[Federal Register Volume 62, Number 168 (Friday, August 29, 1997)]
[Notices]
[Pages 45815-45821]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-23084]



[[Page 45815]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Disease Control and Prevention
Health Care Financing Administration
[HSQ-219-GNC]
RIN 0938-AG87


CLIA Program; Fee Schedule Revision

AGENCY: Health Care Financing Administration (HCFA), Centers for 
Disease Control and Prevention (CDC), HHS.

ACTION: General Notice with comment period.

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SUMMARY: This notice updates the certificate fees for laboratories 
established under the Clinical Laboratory Improvement Amendments of 
1988 (CLIA) consistent with the methodology set forth in 42 CFR part 
493. Section 353(m) of the Public Health Service Act requires that fees 
be collected to recoup costs of general administration of the CLIA 
Program. By economizing at every opportunity, the CLIA program has 
managed to maintain the fees established in 1992 and has absorbed all 
increases in costs. Revisions to the fees are necessary because the 
current fees are no longer sufficient to support the administration of 
the CLIA program. This restructuring of fees will more equitably 
distribute fees across all sizes and complexity of laboratories. For 
purposes of simplification, this notice announces a flat fee of $100 
for a certificate of registration.

DATES: Effective Date: The updated fee schedule is effective for 
certificate fees assessed as of January 1, 1998, unless we announce 
changes in response to public comments in a subsequent notice.
    Comments: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on October 
28, 1997. We will not consider comments concerning any other issue.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HSQ-219-GNC, P.O. Box 26676, 
Baltimore, MD 21207.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201, or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HSQ-219-GNC. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).
    Copies: To order copies of the Federal Register containing this 
document, send your request to: New Orders, Superintendent of 
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date 
of the issue requested and enclose a check or money order payable to 
the Superintendent of Documents, or enclose your Visa or Master Card 
number and expiration date. Credit card orders can also be placed by 
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost for each copy is $8. As an alternative, you can view and 
photocopy the Federal Register document at most libraries designated as 
Federal Depository Libraries and at many other public and academic 
libraries throughout the country that receive the Federal Register.
    This Federal Register document is also available from the Federal 
Register online database through GPO Access, a service of the U.S. 
Government Printing Office. Free public access is available on a Wide 
Area Information Server (WAIS) through the Internet and via 
asynchronous dial-in. Internet users can access the database by using 
the World Wide Web; the Superintendent of Documents home page address 
is http://www.access.gpo.gov/su__docs/, by using local WAIS client 
software, or by telnet to swais.access.gpo.gov, then login as guest (no 
password required). Dial-in users should use communications software 
and modem to call (202) 512-1661; type swais, then login as guest (no 
password required).

FOR FURTHER INFORMATION CONTACT: Judith Yost (410) 786-3531.

SUPPLEMENTARY INFORMATION:

I. Background

    On October 31, 1988, the Congress enacted the Clinical Laboratory 
Improvement Amendments of 1988 (CLIA), Pub. L. 100-578. CLIA replaced 
in its entirety section 353 of the Public Health Service (PHS) Act and 
applies to every laboratory in the United States and its territories 
that examines human specimens for the diagnosis, prevention, or 
treatment of any disease or impairment of, or the assessment of the 
health of, human beings subject to the requirements established by the 
Department of Health and Human Services (HHS). These requirements apply 
whether or not a laboratory receives reimbursement for services, 
participates in the Medicare or Medicaid program, and whether or not it 
tests specimens in interstate commerce. Section 353 of the PHS Act 
requires HHS to establish certification requirements for any laboratory 
that performs tests on human specimens. An amendment to the Social 
Security Act also requires laboratories to meet the CLIA requirements 
if they choose to participate in the Medicare or Medicaid programs.
    On February 28, 1992, we published regulations (57 FR 7002) that 
contain the CLIA standards that all laboratories must meet. Also on 
that date, we issued regulations (57 FR 7188) concerning CLIA fees and 
their collection. Section 353(m) of the PHS Act requires HHS to impose 
fees sufficient to cover the general costs of administration incurred 
by HHS in implementing the CLIA program.
    The preamble to the final regulations published on February 28, 
1992, stated that, as experience was gained from administering the CLIA 
program, the fee schedules would be revised as necessary. The 
regulations themselves provide for periodic updating (Sec. 493.638(b)).
    The statute requires that CLIA be a self-funded program with two 
separate types of fees: (1) Certificate fees and (2) additional fees 
for laboratory specific monitoring activities. Of these two types of 
fees, this notice revises only certificate fees, which is the only type 
of fee authorized by the statute to cover general administrative 
program costs.
    <bullet> Certificate fee means a fixed charge for the issuance and 
renewal of certificates. Section 353(b) of the PHS Act requires that 
every laboratory have in effect a certificate issued by the Secretary 
applicable to the nature and scope of tests performed. The categories 
or types of certificates are described in the regulations at Part 493. 
Section 353(m) of the PHS Act requires that certificate fees must be 
sufficient to cover the Federal administrative costs of the program. 
These Federal administration costs to be recouped include costs 
incurred by HCFA, the Centers for Disease Control and Prevention (CDC) 
and contractors for both agencies. Administrative activities

