey agencies not to cite 

deficiencies during the first two years of required Pap smear proficiency 

testing, to allow labs and their staff to become familiar with the program. 

Second, the manner in which one accrediting organization structures its 

survey teams raised concerns about appropriate levels of training and the 

appearance of a conflict of interest that could undermine the integrity of the 

survey process. Third, concerns about anonymity and lab workers’ lack of 

familiarity with how to file a complaint suggests that some quality problems 

are not being reported. Fourth, 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 deficiencies on consecutive surveys—it is 

unclear how effective CMS’s enforcement process is at motivating labs to 

consistently comply with CLIA requirements. Finally, CMS is not meeting its

requirement to determine in a timely manner the continued equivalency of 

accrediting organization and exempt-state program inspection requirements 

and processes, nor has the agency reviewed changes to accrediting 

organization and exempt-state program inspection requirements before 

implementation. 

www.gao.gov/cgi-bin/getrpt?GAO-06-879T.

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. 
Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today as you discuss oversight of the quality of 

testing performed by the nation’s clinical laboratories. 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

 Ensuring accurate and reliable lab test 

results is critical because erroneous results may lead to improper 

treatment, unnecessary mental and physical anguish for patients, and 

higher health care costs. Concerns about the quality of lab testing resulted 

in enactment of the Clinical Laboratory Improvement Amendments of 1988 

(CLIA).2

 In recent years, despite CLIA, lab quality problems in several 

states have raised questions about the adequacy of lab oversight. 

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

overseeing compliance with clinical lab testing 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 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. During the surveys, inspectors 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. Labs may choose to be 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. State survey agency inspections use CLIA requirements that 

are intended to help ensure valid and reliable lab tests; the two state CLIAexempt programs and six accrediting organizations survey labs using their 

own requirements that CMS has determined to be at least equivalent to 

 1

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

2

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

Page 1 GAO-06-879T
CLIA’s. Each survey organization is also responsible for investigating 

complaints about lab quality.3

My remarks today will focus on (1) the quality of lab testing and (2) the 

effectiveness of CMS and survey organization oversight of the CLIA 

program. My testimony summarizes the findings of a report we released 

today that examines these issues in more detail and includes numerous 

recommendations to the CMS Administrator for improving the quality of 

laboratory testing through closer oversight of clinical labs and the 

administration of CLIA standards. 

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 

(OSCAR). We requested comparable data on serious deficiencies from 

state CLIA-exempt 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.4

 We 

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

to produce accurate test results. To evaluate the effectiveness of CLIA 

program oversight, we reviewed the processes used to ensure the quality 

of clinical lab testing and analyzed available data related to these issues. 

Based on our review and discussions with CMS and survey organization 

officials, we focused on several key issues: (1) the balance struck between 

the regulatory and educational goals of lab surveys, (2) the implications of 

CAP’s use of volunteer surveyors from neighboring labs to conduct 

inspections, (3) how survey organizations facilitate the filing of 

complaints, (4) the use of sanctions to encourage compliance, (5) CMS’s 

process for determining that the standards used by state CLIA-exempt 

programs and accrediting organizations are at least equivalent to those of

CLIA, and (6) the results of validation reviews that are intended to assess 

the adequacy of inspections by survey organizations. In addition, we 

interviewed officials from CMS, three CMS regional offices,5

 10 state 

 3

We use the term “survey organizations” when referring collectively to state survey 

agencies, the two state CLIA-exempt programs, and accrediting organizations. 

4

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

5

New York, Philadelphia, and Seattle. 

Page 2 GAO-06-879T
survey agencies,6

 the New York and Washington CLIA-exempt programs, 

and the three largest accrediting organizations. We conducted our work 

from January 2005 through May 2006 in accordance with generally 

accepted government auditing standards. 

In summary, 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. The

limited data available suggest that state survey agency inspections do not 

identify all serious deficiencies. 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. Furthermore, CMS does not 

effectively use available data—such as the proportion of labs with serious 

deficiencies or proficiency testing results—to monitor lab quality. 

Proficiency testing is the one available data source that can be used to 

uniformly compare lab quality across survey organizations. Although CMS 

noted that proficiency testing trend data show a decrease in failures for 

labs as a whole, we found that the data suggest that quality may not have 

improved at hospital labs in recent years. Despite the importance of, and 

the statutory requirement for, quarterly proficiency testing, CMS requires 

proficiency testing for almost all laboratory tests only three times a year. 

