Physician-Operated Labs Must Now
Have Federal and State Licenses
[Posted 05/05/05]

Despite CMA objections, the California Department of Health Services (DHS) has gone ahead with its plan to require physician-operated laboratories to be licensed or registered with the state. This new state oversight will be in addition to current federal oversight. Effective immediately, physician office laboratories established on or after January 1, 1996, must be either licensed by or registered with DHS, subjecting them to fees and regulations beyond those currently imposed under the federal Clinical Laboratory Improvement Amendments (CLIA) program.

Although the law requiring this dual oversight took effect in 1996, the regulations were never implemented, due to CMA’s opposition. It has always been CMA’s position that dual fees and dual regulations will only create unnecessary administrative hassles, without any true benefit to patients.

Previously, physician-operated laboratories (labs operated in a physician’s office that are used by five or fewer physicians) that perform moderate- and high-complexity tests did not require state licensure. Physician labs that were in existence prior to January 1, 1996—when the original lab licensing law took effect—will continue to be exempt from state licensure requirements, providing they have not since that date had a change in status (e.g., location, partners).

Laboratories that perform only “waived” tests (classified by FDA or CDC to be so simple that there is little risk of error) and labs that perform only “provider-performed microscopy” tests will also be exempt from the state licensure requirements, but will have to register with the state.

CMA will work with DHS to make sure that licensure and certification processes are not overly complicated or burdensome to physicians. We will provide details on these processes via CMA Alert as soon as they become available.

DHS plans to seek an exemption from federal CLIA requirements, which would allow physician labs in California to be licensed by DHS alone. CMA will work with DHS to pursue this option. DHS did request an exemption in the late 1990s, but the idea was abandoned because the federal government was asking the state to pay a $2.5 million-a-year “exemption fee.” DHS hopes that a federal exemption will be more viable this time around.

Contact: Robin Flagg, 415/882-5110 or rflagg@cmanet.org.