[[Page 45816]]

include locating and registering laboratories, issuing and reissuing 
certificates, developing regulatory standards, evaluating States' 
requests for exemption and accrediting organizations' petitions for 
deemed status, reviewing, approving and monitoring proficiency testing 
programs, evaluating which procedures, tests, or examinations meet the 
criteria for inclusion in the appropriate complexity category, carrying 
out special public health research studies required by law, providing 
public information, training surveyors, developing and maintaining a 
comprehensive CLIA data system, and developing and overseeing the 
fiscal management of the program.
    This notice updates the fees associated with issuance of 
certificates, consistent with the applicable statutory requirements and 
regulations. Certificate fees, as required in part 493 subpart F, 
support the Federal CLIA administration activities.
    <bullet> Additional fees are the fees associated with the 
inspection of laboratories found in Sec. 493.643 of the CLIA 
regulation. These fees are to be used for the costs associated with the 
inspection of laboratories and to assess compliance with CLIA 
requirements. This notice does not increase these fees.

II. Current Types of Certificates and Fees

    Laboratories must pay the following applicable fees biennially 
depending on the type of certificate they receive. (These fees and 
certificates do not apply to laboratories licensed in States which are 
CLIA-exempt under subpart E of this part. In this case the State pays a 
fee for CLIA administrative costs.)
    <bullet> Certificate of Waiver (Sec. 493.638). A laboratory that 
performs only tests categorized as waived must obtain a certificate of 
waiver. The certificate of waiver fee, established in 1992, is $100.
    <bullet> Certificate for Provider-Performed Microscopy (PPM) 
Procedures (Sec. 493.638). A certificate for PPM procedures is required 
for a laboratory that performs:
    1. Only tests specified as PPM procedures, or
    2. Only tests specified as PPM procedures and tests categorized as 
waived.
    The certificate fee for PPM procedures, set in 1993, is $150, which 
is $50 more than the fee for certificates of waiver and Schedules LVA, 
A, B, and C laboratories. (See Section IV Volume and Scope of 
Laboratory Services.) This fee reflects the additional expenses 
involved in reviewing moderate complexity tests to determine if they 
meet the criteria for classification as PPM procedures. (NOTE: This 
subcategory was first established in a rule published January 19, 1993, 
(58 FR 5212) and subsequently revised in a rule published April 24, 
1995 (60 FR 20035).)
    <bullet> Certificate of Registration (part 493, subparts B and C)
    The CLIA regulations, issued on February 28, 1992, and revised 
April 24, 1995, describe the fees charged for a certificate of 
registration. Every laboratory is required to obtain a certificate of 
registration (subparts B and C) except for the following: laboratories 
performing only those tests categorized as waived; laboratories 
performing only tests specified as PPM procedures or performing PPM 
procedures and waived tests; and laboratories located in and licensed 
by a State which has a CLIA exemption, as specified in subpart E. In 
the 1992 regulations the cost to the laboratory for the certificate of 
registration varied with the volume and specialties of services of the 
laboratory. The fees for the certificate of registration, established 
by the February 28, 1992 regulations, are: $100 (Small volume 
laboratories), $350 (Medium volume laboratories), and $600 (Large 
volume laboratories). (See Table I)
    <bullet> Certificate of Accreditation (Sec. 493.638). Any 
laboratory performing testing beyond waived and PPM procedures may 
request a certificate of accreditation based on its accreditation by a 
HCFA approved accrediting body. The laboratory must initially pay a fee 
for a certificate of registration. The certificate of registration fee 
is based on the laboratory's volume and number of specialties. The 
certificate of registration is valid for a period of no more than 2 
years or until such time as the laboratory shows proof of compliance 
with the requirements of the accreditation organization. Once 
compliance is established through the accreditation program, the 
laboratory must pay the appropriate certificate fee based on volume and 
number of specialties, prior to the issuance of the certificate of 
accreditation. The fees, set in 1992, for these certificates are: $100 
(Small volume laboratories), $350 (Medium volume laboratories), and 
$600 (Large volume laboratories).
    <bullet> Certificate of Compliance (Sec. 493.638). All laboratories 
performing testing beyond waived and PPM procedures and requesting a 
certificate of compliance must initially pay a fee for a certificate of 
registration. The certificate of registration fee is based on the 
laboratory's volume and number of specialties. The certificate of 
registration is valid for no more than 2 years or until such time as an 
inspection by HCFA or a HCFA agent establishes compliance with the CLIA 
requirements. Once compliance is established, the laboratory must pay 
the appropriate certificate fee based on volume and number of 
specialties, prior to the issuance of the certificate of compliance. 
The fees for these certificates, set in 1992, are: $100 (Small volume 
laboratories), $350 (Medium volume laboratories), and $600 (Large 
volume laboratories).