Regarding oversight of clinical lab quality, we found that it is inadequate to

ensure that labs are meeting CLIA requirements. Weaknesses in six areas 

mask real and potential quality problems at labs. First, the balance struck 

between the CLIA program’s educational and regulatory goals is 

sometimes inappropriately skewed toward education, which may result in 

understatement of survey findings. In one instance, CMS instructed state 

survey agencies not to cite deficiencies for Pap smear proficiency test 

results during the first two years of required testing, to allow labs and their 

staff to become familiar with the program. Second, the way one 

accrediting organization structures its volunteer survey teams raised 

concerns about appropriate levels of training and the appearance of a 

conflict of interest. Third, although few labs were the subject of a 

 6

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

Pennsylvania, and South Carolina. 

Page 3 GAO-06-879T
complaint each year from 2002 through 2004—significantly less than one

complaint per lab per year—concerns about anonymity and lab workers’ 

lack of familiarity with how to file a complaint suggest that some quality 

problems may not be reported. Fourth, 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. Fifth, CMS is not meeting its 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. Moreover, CMS allows the 

implementation of changes to accrediting organization and exempt-state 

program inspection requirements between periodic equivalency 

determinations before it reviews the proposed changes. CMS attributed 

these delays to having insufficient staff. Finally, 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. 

Accordingly, in the report we released today, we made specific 

recommendations to the CMS Administrator to standardize survey findings 

across survey organizations in order to make meaningful comparisons; 

strengthen survey, complaint, and enforcement processes; and improve 

oversight of the CLIA program. In its comments on a draft of our report, 

CMS endorsed our overall conclusion that quality assurance for the 

nation’s clinical labs should be strengthened and said that it would take 

action in response to 11 of our 13 recommendations. CMS provided an

alternative assessment of lab quality, and disagreed with our 

recommendations concerning the frequency of proficiency testing and the 

extent of simultaneous accrediting organization validation reviews. CMS 

also expressed concern about identifying and sanctioning labs with repeat 

condition level deficiencies. After considering CMS’s comments, we 

believe that implementing our recommendations is necessary to improve 

oversight of labs and accrediting organizations. 

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. Labs conduct a wide range 

of tests that are categorized as waived tests or as moderate- or highcomplexity tests. Approximately 81 percent of all labs (about 157,000) are 

Background 

Page 4 GAO-06-879T
not subject to routine biennial surveys because they perform (1) “waived” 

tests, which are generally simple tests that have an insignificant risk of 

erroneous results, such as those approved for home use7

 or (2) tests 

performed during the course of a patient visit with a microscope on 

specimens that are not easily transportable. 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. 

Surveys examine lab compliance with CLIA program requirements in 

several areas including: personnel qualifications, proficiency testing,8

quality control, quality assurance, and recordkeeping. 

Survey Organizations 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. CMS contracts with state survey agencies in most 

states to inspect labs against CLIA requirements.9

 CLIA established an 

approval process to allow states and private accrediting organizations to 

use their own requirements to survey labs. 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. 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 moderate- to high-complexity 

 7

Pregnancy and blood sugar screenings are examples of such tests. 

8

Surveyed labs must participate in an approved external proficiency testing program, which 

evaluates the accuracy of laboratory testing. Under this requirement, a lab purchases 

samples with unknown characteristics several times each year from an approved 

proficiency testing provider. 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. 

9

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. 

Page 5 GAO-06-879T
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. 

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 6 GAO-06-879T
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. 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. 

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

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

based on the requirement in which the deficiency occurs. Standard-level 

deficiencies denote problems that generally are not serious, while 

condition-level deficiencies are cited when the problems are serious or 

systemic in nature. 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. Principal 

sanctions include revocation of a CLIA certificate, cancellation of the right 

to receive Medicare payments, or limits on testing. Alternative sanctions, 

authorized by Congress to give CMS more flexibility to achieve lab 

compliance, are less severe and include civil money penalties or on-site 

monitoring. For condition-level deficiencies that do not involve an 

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

public health, 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 sanctions. 

