Why Theranos Is a Big Test for CMS and CLIA

OFFICIALS AT THE FEDERAL CENTERS FOR MEDICARE & MEDICAID SERVICES are at what may be the most important crossroads in the history of clinical laboratory regulation since Congress passed the CLIA 1988 legislation. Will CMS pursue the severe sanctions it disclosed to Theranos, Inc., and force the lab to close? Or will it soften its position as a result of negotiations underway with the clinical lab company in Palo Alto, Calif.?

Some clinical pathologists say, “Given the findings of ‘serious deficiencies that could ‘cause immediate patient harm,’ CMS must revoke the CLIA license and close the lab.” Others believe CMS won’t act decisively, saying, “CMS will never close Theranos due to bureaucratic indecision and politics.”

CMS put itself in this position as a result of how it interprets and implements the language of CLIA 88. At the inception of CLIA, CMS officials argued that if all lab deficiencies—major and minor—were made public, they could not run an effective inspection and compliance program. Thus, CMS has kept hidden from Congress, the American public, and the press all the regular inspection reports of the nation’s medical laboratories.

Of equal significance, CMS has also hidden the less-than-stellar performance of the private organizations granted deeming status to inspect and accredit labs for compliance with CLIA 88. Last year, Ellen Gabler, an investigative reporter for the Milwaukee Journal Sentinel, explained the problem in an article, “Weak oversight allows lab failures to put patients at risk.” Published May 17, 2015, the article explains the little-known weaknesses in the nation’s anemic clinical laboratory oversight system.

Why is it, in recent years, that CMS has pulled the licenses of well-run, highly respected clinical labs for the inadvertent referral of proficiency testing (PT) specimens? Yet, for any other CLIA violation, it has imposed minor slaps to the wrists of offending lab organizations. It is a fact that respected labs do go off the rails and their problems will often go undiscovered for years by their accrediting bodies and CLIA assessors. The lab problems in 2004 at Maryland General Hospital are a prime example.

Theranos asserts it has complied with CLIA and not exposed patients to harm. The CMS inspection report is persuasive evidence to the contrary. Now, the question is: Will CMS do what’s right on behalf of the American public?


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