III. Revisions to Certificates

    If a laboratory issued a certificate, changes its name, location, 
or meets any conditions specified in Sec. 493.639 of our regulations 
before the certificate expiration date, the administrative fee to issue 
the revised certificate is $50. (The categorization of laboratories by 
scope and volume (see below) was discussed in detail in the preamble to 
the February 28, 1992 rule (at page 7194) and is specified in our 
regulations at Sec. 493.643(c).)

IV.  CLIA Schedules Defined by Number of Specialties and Volume 
(See Table II)

    Section 493.643(c), lists the schedules based on the laboratory's 
number of specialties and volume of testing (including PPM procedures 
but excluding tests performed for quality control, quality assurance, 
and proficiency testing purposes). These schedules, as set forth below, 
are used to establish the certificate fees, as well as fees associated 
with monitoring activities.
    <bullet> Schedule A Low Volume (LVA). The laboratory performs not 
more than 2,000 laboratory tests annually.
    <bullet> Schedule A. The laboratory performs tests in no more than 
three specialties of service with a total annual volume of more than 
2,000, but not more than 10,000 laboratory tests.
    <bullet> Schedule B. The laboratory performs tests in at least four 
specialties of service with a total annual volume of more than 2,000, 
but not more than 10,000 laboratory tests.
    <bullet> Schedule C. The laboratory performs tests in no more than 
three specialties of service with a total annual volume of more than 
10,000, but not more than 25,000 laboratory tests.
    <bullet> Schedule D. The laboratory performs tests in at least four 
specialties with a total annual volume of more than 10,000, but not 
more than 25,000 laboratory tests.
    <bullet> Schedule E. The laboratory performs more than 25,000, but 
not more than 50,000 laboratory tests annually.
    <bullet> Schedule F. The laboratory performs more than 50,000, but 
not

[[Page 45817]]

more than 75,000 laboratory tests annually.
    <bullet> Schedule G. The laboratory performs more than 75,000, but 
not more than 100,000 laboratory tests annually.
    <bullet> Schedule H. The laboratory performs more than 100,000, but 
not more than 500,000 laboratory tests annually.
    <bullet> Schedule I. The laboratory performs more than 500,000, but 
not more than 1,000,000 laboratory tests annually.
    <bullet> Schedule J. The laboratory performs more than 1,000,000 
laboratory tests annually.
    For purposes of assessing certificate fees in 1992, we considered 
laboratories in Schedules LVA through C as small volume ($100 fee), in 
Schedules D through G as medium volume ($350 fee), and Schedules H 
through J as large volume ($600 fee).

V. Need for Increased Fees

    After careful review of CLIA administration costs and revenues 
generated from the current certificate fees, we have concluded that 
current certificate fees are not sufficient to satisfy the requirements 
of section 353 of the PHS Act. According to our regulations at 
Sec. 493.638, the total of fees collected must be sufficient to cover 
the general costs of administering the CLIA program. The total cost of 
the CLIA program is estimated to be approximately $37.5 million 
annually. CLIA generates about $25 million in total revenue annually, 
through a combination of certificate fees and additional fees, leaving 
a projected shortfall of approximately $12.5 million annually.
    The shortfall in revenue is the result of two factors. First, more 
than half of all registered laboratories now pay fees based on their 
performing only waived tests or performing only PPM procedures, or 
both. When the initial fees were established in February 1992, there 
were no national data available on the number or types of testing 
performed. We projected that only 15 percent of all laboratories would 
have a certificate of waiver, and the PPM procedures category had not 
yet been established. Second, our revenue projections were based on an 
initial estimate of 180,000 to 250,000 registered laboratories. In 
fact, less than 150,000 laboratories are currently registered. This 
number does not include laboratories in CLIA exempt States.
    This shortfall has been exacerbated by the lack of appropriations 
for start up costs at the inception of the program in 1988. As a 
result, we have taken a number of steps to curtail CLIA costs and 
administrative activities in order to meet the statutory mandate which 
requires CLIA revenues to cover the costs of administering the program. 
These steps have included: implementing survey efficiencies, improving 
the fee collection process, limiting or postponing CLIA research 
projects, restricting hiring of additional staff and delaying some 
other Federal administrative activities. Overall Federal administrative 
costs have been reduced significantly by decreasing staff positions and 
reducing costs for travel, printing, subscriptions, and training.
    Even though we have reduced administrative costs, a portion of 
CLIA's administrative expenditures remains fixed and cannot be reduced 
without seriously undermining the effectiveness of the program. These 
costs are associated with activities such as: evaluating test systems 
for appropriate complexity categorization under CLIA; revising survey 
procedures, such as instituting the Alternate Quality Assessment Survey 
(AQAS); providing training and consultation to States, other Federal 
agencies, professional organizations, and laboratories; mailing 
information and application materials to laboratories; and operating 
and maintaining the accounting and data systems needed to provide 
accurate and timely information about laboratory registration and about 
CLIA receipts and expenses. Other costs are those associated with 
collecting unpaid fees and administration of the enforcement process.
    In order to comply with statutory requirements requiring that CLIA 
be self-funded, we have already made substantial efforts to decrease 
Federal administrative costs. Now, we must also seek additional 
revenues within the authority of the statute and existing regulations 
to eliminate an anticipated CLIA shortfall.
    While this increase in fees will have a varying impact on 
laboratories, depending on the size and volume of testing performed and 
other market place factors, it will ultimately provide for a more 
effective and efficient management of the CLIA program and be a cost 
effective investment. For example, research projects will enable us to 
identify, expand and develop innovative, less burdensome survey 
processes, appropriate personnel qualifications, effective quality 
control requirements, and could ultimately reduce costs to individual 
laboratories.

