March 2008
Feature Story

Karen Lusky

Proficiency testing referral in which a lab sends all or part of a PT specimen to another lab for analysis, or communicates with another lab about PT results, is on CMS' radar screen these days and causing concern in the lab community about the dire regulatory consequences of the CLIA-forbidden practice.

Revoking a lab's CLIA certificate for a year is one of the actions the Centers for Medicare and Medicaid Services takes, if the finding is confirmed, and this includes the loss of Medicare and Medicaid payment. The other is to prohibit the lab's director from directing any laboratory for two years.

CLIA surveyors are finding a "plethora of cases," says Judy Yost, MA, MT(ASCP), director of the CMS Division of Laboratory Services. And "even though the regs indicate 'intentional' PT referral," it is not defin­ed, she says. "All of the legal cases we have had thus far pretty much disregard that. So if a lab ­accident­ally sends a PT sample to another lab for test­ing, basically the lab may still be held ­accountable for it."

"When we find a problem like this, the lab either did it or didn't do it. ..." Yost says. The prohibition against PT referral also applies to situations in which a lab performs proficiency testing for analytes that don't require PT under the CLIA regulations.

CLIA requires labs that receive what appears to be a PT sample from another lab to notify the CMS about it, and the agency has received "a good number" of such reports of late, Yost says.

It isn’t only the CMS that is noticing an increase in PT referral. More such instances appear to be coming to the CAP’s attention as well, says Walter Henricks, MD, chair of the Laboratory Accreditation Program Complaints Committee, which receives information about possible cases from CMS regional offices, state health departments, and other sources.

For laboratories, PT referral appears to be an equal-opportunity problem. R. Bruce Williams, MD, chairman of the CAP Commission on Laboratory Accreditation, says cases of PT referral have been seen in all types of labs, "from reference labs to large hospital labs to rural labs, which is why it's important to get the word out to everyone."

In some cases, Dr. Henricks says, PT materials are referred to another lab for analysis because of a "well-intentioned misunderstanding" whereby the person performing PT follows standard operating procedures for a particular type of specimen.

In fact, the CLIA regulations and CAP instructions for proficiency testing say a laboratory must test proficiency samples in the same manner as regular patient specimens. And for labs, Dr. Williams says, "those few words are some of the most dangerous around." That's because anyone who follows that directive literally can end up illegally referring a PT specimen for confirmatory or additional testing that would have been required for a patient sample.

Of course, the instructions for performing PT and prohibition on referrals have been around for a long time. So why the spike in noncompliance?

Attorney Peter Kazon has been handling cases for laboratories for 20 years, but he had never had a PT referral case until the two he's handled in the past four months. He attributes the jump in numbers of such cases to the CMS paying more attention, "some confusion among labs about aspects of the PT referral rules," and some of the "old guard" retiring and the newer employees not understanding the rules "like the back of their hand as their predecessors did."

Kazon, of Alston & Bird LLP in Washington, DC, isn't of the view that the PT referral rules are being evaded intentionally. "After all, people who work in labs tend to follow rules," he says. "Rules are pretty much what they live by in their profession."

The inadvertent breaking of those rules can happen in a number of ways. Suppose, says Dr. Williams, a stat lab in a hospital has a different CLIA number than the main hospital laboratory. And the stat lab technologist doing proficiency testing for glucose finds the PT sample shows a reading of over 500. The protocol for handling a patient sample in that scenario would call for the stat lab to refer the sample to the main hospital lab, but that would be a violation of CLIA regulations for PT testing-"an illegal action but unintentional," he says.

Another example might involve hematology, where proficiency testing could include a white blood cell for a technologist to identify. The technologist might be required to send that slide to a pathologist if it's abnormal. And "the technologist can do that if the pathologist is sitting in the lab to review the slide," Dr. Williams says. "But if the technologist sends the slide for the pathologist to review in a lab with a different CLIA number-even if the lab is within the same hospital-the technologist has violated the CLIA regs."

James Nichols, PhD, says the person doing PT has to realize that the PT samples should be treated as though they are patient samples but that neither the samples nor the results should be shared. "You stop short of sharing the sample with another lab or facility unless it has the same CLIA number and [sharing it with that lab] is part of the process the lab would normally use to confirm a patient sample," says Dr. Nichols, associate professor of pathology at Tufts University and medical director of clinical chemistry, Baystate Health, Springfield, Mass.