Surveys and Complaint 

Investigations 

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

organization survey activities. 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 

Page 7 GAO-06-879T
and exempt-state program inspections, but state survey agency staff 

conduct the validation reviews of accrediting organization inspections.10

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

deficiencies were identified. These reviews are conducted within 60 days 

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

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. Survey results for 2004 show substantial variability 

across states, which suggests that state survey agencies do not conduct 

surveys in a consistent manner. We also found that the lack of a 

straightforward linkage between CLIA requirements and the CLIAequivalent requirements of some survey organizations makes it virtually 

impossible to assess lab quality in a standardized manner. CMS does not 

effectively use available data, such as the results of surveys and 

proficiency testing, to monitor and assess lab quality. Although CMS noted 

that proficiency testing trend data show a decrease in failures for labs as a

whole, the data suggest that quality may not have improved at hospital 

labs for the period 1999 through 2003. 

Insufficient Data 

Exist to Identify 

Extent of Serious Lab 

Quality Problems 

Limited Quality Data for 

Labs Inspected by State 

Survey Agencies Suggest 

Survey Inconsistencies 

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. The revisions affected approximately two-thirds of the CLIA 

condition-level requirements.11 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. 

 10Unlike 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 testimony. 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. 

11For example, some condition-level requirements were reorganized and some were 

consolidated. 

Page 8 GAO-06-879T
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. However, variability in the OSCAR 

data suggests that labs are not surveyed in a consistent manner. In 2004, 

the percentage of labs that were reported to have condition-level 

deficiencies varied considerably by state, ranging from none in 6 states to 

about 25 percent of labs in South Carolina. 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 conducting their 

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 results in 

variations in the citing of deficiencies. In fact, officials in several states 

said that there are circumstances under which condition-level deficiencies 

would not be cited, such as if the lab staff were new or if the lab had a 

good history of compliance. As a result, available data likely understate 

the extent of serious quality problems at labs. 

Quality of Labs Inspected 

by Survey Organizations Is 

Very Difficult to Measure 

in a Standardized Manner 

Differences in the inspection requirements used by survey 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 with the 

same criteria used by state survey agencies—as either standard- or 

condition-level—they cannot easily identify the proportion of surveyed 

labs with condition-level deficiencies.

12

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. CAP and COLA crosswalked their 

recent survey findings to CLIA condition-level requirements. 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 

 12Although 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 9 GAO-06-879T
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.13

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.14

CMS Use of Data for 

Monitoring Lab Quality Is 

Limited 

CMS does not effectively use available data, such as the results of surveys 

and proficiency testing data, to monitor and assess lab quality. 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. As noted earlier, 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 

the public or an individual’s health. 

We also found that CMS does not effectively use proficiency testing data to

assess clinical lab quality. Proficiency testing is an important indicator of 

lab quality because it is an objective assessment of a lab’s ability to 

produce accurate test results and is conducted more frequently than 

 13However, JCAHO officials noted that in 2004, about 90 percent of the labs it surveyed had 

a deficiency in at least one requirement. JCAHO classifies all of its requirements as serious. 

14As 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. 

Page 10 GAO-06-879T
surveys—three times a year versus once every 2 years. In the absence of 

comparable survey data, proficiency testing results provide a uniform way

to assess the quality of lab testing across survey organizations. Although 

CMS’s analysis of proficiency testing data showed improvements over 

time, our analysis of 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. 

Importantly, 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).”15 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.16 CMS told us that officials from CMS and the Centers for Disease 

Control and Prevention had together determined that the reduced 

frequency was based on technical and scientific grounds and supplied a 

brief, undated narrative which it attributed to the Centers for Disease 

Control and Prevention. However, the narrative focused on the relative

costs and benefits of proficiency testing at various intervals and did not 

include an analysis of the technical and scientific considerations with 

regard to particular tests that presented a basis for reducing the frequency. 

Oversight by CMS and survey organizations is not adequate to ensure that 

labs meet CLIA requirements. For example, the goal of educating lab

workers during surveys takes precedence over the identification and 

reporting of deficiencies, while the use of volunteer rather than staff 

surveyors by one accrediting organization raises questions about 

appropriate levels of training and the appearance of a conflict of interest. 

CLIA Program 

Oversight Is 

Inadequate 

 15Pub. L. No. 100-578, § 2, 102 Stat. 2903, 2907-08, 42 U.S.C. § 263a(f)(3)(2000). 

16In its rationale, CMS noted that experts were divided on the appropriate frequency of 

proficiency testing and further justified the change by explaining that fewer events of

proficiency testing would give laboratories more time to analyze the causes of test failures,

thus enhancing the value of proficiency testing as an educational tool. 