VI. Revised Fees

    The CLIA regulations require laboratories to pay a fee for the 
issuance of a CLIA certificate. In updating the certificate fee levels 
to meet statutory revenue requirements, the methodology set forth in 
Sec. 493.638(b) has been retained. This is consistent with the intent 
to allocate fees to avoid any undue burden and to maintain site 
neutrality among all laboratories. This means that laboratories 
performing similar types and volumes of testing despite the location of 
testing have the same fees imposed upon them. Currently, there are 
three certificate fees for small, medium and large volume laboratories. 
This notice sets forth a $150 certificate fee for Schedules LVA, A and 
B laboratories. It also establishes eight other certificate fees based 
on volume differences in laboratories.
    Registration Fee--Currently, a laboratory pays the same amount for 
a certificate of registration and its certificate of compliance or 
certificate of accreditation. Schedules LVA, A, B, and C laboratories 
pay $100. Schedules D, E, F, and G laboratories pay $350; and Schedules 
H, I, and J laboratories pay $600. To be consistent, a set registration 
fee of $100 will be charged to every laboratory applying for a 
certificate of accreditation or certificate of compliance. Therefore, 
this notice provides for a reduction in certificate of registration 
fees for Schedules D through J laboratories. The fee for Schedules LVA, 
A, B, and C laboratories will remain $100. (See Table I). We invite 
comments if there are other alternatives which might be adopted in 
place of this flat registration fee.
    Fee for Revised Certificates--The regulations require laboratories 
to provide notification of certain changes such as name, location, 
director, and deleting or adding services as outlined in Sec. 493.639. 
Prior to the expiration of the certificate, these changes require 
payment of a fee for the issuance of a revised certificate. Based on 
the costs involved to issue a revised certificate, this fee will 
increase from $50 to $75. It should be noted that, to date, no fees 
have been charged for issuing revised certificates, due to changes in 
the CLIA program such as the addition of PPM procedures; categorization 
of additional waived tests and revisions to other federal regulations 
pertaining to laboratory ownership.
    Biennial Certificate Fees--The statute requires fees be imposed to 
cover the costs of administering the CLIA program. Even though 
significant cost reductions in the program have already occurred, the 
certificate fees must be increased to maintain program integrity. In 
order to equitably distribute the biennial certificate fees, the 
average annual testing volume for laboratories in

[[Page 45818]]

