Physician Labs Lacking State Registration Will Have Federal Lab Certificates Terminated
[Posted 03/16/06]

Physician-operated laboratories that are not in compliance with a newly implemented state law that requires state registration/licensure will have their federal CLIA laboratory certificates terminated as early as next week. Without a CLIA certificate, labs will not be able to receive Medicare or Medicaid payments.

The labs that are impacted by this law have received multiple notices from the Laboratory Field Services (LFS) division of the California Department of Health Services.

The state legislature in 1996 passed a law requiring 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 to be either licensed by or registered with DHS, subjecting them to fees and regulations beyond those imposed under the federal Clinical Laboratory Improvement Amendments (CLIA) program. Although the law requiring this dual oversight took effect in 1996, the regulations were delayed in large part due to CMA opposition. It has always been CMA’s position that dual fees and dual regulations create unnecessary costs and administrative obligations, without any benefit to patients.

Despite CMA objections, DHS finally implemented the dual oversight regulations last summer. DHS is seeking an exemption from federal CLIA requirements, which would allow physician labs in California to be licensed by DHS alone. CMA is currently sponsoring a bill (AB 2452) that would suspend state licensure/registration requirements until a federal CLIA waiver is obtained. In the meantime, however, labs must comply with the new regulations.

Physician labs that were in existence prior to January 1, 1996—when the original lab licensing law took effect—are 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 are exempt from the state licensure requirements, but do have to register with the state. Labs must renew their registration and licenses annually.

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