A clinical lab is generally defined as a facility that examines specimens derived from humans for the purpose of disease diagnosis, prevention, and treatment, or health assessment of individuals. While hospital and interstate labs were previously subject to regulation, CLIA strengthened federal requirements and extended them to most other clinical labs, including physician office labs. For example, CLIA strengthened personnel requirements for lab workers, strengthened proficiency testing that evaluates the accuracy of lab testing between surveys, and created a range of sanctions to enforce compliance. Most clinical labs regulated under CLIA must obtain a certificate from CMS and pay fees every 2 years to cover the costs of administering the CLIA program, including surveys and other oversight activities. The fees vary based on the complexity and volume of testing performed. Lab tests are categorized as waived, moderate, or high complexity. Approximately 81 percent of all labs (about 157,000) are not subject to routine biennial surveys because they perform (1) “waived” tests, which are examinations and procedures that have an insignificant risk of erroneous results, including those approved for home use or determined to employ methodologies so simple or accurate that the likelihood of erroneous results is negligible; 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. Since the early 1990s, the number and proportion of labs subject to surveys have declined, while the number and proportion conducting waived tests have increased. Surveys examine lab compliance with CLIA program requirements in several areas including: personnel qualifications, proficiency testing, quality control, quality assurance, and recordkeeping. Personnel: CLIA sets minimum qualifications for all persons performing or supervising moderate- or high-complexity lab tests and specifies responsibilities for each position. Proficiency testing: Surveyed labs must participate in an approved external proficiency testing program, which evaluates the accuracy of laboratory testing. Under this requirement, labs purchase samples with unknown characteristics several times each year from an approved 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. The results of proficiency testing for all inspected labs are transmitted to CMS and maintained in a database. Quality control: Labs must have a process for routinely monitoring personnel, testing equipment, and the testing environment to ensure proper operation and accurate results. Quality assurance: Labs must follow their plan to monitor the overall operation of the laboratory on an ongoing basis and must resolve identified problems that affect the quality of their testing. Recordkeeping: Labs must maintain an audit trail of testing that documents specimen integrity and test performance for all phases of the test process from the test order to the test report. In general, labs have a choice of who conducts their surveys—state survey agencies using CLIA inspection requirements or other survey organizations that use requirements CMS has determined to be at least equivalent to CLIA’s. CMS contracts with state survey agencies in most states to inspect labs against CLIA requirements. 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. For example, when inspecting labs engaged in moderate- and high-complexity testing, New York and some accrediting organizations also look at the labs’ procedures for conducting “waived” tests, which is not required under CLIA. Figure 1 lists the three types of survey organizations and indicates whether they survey labs under CLIA requirements, or use their own CLIA-equivalent requirements. It also shows the percentage of labs performing moderate- to high-complexity testing surveyed by each type of organization. In general, state survey agencies, COLA, and Washington’s CLIA-exempt program survey physician office labs, while New York’s CLIA-exempt program, CAP, and JCAHO survey hospital labs. Survey organizations (1) conduct surveys and complaint investigations, and (2) monitor proficiency test results submitted by surveyed labs three times a year. Surveys are typically conducted by former or current lab workers, who assess lab compliance with CLIA or CLIA-equivalent requirements. Most lab inspections are announced, that is, the lab has advance notice of when the survey will occur. Generally, surveyors verify that lab personnel are appropriately qualified to conduct testing, evaluate proficiency test records, check equipment and calibration to ensure that appropriate quality control measures are in place, and determine whether the lab has a quality assurance plan and uses it to, among other things, appropriately identify and resolve problems affecting testing quality. Surveys also include an educational component to assist labs in understanding how to comply with CLIA requirements. The duration of a survey generally depends on the size—in terms of the number of tests conducted—and complexity of a lab as well as the number of surveyors. Thus, a survey conducted at a small lab may only take a few hours to complete, while a survey at a large hospital lab may take a survey team a full week or more. In addition to inspections, survey organizations are responsible for determining the seriousness of and investigating all complaints. For those complaints that are determined to pose immediate jeopardy—an imminent and serious threat to patient health and a significant hazard to public health—CMS requires that the investigation be initiated within 2 working days. Complaints may be investigated on-site or through communications between the survey organization and the lab. Complaint investigations for all survey organizations are unannounced. Lab survey requirements are classified as either “standard-” or “condition-” level. Generally, condition-level requirements are made up of one or more related standard-level requirements. For example, the condition-level requirement on enrollment and testing of samples through a proficiency testing program has two related standard-level requirements: (1) enrollment, which includes requirements for the lab to provide the name of the program it has enrolled in to the Department of Health and Human Services and authorize the release of testing data to the department; and (2) testing, which specifies that the samples must be tested in the same manner as any specimen and prohibits referring the test samples to another lab for analysis. Deficiencies are also characterized as standard- or condition-level based on the requirement in which the deficiency occurs. Deficiencies in standard-level requirements, that is, standard-level deficiencies, denote problems that generally are not serious, while condition-level deficiencies are cited when the problems are serious or systemic in nature. A serious problem is defined as an inadequacy in a lab’s quality of services that adversely affects, or has the potential to adversely affect, the accuracy and reliability of patient test results. When deficiencies are found during surveys or complaint investigations, labs are required to submit a plan of correction, detailing how and when they will address the deficiencies. Additionally, CMS can impose principal or alternative sanctions, or both. Principal sanctions include revocation of a CLIA certificate, cancellation of the right to receive Medicare payments, or limits on testing. Revocation of a CLIA certificate is equivalent to termination from the CLIA program. Alternative sanctions are less severe and include civil money penalties or on-site monitoring. For condition-level deficiencies that do not involve immediate jeopardy, labs have an opportunity to correct the deficiencies, which we refer to as a grace period, before the sanctions are imposed. If a lab is unable to correct a deficiency during this grace period, CMS determines whether to impose a sanction and the type of sanction. CMS, 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 and exempt-state program inspections, but state survey agency staff conduct the validation reviews of accrediting organization inspections. 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. Starting in 1999, CMS required that at least one validation review be conducted simultaneously with an accrediting organization’s survey, a step intended to encourage an exchange of ideas and approaches among surveyors. CMS also encourages the use of simultaneous reviews of state survey agency inspections. By law, the number of labs selected for validation reviews must be sufficient to allow a reasonable estimate of the performance of each accrediting organization being assessed. CMS requires fewer validation reviews of state survey agency lab surveys (1 percent) than for those of exempt-state programs or accrediting organizations (5 percent). Beginning in 2003, CMS regional offices began reviewing the activities of state survey agencies against a set of 13 performance standards. The standards cover areas such as the timeliness of lab inspections, surveyor personnel qualifications and training, CLIA data management, and the handling of complaints. CMS’s goal is to evaluate each state survey agency’s ability to carry out its CLIA responsibilities and to make improvements.