Schedules LVA through J were considered. Table III in this section 
lists average annual testing volumes for the various schedules of 
laboratories.
    The regulations at Sec. 493.643(c) require that certificate fees be 
based on the ``number of specialties and volume of testing.'' It was 
determined that an equitable manner to spread costs while conforming to 
regulatory requirements would be to set certificate fees for Schedules 
C through J laboratories on an average per-test basis. Fees for 
Schedules LVA, A, and B laboratories would be set at a minimum amount--
$150. Use of this basis to determine fees is expected to result in a 
more appropriate allocation of cost across all fee schedules. (See 
Table III).
    Economies of scale among laboratories are accounted for by applying 
reductions in the per-test rates as the number of specialties and 
volume of a laboratory increases. New fees for laboratory Schedules C 
through J are calculated by multiplying the average testing volume by 
the corresponding per-test rate. This will result in a fairer 
allocation of costs than the current flat fees for small, medium and 
large laboratories. The revised fees are summarized below.
    <bullet> Certificate of Waiver (Sec. 493.638). The biennial fee for 
this certificate is being increased from $100 to $150. This increase is 
necessary to cover added administrative costs to the CLIA program as 
more tests are waived. Laboratories may perform these tests at any 
volume and pay only $150 biennially.
    <bullet> Certificate for Provider-Performed Microscopy (PPM) 
Procedures (Sec. 493.638). The biennial fee for the certificate is 
being increased from $150 to $200. This increase in fees is required to 
cover administrative costs associated with this subcategory of testing. 
This certificate allows a laboratory to conduct both PPM procedures and 
waived tests, at any volume and pay no other fee.
    <bullet> Certificate of Compliance and Certificate of Accreditation 
(Sec. 493.638).
    <bullet> Schedule A Low Volume. If the laboratory performs not more 
than 2,000 laboratory tests annually, the biennial certificate fee will 
be $150.
    <bullet> Schedule A. If the laboratory performs tests in no more 
than three specialties of service with a total annual volume of more 
than 2,000, but not more than 10,000 laboratory tests, the biennial 
certificate fee will be $150.
    <bullet> Schedule B. If the laboratory performs tests in at least 
four or more specialties of service with a total annual volume of not 
more than 10,000 laboratory tests, the biennial certificate fee will be 
$150.
    <bullet> Schedule C. If the laboratory performs tests in no more 
than three specialties of service with a total annual volume of more 
than 10,000, but not more than 25,000 laboratory tests, the biennial 
certificate fee will be $430.
    <bullet> Schedule D. If the laboratory performs tests in at least 
four or more specialties with a total annual volume of more than 
10,000, but not more than 25,000 laboratory tests, the biennial 
certificate fee will be $440.
    <bullet> Schedule E. If the laboratory performs more than 25,000, 
but not more than 50,000 laboratory tests annually, the biennial 
certificate fee will be $650.
    <bullet> Schedule F. If the laboratory performs more than 50,000, 
but not more than 75,000 laboratory tests annually, the biennial 
certificate fee will be $1,100.
    <bullet> Schedule G. If the laboratory performs more than 75,000, 
but not more than 100,000 laboratory tests annually, the biennial 
certificate fee will be $1,550.
    <bullet> Schedule H. If the laboratory performs more than 100,000, 
but not more than 500,000 laboratory tests annually, the biennial 
certificate fee will be $2,040.
    <bullet> Schedule I. If the laboratory performs more than 500,000, 
but not more than 1,000,000 laboratory tests annually, the biennial 
certificate fee will be $6,220.
    <bullet> Schedule J. If the laboratory performs more than 1,000,000 
laboratory tests annually, the biennial certificate fee will be $7,940. 
The revised certificate fees in schedule C through J are based on the 
average annual number of tests performed.
    The following examples illustrate how these fees are determined:
    <bullet> The average annual test volume for laboratories in 
Schedule D is 16,445 tests each year. The certificate fee, rounded to 
the nearest $10, for those laboratories is $0.0269 times 16,445 annual 
tests, or $440.
    <bullet> Similarly, the average annual test volume for Schedule J 
laboratories is 2,886,393. At a per-test rate of $0.00275, Schedule J 
laboratories will pay a biennial certificate fee, rounded to the 
nearest $10, of $7,940.

                                 Table I.--Reductions in Most Registration Fees                                 
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                                                              Current          Reduction in     New registration
                      Type of lab                         registration fee   registration fee         fee       
----------------------------------------------------------------------------------------------------------------
Waived.................................................                N/A                N/A                N/A
PPM....................................................                N/A                N/A                N/A
Low Vol A..............................................               $100                 $0               $100
Schedule A.............................................                100                  0                100
Schedule B.............................................                100                  0                100
Schedule C.............................................                100                  0                100
Schedule D.............................................                350                250                100
Schedule E.............................................                350                250                100
Schedule F.............................................                350                250                100
Schedule G.............................................                350                250                100
Schedule H.............................................                600                500                100
Schedule I.............................................                600                500                100
Schedule J.............................................                600                500                100
----------------------------------------------------------------------------------------------------------------


                                       Table II.--CLIA Laboratory Schedule                                      
----------------------------------------------------------------------------------------------------------------
                                       Number of                             Current biennial     New biennial  
           Type of lab                specialties       Annual test volume   certificate fee    certificate fee 
----------------------------------------------------------------------------------------------------------------
Waived..........................  N/A................  N/A................               $100               $150
PPM.............................  N/A................  N/A................                150                200

[[Page 45819]]

                                                                                                                
Low Vol A.......................  N/A................  Less than 2,000....                100                150
Sch. A..........................  3 or Fewer.........  2,000-10,000.......                100                150
Sch. B..........................  4 or More..........  2,000-10,000.......                100                150
Sch. C..........................  3 or Fewer.........  10,001-25,000......                100                430
Sch. D..........................  4 or More..........  10,001-25,000......                350                440
Sch. E..........................  N/A................  25,001-50,000......                350                650
Sch. F..........................  N/A................  50,001-75,000......                350              1,100
Sch. G..........................  N/A................  75,001-100,000.....                350              1,550
Sch. H..........................  N/A................  100,001-500,000....                600              2,040
Sch. I..........................  N/A................  500,001-1,000,000..                600              6,220
Sch. J..........................  N/A................  Greater than                       600              7,940
                                                        1,000,000.                                              
----------------------------------------------------------------------------------------------------------------