Page 11 GAO-06-879T
The significant increase in complaints since CAP took steps to help ensure

that lab workers know how to file a complaint suggests that some quality 

problems at labs inspected by some survey organizations may not be 

reported. In addition, sanctions are not being used effectively as an 

enforcement tool to promote labs’ compliance with CLIA requirements, as 

evidenced by the relatively few labs with repeat condition-level 

deficiencies on consecutive surveys from 1998 through 2004 that had 

sanctions imposed. Furthermore, CMS is not meeting its responsibility to 

determine that accrediting organization and exempt-state program 

requirements and processes continue to be at least equivalent to CLIA’s. 

Finally, 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. 

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.17 For example, surveyors from one state survey 

agency told us they do not cite condition-level deficiencies when lab 

workers are new but prefer to educate the new staff. As a result, data on

the quality of lab testing and trends in quality over time may be misleading.

CMS also appears to be inappropriately stressing education over 

regulation. For instance, in its 2005 implementation of proficiency testing 

for lab technicians who interpret Pap smears, a test for cervical cancer, 

CMS instructed state surveyors to refrain from citing deficiencies at labs 

whose staff fail the tests in 2005 or 2006. According to CMS, this 

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

proficiency testing program; however, it is important to note that there 

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

implemented CLIA and the 2005 implementation of Pap smear proficiency 

testing.18 In addition, CMS noted that it was concerned about some of the 

high initial Pap smear proficiency testing failure rates. An inappropriate 

balance between the educational and regulatory roles is also evident in

 17Although 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.

18Because of lab testing errors that led to women’s deaths, 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. 

Page 12 GAO-06-879T
some accrediting organization practices. For instance, for COLA, the 

process of educating labs begins even prior to a survey, when labs are 

encouraged to complete a self-assessment to identify COLA requirements 

with which they are not in compliance. A CAP surveyor 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. 

Use of Volunteer Surveyors 

by CAP Raises Concerns 

The use of volunteer inspectors by CAP raises concerns about appropriate 

levels of training and the appearance of a conflict of interest. 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.19 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.20 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. 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. CAP officials told us 

they plan to establish a mandatory training program for survey team 

leaders beginning in mid-2006.

21 However, the required training will take 

only 1 or 2 days. In contrast, state survey agency inspectors must complete 

5 days of basic training, while COLA staff inspectors participate in a 

5-week orientation program and an annual 20 hours of continuing 

education. 

CAP’s method for staffing survey teams also raises concerns about the 

appearance of a conflict of interest. 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. In the

 19As of November 2005, CAP also employed 11 full-time surveyors. 

20Currently, CAP volunteer surveyors are encouraged to participate in surveyor training at

least once every 3 years. 

21Mandatory training for survey team members is targeted to begin in 2007. 

Page 13 GAO-06-879T
event of differing opinions about survey findings, 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—such as downgrading the 

record of an inspection finding to a less serious category. 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. 

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. 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.22 We 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 

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.23

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.24 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 

 22Information about complaints is from OSCAR data and data obtained from exempt-state 

programs and accrediting organizations for 2002 through 2004. The 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. 

23In September 2005, COLA also began requiring labs to display a complaints poster similar 

to CAP’s. Neither CMS nor JCAHO plan to require a similar complaints poster. Effective 

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. 

24COLA 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.

Page 14 GAO-06-879T
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. Although there are no federal whistle-blower protections 

specifically for workers in labs covered by CLIA, legislation was 

introduced in 2005 to provide such protections.25

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 while over 9,000 labs

had sanctions proposed during these years, only 501 labs were 

sanctioned.26 This equates to less than 3 percent of the approximately 

19,700 labs inspected by state survey agencies. Before sanctions go into 

effect, labs are given a grace period to correct condition-level deficiencies, 

unless the deficiencies involve an imminent and serious threat to patient

health and a 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.

However, 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 conditionlevel deficiency cited on consecutive surveys and 24 of these labs had the 

same condition-level deficiency cited on more than two surveys.27 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 condition-level deficiencies had sanctions imposed—either 

principal, alternative, or both. With respect to accredited labs, 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 

 25H.R. 686, 109th Cong. (2005). 

26Since CMS data list only the number of labs with proposed sanctions by year, this number

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

27Thirty-three states and the District of Columbia had at least one lab with the same repeat 

condition-level deficiency. 

Page 15 GAO-06-879T
many still participate in the CLIA program. Moreover, CMS did not 

sanction 3 labs that COLA concluded had cheated on proficiency testing 

by referring the samples to another lab to be tested.28 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.29 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. 