Some activities don't rise to the level of a PT referral, though they could still result in sanctions. Yost says the regulations indicate that PT samples should be tested only the same number of times that patient samples are tested and on the lab's primary test system. So, for example, if surveyors found that several people in a laboratory ran the test to compare answers and select the best result, the lab may be subject to a deficiency and possibly penalties. But that type of behavior would not constitute a referral.

On the other hand, if a supervisor worked at more than one laboratory and took PT results from one lab to another, that's a PT referral, Yost says.

How do surveyors uncover instances of PT referral? One way, Yost says, is to review the printouts of laboratory results and, in so doing, find an odd specimen from another lab. In addition, she says, CMS' surveyors have a lot of interaction in the lab and thus could actually find a PT sample sitting in an area where reference testing is done. Sometimes people in the lab tell the surveyors about PT referral, she adds. And "we have seen labs with records of PT sample results that weren't performed at the lab."

While the tests involved in PT referral cases have "pretty much run the gamut," Yost says, microbiology is an area that may be seeing a bit more than others. "Some labs will isolate the organism on a tube or plate and then send it to another lab for identification. But for PT, you don't actually send it but rather just indicate on the PT report that "you would refer," Yost explains.

Bundled PT samples in microbiology might potentially cause a laboratory to inadvertently refer PT samples to another lab. Edward Catalano, MD, chair of the College's Practice Management Committee, says the CAP often bundles its PT samples to make the process more cost-efficient for labs, including microbiology labs, that do all of that testing. But if a small rural hospital only does gram stains and typically sends the patient sample out for specimen identification and antibiotic susceptibility testing, the medical technologist might mistakenly do the same for a PT sample. And "the minute the reference lab gets the PT sample, it has to notify CMS," Dr. Catalano says.

Of course, not every case of PT referral has been unintentional. Yet even if a rogue employee knowingly violates the rules to cheat on PT, the buck stops with the laboratory and its director. For example, in one case involving a small rural hospital a number of years ago, a CLIA inspector actually found a "smoking gun" showing that an employee doing PT testing on the weekend had requested assistance from a friend at another lab in arriving at the right answer, says attorney Jane Pine Wood, of McDonald Hopkins LLC, Dennis, Mass.

A CLIA inspector in Hospital A found a note on an employee's desk that said something like, "Here's the PT data from Hospital B and here are the results." It was like "leaving the cheat sheet on top of the test," says Wood, who provided legal counsel in this case to the pathologist, who served part-time as the hospital lab's medical director.

"CMS recognized that my client, the medical director, had no knowledge of the event," Wood says. "He wasn't even at the hospital the week it occurred, and he obviously didn't approve it-no one at the hospital did." The employee's action ran contrary to any policy the hospital had in place.

After much legal wrangling, the case was finally resolved so that the hospital lab kept its CLIA license, though it was required to implement a plan of correction. The medical director wasn't allowed to continue serving as the medical director of the lab, which raised the question, says Wood: "Where does a small rural hospital find a replacement who is willing to drive a couple of hours to that hospital and put his or her neck on the line?"

Luckily, a local pathologist "out of the goodness of his heart" took on the medical director role. "If we hadn't found a person to replace the medical director, CMS wouldn't have agreed to the settlement agreement and would have revoked the hospital's CLIA license, and imposed sanctions against the existing medical director," Wood says.

Dr. Catalano says pathologists serving as medical directors have to be aware of the risks involved with PT referral. "The policies/ procedures should include absolute prohibitions against noncompliance," he stresses. The CAP has plans to provide education about the matter.

The CMS is preparing a letter to be sent to laboratory directors listing the do's and don'ts related to handling PT samples, and the agency will place this information on the CMS/CLIA Web site at www. cms. hhs. gov/ clia. Says Yost: "We really do not want labs to get caught in a circumstance where a silly accident happens and they are in a place where they can't really go back."