                                                     TABLE III.--CLIA Laboratories by Testing Volume                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Current biennial  Number of labs as    Average annual    Biennial per test      New biennial  
                      Type of lab                            cert. fee           of 3/96         testing volume           rate             cert. fee    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Waived.................................................               $100              70948                N/A            N/A                     $150
PPM....................................................                150              26707                N/A            N/A                      200
Low Vol A..............................................                100              18307                852            N/A                      150
Sch. A.................................................                100              11204               4911            N/A                      150
Sch. B.................................................                100               2864               5509            N/A                      150
Sch. C.................................................                100               3599              15969             $0.027                  430
Sch. D.................................................                350               1840              16445              0.0269                 440
Sch. E.................................................                350               2990              35928              0.0181                 650
Sch. F.................................................                350               1417              61669              0.0179               1,100
Sch. G.................................................                350                938              87145              0.0178               1,550
Sch. H.................................................                600               3566             226237              0.0090               2,040
Sch. I.................................................                600                988             711213              0.00875              6,220
Sch. J.................................................                600               1058            2886393              0.00275              7,940
--------------------------------------------------------------------------------------------------------------------------------------------------------

VII. Comment Opportunities and Alternatives Considered

    We are publishing this as a general notice with opportunity to 
comment because it relates only to the application of Sec. 493.638 by 
the agency, and is limited to the issue of the amount of the CLIA 
certificate fee. While we will be accepting public comment on this 
notice, a fee increase is required by statute because section 
353(m)(3)(A) of the PHS Act mandates that certificate fees cover the 
cost of general CLIA program administration. Moreover, we believe this 
fee increase is consistent with the methodology set forth in our 
regulations at Secs. 493.638 and 493.649.
    We will consider all comments received within 60 days of the date 
of publication of this notice, and if necessary, we may revise the 
certificate fees laid out in this notice based on issues raised by 
commenters. Other alternatives to the changes in fee schedules may 
exist, and we will consider options suggested by commenters. If we 
determine that changes in the certificate fees are required in response 
to public comments, we will announce the changes in a subsequent 
notice. Otherwise, the certificate fees announced in this notice will 
become effective on January 1, 1998.
    We considered several options before establishing the certificate 
fees. The first option we considered was to establish a single 
registration and certificate fee for all laboratories, regardless of 
their size. This option was first presented in the proposed rule on 
CLIA program fees in May 1990 (55 FR 31758). After further discussion 
and consideration of public comments, it was rejected because a single 
certificate fee would create an unfair burden on small laboratories.
    The second option we considered was to retain separate registration 
and certificate fees for small, medium, and large laboratories, using 
the existing size categories; that is, for purposes of assessing fees, 
we considered laboratories in Schedules LVA through C as small volume, 
in Schedules D through G as medium volume, and in Schedules H through J 
as large volume. We dismissed this option because, in order to generate 
adequate revenue, the increase in fees from one category to another 
would be too extreme. Laboratories with nearly identical test volumes 
could, under this option, pay extremely disparate fees.
    We also considered basing certificate fees on each laboratory's 
annual revenue, but dismissed this option because accurate information 
regarding revenues for each laboratory is not readily available. 
Therefore, after careful evaluation of these options, it was determined 
that a set fee would be assessed for certificates of waiver, PPM 
procedures, registration and Schedules LVA, A and B laboratories. 
Certificate of compliance and certificate of accreditation fees, for 
Schedules C through J laboratories, are based on the average annual 
test volume and number of specialties. This was the most equitable and 
practical method for determining fees. This approach has the merit of 
assessing larger fees to large volume laboratories, while setting their 
cost per test performed at a lower rate than that of smaller 
laboratories to acknowledge economies of scale. This approach is based 
on the fee methodology already set forth in the CLIA regulations.
    We will continue to review these certificate fees and may adjust 
the fee amounts in the future as additional experience in program 
implementation is gained. We are considering whether to establish a 
mechanism to adjust fees periodically for inflation and invite specific 
suggestions on mechanisms, including specific indices, which could be 
used to accommodate adjustments

[[Page 45820]]

based on inflation and changes to the program. Any future changes in 
the fees will be preceded by an announcement in the Federal Register.

