Inadvertent PT “Errors” Trigger CLIA Sanctions

Confusing rules for proficiency testing lead to harsh penalties, including change in ownership

CEO SUMMARY: Despite taking appropriate steps to complete proficiency testing (PT), in recent years an unknown number of labs were determined to be in violation of CLIA requirements. Federal regulators are enforcing penalties ranging from suspension of the labs’ licenses to transition to new lab ownership for two years. A lawyer involved in several of these cases says labs are confused about how to follow proper procedures without violating proficiency test rules.

IN RECENT YEARS, an unknown number of labs have found that taking all the proper steps to complete proficiency testing (PT) led to violations of federal CLIA rules and suspension of their laboratory licenses. In extreme cases, federal officials have required new lab ownership for two years.

Earlier this month, Foster’s Daily Democrat reported that the CLIA certificate was to be revoked for the laboratory at 178- bed Wentworth-Douglass Hospital (WDH) in Dover, New Hampshire, effective May 31, 2011, but that action was deferred by government officials.

As reported by the newspaper, the laboratory at WDH followed proper protocol when conducting a PT and sent the sample to a laboratory at a sister facility for confirmation. But because the sample was for PT, the federal Centers for Medicare & Medicaid Services (CMS) ruled that sending out the sample was a violation of CLIA rules.

The hospital paid a fine of $60,000 and has operated under an agreement with CMS since January. Under the agreement, WDH voluntarily surrendered its CLIA license for one year, beginning January 1, 2012. Now the lab sends out tests to a lab it does not own or operate. (See sidebar for more details.)

Other labs that have inadvertently violated CLIA’s PT rules have been forced to transition to new ownership for two years, stated Jane Pine Wood, an attorney with McDonald Hopkins. One large regional laboratory incurred costs of about $2 million for such a transition. “That is money that could have been put to much better use, such as for patient care,” observed Wood. “It’s hard to argue that this $2 million is money well spent.

New Owners Required

“In the past five years, I have seen several PT-related settlement agreements with CMS and laboratories and/or lab directors that I represent. Two such agreements were signed in recent weeks,” she explained. “To preserve the confidentiality of these settlements, I can discuss only the general terms of these agreements.

“In the cases I’ve seen, there are variations on a theme—that theme being that all instances were relatively inadvertent,” observed Wood. “The CLIA regulations say that for proficiency testing, labs should treat the PT the same way they treat a patient specimen. But this rule is problematic if your lab’s procedure says you should send out certain tests. If you can’t send out a PT, there may be situations in which there is a conflict.

“One penalty is given out repeatedly as a result of protocols used in most labs,” Wood said. “Let’s say it’s a test for HIV. Most labs do not do their own HIV antibody test in house. Instead, they send these out.

“So, if they get a PT that is positive for HIV, they record the result, and then check the lab protocol on how to handle a positive HIV test. At most labs, a positive result for HIV requires sending out the test for confirmation,” she said.

“I know of cases where there are email messages from the clinical lab scientists who run the PTs,” she added. “They ask their superiors, ‘Am I supposed to send this out or not? It’s PT and so I’m confused about the regulations.’ Unfortunately, these PT sample were put in boxes for referral to other laboratories and went out.

“Generally, CMS takes the position that the definition of intentional referrals is that you intended to send it out—not that you intended to do something wrong,” commented Wood. “That definition of intent is different from the definition used to define intent under any law with a substantial penalty. Under the law, usually ‘intent’ means you intended to violate the law.

Defining ‘Intentional’

“In the various CMS regions, there are differences regarding interpretation of ‘intent’ and therefore differences in how penalties are applied,” she added. “But CMS generally has recognized that there is no improper intent; a case like this with HIV was simply a misunderstanding. In fact, at least one CMS official has been quoted as saying that the agency recognized there is legitimate confusion in this area.

“Usually, CMS takes one of two general approaches with these cases,” observed Wood. Each approach is not related to the seriousness of the violation but with the region where the problem arose.

“One approach involves having the lab pay a fine and invest in retraining staff,” she continued. “The other approach is to require a new owner of the laboratory for two years.