Yost believes education can help solve the problem of PT referral. It's a matter, she says, of making sure new staff are aware of the implications of PT referral, and having good policies and procedures and the infrastructure in place to prevent it. "The lab should have a mechanism in place to make sure the PT sample isn't mishandled-for example, color coding it. And make sure people know the sample is not to be referred even when the protocol calls for reflex testing on a patient sample." Yost says a sample clearly labeled as PT should provide enough warning so that someone who sees it knows to stop and handle "on the spot" a situation in which a PT sample has slipped into a batch of other tubes headed to another laboratory.

To help prevent PT referrals, Baystate's Dr. Nichols suggests the medi­cal director designate an effective technical supervisor to be on site, especially if the lab is doing high-complexity testing. "The technical supervisor needs the lab experience and personnel background to deal with the management aspects of the lab," he says.

"Rogue employees can be out of a manager's control," Dr. Nichols acknowledges, "but a manager has to be on site enough to know there's a problem with certain employees or systematic problems." That's why the College has implemented the leadership checklist for accredited labs. "CAP wants to see that if the medical director's name is on the CLIA license that the person is taking an active leadership role in the lab."

Given the recent increase in the number of such cases, some in the lab community are questioning whether the regulatory stance on PT referral isn't itself causing harm not intended by congressional lawmakers who, after all, crafted the statute two decades ago in the wake of the scandal about Pap smear mills.

The regulations provide "a relatively inflexible, very punitive system," Dr. Catalano says. "It's not rational." A pathologist serving as medical director of a laboratory in which an employee engages in PT referral can be excluded from Medicare for a time. "CMS can also potentially impose sanctions against the pathologist's entire group," Dr. Catalano says. And "these types of scenarios aren't addressed by the pathologist's typical malpractice insurance."

Yost says the CMS realizes that the regulations governing PT referral are a "bit onerous." Changing them, however, would require Congress to make a statutory change. "It's not something we can change administratively or even through the regulations ... . Some cases have gone to hearing and we have won every case to date. It's black and white -that's the problem," Yost says.

But a PT referral case is brewing now that attorney Patric Hooper, of Hooper, Lundy & Bookman in Los Angeles, believes could end up being the first to uncover what a federal court has to say about imposing severe sanctions regardless of the level of a lab's culpability.

The case involves Victor Valley Community Hospital, of Victorville, Calif., which is facing loss of its CLIA certificate because a lab employee inadvertently referred a PT specimen to Quest earlier this year. Hooper, who is representing the hospital, says the lab employee was under the impression that the lab's protocol called for her to send the PT sample to Quest to perform the rest of the test. And, as required by law, Quest reported the receipt of the PT sample to the CMS, he says.

In imposing sanctions, the CMS agreed to hold off on revoking the CLIA certificate if the hospital requested an administrative hearing. But the agency said it would stop payment for the hospital's Medicare and Medi-Cal (Medicaid) clinical lab services.

So, in January, Victor Valley obtained a temporary injunction in federal court preventing the CMS from halting the hospital's lab payments. Now the hospital has to "fight the PT referral-related CLIA revocation issue at hearing," Hooper says. "If we can settle, we'd love to, but CMS hasn't offered us that option."

Hooper says he and the hospital are intent on taking the issue to federal court, if necessary. "We do not believe that Congress intended for innocent acts undertaken in good faith to result in CLIA revocation. By innocent acts, I mean people who thought they were doing the right thing."

"By taking the case to federal court, we would [attempt] to make some law in an area where I think it needs to be made." It's Hooper's view that "unless the PT referral was due to someone trying to cheat the system or being grossly reckless," Congress would not have intended for CMS to revoke a lab's CLIA certification.

The government could win the case in federal court, Hooper concedes. But he views it as a "pretty strong case for testing the issue," in that revoking the hospital lab's CLIA license would "set off a chain reaction that would knock out the hospital."

As long as laboratorians know the PT rules that prohibit referral, they can live with them, says Thomas Rafalsky, a lawyer and presi­dent of the New York State Clinical Laboratory Association. He says it was "really eye opening" for laboratory professionals who attended a recent PT work­shop sponsor­ed by the association and the state to hear what PT referral involves in terms of the nuances-and to find out that a lab that engages in PT referral, whether intentional or not, in the CLIA-exempt state of New York will lose its ability to operate.

In the absence of a change to the regulations or how CMS interprets them, Rafalsky says, living with the rule requires education and risk management.

"It is draconian, but it is what it is," he says.

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