VIII. Impact Analysis

A. Regulatory Impact Statement

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless the Secretary certifies that a final rule will not 
have a significant economic impact on a substantial number of small 
entities. For purposes of the RFA, all laboratories are considered to 
be small entities. Individuals and States are not included in the 
definition of a small entity. Although this notice would not have a 
significant economic impact on a substantial number of small entities, 
we are preparing the following voluntary regulatory flexibility 
analysis.
    This notice revises the fees for all CLIA certificates. The effect 
of this notice will vary widely among laboratories. This notice is 
projected to generate certificate fees of $50 million on a biennial 
basis or $25 million annually.
    Section 353(m) of the PHS Act, as amended by CLIA, requires HHS to 
impose fees for the issuance and renewal of certificates and for 
determining program compliance. The statute requires that all 
certificate holders share in the costs that the government incurs in 
administering the CLIA program. The statute states that the fees 
imposed vary by group or classification of laboratory, based on such 
considerations as the Secretary determines are relevant. Hence, the 
imposition of fees is not a discretionary action on the part of HHS or 
HCFA.
    The CLIA fee collection rule, published on February 28, 1992, 
established 12 classifications of laboratories based on volume and 
scope of services. (A thirteenth schedule, certificate for PPM 
procedures, was added January 19, 1993.) These classifications are 
unchanged by this notice. Previously, laboratories applying for 
certificate of waiver or certificate of PPM procedures paid a set fee. 
Laboratories applying for certificates of compliance or accreditation 
paid one of three registration and certificate fees determined by 
number of specialties and volume of services.
    In developing the CLIA regulations and implementation policies, we 
were cognizant of the costs and attempted to avoid unnecessary burden 
on laboratories due to unreasonable costs of regulation, particularly 
on small providers in rural areas. The graduated fee amounts also were 
adopted in order to avoid any undue burden on small laboratories and 
represented our best attempt, using the limited data available at the 
time, to apportion the estimated costs of administering CLIA while 
maintaining site neutrality among the projected universe of 
laboratories.
    In the comprehensive regulatory impact analysis of the February 28, 
1992, regulations implementing CLIA, we presented several assumptions 
regarding the universe of laboratories and the projected distribution 
of laboratories by certificate fee category. Our most conservative 
assumption estimated a universe of 180,000 laboratories, with 50 
percent of the laboratories paying the lowest fee of $100 by virtue of 
being classified as waived or small, and 50 percent paying either $350 
or $600, depending on whether they were classified as medium or large.
    Our 1992 projections have proven to be incorrect. At that time, 
there was no way to accurately predict that the total number of 
laboratories registering under CLIA would fall short of our estimate, 
and the number of waived and small laboratories would exceed our 
projection. Recent data indicate that approximately 90 percent of the 
registered laboratories pay minimum fees because they hold certificates 
of waiver, PPM procedures, or are categorized as small based on volume 
of testing. The remaining 10 percent (Schedules C through J) have 
average annual testing volumes greater than 10,000.
    Current total CLIA revenues generated are approximately $25 million 
annually and are not sufficient to fully support the continued 
operation of the CLIA program and retain the intended goals of the 
program. Even with the reduction in administrative activities, we 
estimate that the cost of the program will be approximately $37.5 
million annually or $75 million biennially. After enactment of this 
certificate fee schedule, we estimate that annual CLIA revenues, 
through a combination of certificate fees and additional fees, will 
maintain the viability of the program.
    Once this notice is effective, there will be a set fee for 
certificates of registration, waiver, PPM procedures and the 
certificates for Schedules LVA, A and B laboratories. For Schedules C 
through J laboratories, the certificate fee changes in this notice 
result in increases in fee amounts from one schedule to another, based 
on test volume. These changes also retain the policy of allowing the 
laboratories doing the least amount of testing to pay the lowest 
certificate fee necessary to cover the costs of implementing the CLIA 
requirements. This is a minimal change because laboratories holding a 
certificate of waiver, certificate for PPM procedures, or laboratories 
falling in Schedules LVA through B will each see an increase of only 
$50 over a 2 year period, amounting to less than $.07 per day.
    Currently, laboratories pay $100, $350, or $600 for a certificate 
of registration, depending on their volume of testing. The new 
certificate of registration fee for all laboratories will be $100, 
regardless of testing volume. We believe this approach is in keeping 
with our policy of attempting to minimize fee increases for 
laboratories performing a smaller volume of testing, and at the same 
time, simplifies the registration process.
    A certificate of registration allows the laboratory to begin 
performing testing before compliance is assessed. We will maintain the 
policy of not requiring a certificate of registration for laboratories 
seeking a certificate of waiver or a certificate for PPM procedures; 
therefore, these laboratories' will not have to pay a certificate of 
registration fee. We will assess these laboratories fees biennially 
only for their respective certificate of waiver or certificate for PPM 
procedures.
    We are soliciting comments on whether assessing even a new minimal 
$100 registration fee for laboratories seeking a certificate of 
compliance or certificate of accreditation creates a barrier into the 
market place. If so, specifically how do such fees create a barrier 
into the market place?
    When we examined total fees related to the volume of tests 
performed, we concluded that disproportionally small fees were being 
collected from large laboratories. Under the current certificate fees, 
laboratories holding a certificate of waiver, certificate for PPM 
procedures and laboratories falling in Schedules LVA, through B 
(approximately 130,000 or 89 percent of the total number of 
laboratories) pay 70 percent of the administrative costs of the CLIA 
program through the certificate fees. Under the new certificate fees, 
the same laboratories pay only 42 percent of the administrative costs. 
We were conservative in raising the certificate fees for small 
laboratories in order to be sensitive to their need to provide direct 
patient care and not impede access to quality laboratory testing. 
Larger laboratories, based on the volume of tests, reap a greater 
financial benefit than the smaller laboratories due to the conceivable 
economies of scale and, therefore, have unlimited potential to provide 
service to a larger share of the