Inadvertent PT Error

“I have a client that will transition the laboratory to a new owner in the next week,” she added. “Again, this ownership change came after an inadvertent error in PT involving an HIV test. However, the estimated cost to convert this lab to new ownership will approach $2 million. A friendly pathology group will run the lab for two years. The clinical laboratory is significant size, involving multiple hospitals, nursing homes, and a sizeable out-reach business.

“This laboratory organization must change every contract it has and revise all documentation to reflect the new name,” she said. “That’s a lot of contracts because the lab needs new provider numbers, new tax identification numbers, new benefit plans, and new retirement plans. For this large regional lab, the transition affects everything, including new policies, procedures, letterhead, requisitions, leases, and reagent and equipment contracts.

“Such a transition can be extraordinarily costly and those costs run counter to the goal of cutting healthcare spending,” Wood commented. “Some officials at CMS recognize that this extreme measure doesn’t make sense. But, to be honest, this is not the only case.

“In recent years, we had a similar case at a rural critical access hospital where a laboratory worker mistakenly put a PT sample in the bin to be sent out,” she said. “It was the weekend and the laboratory was cited for violating the PT rules. But the clinical lab didn’t even have that test available on its testing menu, so how could it have cheated?

Proficiency Test Issue Causes NH Hospital Lab To Voluntarily Surrender CLIA License for One Year

OVER THE PAST FIVE YEARS, attorney Jane Pine Wood of McDonald Hopkins has seen several cases in which labs have been penalized severely for inadvertent errors when conducting proficiency tests (PT). She believes an inadvertent PT-procedural error may have been the cause of trouble for the laboratory of Wentworth-Douglass Hospital, located in Dover, New Hampshire.

“Looking at this case, it’s difficult to know actually what happened, but my first reaction was that any violation of the PT rules could easily have been inadvertent,” she said.

“Fortunately, in the Northeast region, the penalties from the Centers for Medicare & Medicaid Services (CMS) in these cases are not as severe as they are in other regions,” Wood commented.

A news story published last week in Foster’s Daily Democrat reported that the laboratory at WDH was informed in a letter from CMS in March 2011 that it violated the PT procedures. Federal officials conducted a “complaint survey” at the WDH lab in February 2011.

The inspectors found the lab out of compliance with CLIA for “reporting proficiency testing results obtained from another laboratory,” the newspaper reported. “The state claimed that WDH had sent its proficiency assessment samples to another lab and turned in the results as their own,” the newspaper reported in an article May 9.

A hospital spokeswoman denied the accusation. State officials referred the case to CMS. Wentworth-Douglass Hospital appealed the decision and then settled with federal officials, the newspaper reported. The hospital paid a fine of $60,000 and put $126,000 in an account to pay for expenses related to quality improvement initiatives. It also surrendered its lab’s CLIA certificate for one year, on a voluntary basis. The effective date of the surrender was January 1, 2012. WDH has complied with all of the components of the settlement agreement, the newspaper reported.

THE DARK REPORT contacted officials at the laboratory at Wentworth-Douglass Hospital for comment. As of press time, there has been no response from anyone at WDH.

In the view of attorney Wood, Wentworth-Douglass Hospital’s agreement with CMS avoided much harsher penalties often resulting from laboratory proficiency testing violations in other areas of the country. “Compared to what they would have had to pay in legal fees and everything else if this case had occurred in another region, that’s not too bad,” concluded Wood.

“There is some interest in Congress about how substantial the penalties should be for something that has not resulted in real patient harm,” offered Wood. “We have seen cases where a mistake was caught before testing was done or where there was confusion over which procedures to follow for PT. In both cases, there were severe penalties. That seems harsh when there was no threat of patient jeopardy. We have laboratory clients that have signed settlement agreements as a result of these situations.”

Medical directors of clinical labs should take note of how the handling of proficiency testing specimens is tripping up a growing number of lab organizations in the United States. The consequences are severe for any laboratory which inadvertently mishandles a PT specimen along the lines described in the case of the lab at Wentworth-Douglass Hospital and the examples cited by attorney Jane Pine Wood.



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