CMS Is Late in Ensuring 

CLIA Equivalency of 

Exempt States’ and 

Accrediting Organizations’ 

Inspection Requirements 

and Processes 

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. Because CMS has not completed its equivalency

reviews within required time frames, accrediting organizations and exempt

state programs have continued to operate without proper approval.30

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. Furthermore, although federal 

regulations require CMS to review equivalency when an accrediting 

organization or exempt-state program adopts new requirements, CMS has 

not reviewed changes in the inspection requirements prior to use by these 

entities.31 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; CMS 

did not begin an in-depth review of JCAHO’s revised requirements until 

early 2005—over a year after they were implemented by JCAHO. 

 28A 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. 

29Pub. L. No. 100-578, § 2, 102 Stat. at 2911, codified at 42 U.S.C. § 263a(i)(4)(2000). 

30CMS must verify the equivalency of accrediting organizations and exempt-state programs, 

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. 

31See 42 C.F.R. § 493.573(a)(3)(2005). 

Page 16 GAO-06-879T
According to CMS, its 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. 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. 

CMS Validation Reviews 

Skip Some State Survey 

Agencies and Many Lack 

Independence 

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.32

However, CMS does not specifically require that validations occur in each

state. As a result, from 1999 through 2003, there were 11 states in which no 

validation reviews were conducted in multiple years. Without validating at 

least some surveys in each state, CMS is unable to determine if the states 

are appropriately identifying deficiencies. 

Many validation reviews occur at the same time a survey organization 

conducts its inspection and, in our view, the collaboration among the two 

teams during these simultaneous surveys prevents an independent 

evaluation. Seventy-five percent of validations of state lab surveys were 

conducted simultaneously from fiscal years 1999 through 2003.33 According 

to CMS officials, the large proportion of simultaneous validation reviews 

 32In contrast, validation reviews of 5 percent of labs inspected by accrediting organizations

during a year are conducted by state survey agency personnel. 

33These validation reviews include both exempt-state and state survey agency lab surveys.

Page 17 GAO-06-879T
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 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 conditionlevel deficiencies, only 1 was a simultaneous review. Regarding validation 

reviews of accrediting organization’s survey of labs, CMS officials were 

unable to tell us how many of the roughly 275 validation reviews 

conducted each year from fiscal year 1999 through fiscal year 2003 were 

simultaneous.34 However, JCAHO estimated that 33 percent of its 

validation reviews were conducted simultaneously. 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. In contrast, 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 processes. 

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. Our work demonstrated that 

the oversight of clinical labs needs to be strengthened in several areas. 

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. Using 

data to analyze activities across survey organizations can be a powerful 

tool in improving CMS oversight of the CLIA program, yet CMS has not 

taken the lead in ensuring the availability and use of data from survey 

organizations to help it monitor their performance. Furthermore, the 

agency is not requiring that labs participate in proficiency testing on a 

quarterly basis, as required by CLIA. More broadly, CMS and survey 

organization oversight of the lab survey process is not adequate to enforce

CLIA requirements. Educating labs to ensure high-quality testing should 

complement but not replace the enforcement of CLIA inspection 

requirements. Labs with the same serious deficiencies on consecutive 

Concluding 

Observations 

 34CMS did not begin tracking this information until August 2003.

Page 18 GAO-06-879T
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. By 

allowing validation reviews to occur simultaneously with surveys and 

permitting some states to go without validation reviews over a period of 

several years, CMS is not making full use of this oversight tool. Moreover, 

independent validation reviews of accrediting organization surveys are 

critical because CMS has not conducted equivalency reviews within the 

time frames it established. The recommendations we have made would 

help CMS to consistently identify and address lab quality problems. 

Mr. Chairman, this concludes my prepared remarks. I would be happy to 

answer any questions that you or other Members of the Subcommittee 

may have. 

For further information regarding this statement, please contact Leslie G. 

Aronovitz at (312) 220-7600 or aronovitzl@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found in the 

last page of this statement. Walter Ochinko, Assistant Director; Jenny 

Grover; Kevin Milne; and Michelle Rosenberg contributed to this 

statement. 

Contact and 

Acknowledgments 

(290548) Page 19 GAO-06-879T
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To

have GAO e-mail you a list of newly posted products every afternoon, go 

to www.gao.gov and select “Subscribe to Updates.” 

The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548 

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548 

Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548 

Obtaining Copies of 

GAO Reports and 

Testimony

Order by Mail or Phone 

To Report Fraud,

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Public Affairs 

PRINTED ON RECYCLED PAPER