[[Page 45821]]

market. In an effort to distribute costs more equitably among the 
various types and sizes of laboratories, while generating sufficient 
revenue, we now rely more heavily on average annual test volumes to 
determine certificate fees. The fees for certificate of waiver or PPM 
procedures have been, and will continue to be, a flat fee irrespective 
of volume of testing performed. The $50 fee increase for these 
laboratories is based on expenditures related to these types of 
certificates. These costs include: reviewing test systems for 
categorization as waived or PPM procedures; maintaining and updating 
the data systems; issuing certificates; issuing test categorization 
notices; collecting fees; and analyzing data.
    For other certificate types, instead of using the three-tiered fee 
schedule based on general ranges of test volume, we are maintaining the 
11 laboratory schedules, LVA through J, previously established on 
February 28, 1992. The new biennial certificate fees for each schedule 
are computed using a decreasing per test rate as the volume of tests 
increases. This per-test rate is multiplied by the average annual test 
volume performed in each schedule, with the exception of the smallest 
laboratories, LVA through B, being charged a certificate fee of $150. 
Laboratories in Schedules C through G, which encompass test volumes up 
to 100,000, each will pay a certificate fee based on the per-test rate. 
(See Table III) Between Schedules G and H laboratories, the per-test 
rate is being reduced by almost one half, because of the dramatic 
increase in volume for Schedule H laboratories. These test volumes 
range from more than 100,000 to 500,000. Another very large increase in 
volume occurs for Schedule J laboratories, which perform over 1 million 
tests annually. Between Schedules I and J laboratories, the per-test 
rate is being reduced by approximately three-fourths, in recognition of 
the large increase in the test volume of these laboratories.
    The revisions to the CLIA certificate fees will significantly alter 
the biennial certificate fees for some laboratories. Table III presents 
the approximate number of laboratories in each laboratory type and 
their new biennial certificate fees.
    The effect of this new fee schedule will vary widely among clinical 
laboratories. Nearly 62 percent of the laboratories now hold 
certificate of waiver or certificate for PPM procedures and pay a flat 
certificate fee. For certificates of waiver, laboratories will pay $150 
biennially and for certificates for PPM procedures, the biennial fee 
will be $200. These $50 biennial increases amount to less than $0.07 
per day per laboratory. The new fees take into account the increased 
number of tests that may be performed under these types of 
certificates.
    Laboratories with a change in name, location or in any of the 
conditions specified in Sec. 493.639 of our regulations will find the 
fee for a revised certificate increased by $25, from $50 to $75.
    As previously stated, we are required by statute to establish fees 
to support the CLIA program. Although certificate fees increase 
proportionately, we believe that by relating the fee more precisely to 
the number of tests a laboratory performs each year, the costs of 
administering CLIA will be distributed more equitably across all 
laboratories. The laboratories bearing the largest increase in 
certificate fees, Schedules C through J, account for more than 90 
percent of the annual test volume in this country. Because of their 
large test volumes we have applied the lowest possible per-test rates 
to those laboratories, consistent with generating sufficient revenues. 
We concluded that basing certificate fees on the average annual test 
volume for each schedule and a decreasing per-test rate was the most 
equitable and practical method for constructing the fee schedule. (See 
Table III) This approach has the merit of charging larger laboratories 
less per test performed, while still basing the overall fees directly 
on the volume of testing. These fees will result in large increases in 
certificate fees for the laboratories with the highest test volumes. 
These differences are directly proportional to test volumes, resulting 
in laboratories with similar volumes paying similar fees.
    For the reasons given above, we certify that this proposed fee 
schedule would not have a significant effect on a substantial number of 
small entities and that a regulatory flexibility analysis is not 
needed.

B. Rural Hospital Impact Statement

    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a rule may have a significant impact on the 
operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 50 beds. We are not preparing a 
rural impact statement since we have determined, and certify, that this 
notice would not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93-778, Medical 
Assistance Program; No. 93.773 Medicare--Hospital Insurance Program; 
and No. 93-774, Medicare--Supplementary Medical Insurance Program)

    Dated: December 20, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
    Dated: December 11, 1996.
David A. Satcher,
Director, Centers for Disease Control and Prevention.
    Dated: March 26, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-23084 Filed 8-28-97; 8:45 am]
BILLING CODE 4210-01-P