As if inflation wasn’t troubling enough, the Centers for Medicare & Medicaid Services (CMS) are getting set to jack up the user fees that certified labs pay under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Here’s a briefing on the new CLIA fees system contained in the new proposed rule (Search for “CMS-3326-P”) published on July 22.
The CLIA User Fees System
Labs must obtain CLIA certification to do tests on human specimens for purposes of diagnosis, prevention, treatment, or assessment of health based on the types of tests they perform. The CLIA regulations require participating labs to pay user fees to fund the government’s costs in carrying out the various functions under the law, e.g., conducting on-site inspections. Under the CLIA law, participating labs must pay:
- “Certificate fees” for the issuance and renewal of their CLIA certificates;
- “Compliance fees” to cover the government’s costs of monitoring and conducting on-site inspections; and
- “Other fees” for validation inspections and other CLIA activities.
For nearly two decades, the system was self-sustaining. But in 2018, CMS raised CLIA fees for the first time in 20 years. However, the funding shortfalls remain and CMS says that without further fee increases, the program will run out of money by the end of fiscal year 2023. So, the agency is proposing a series of changes to ensure sustainable funding in the long term.
1. Immediate 20 Percent Increase
First, CMS wants to impose an immediate one-time, across the board 20 percent fee increase to “stabilize the CLIA program” and establish the baseline for future increases that would be imposed every two years. The 20 percent increase amount would be subject to change in the final rule.
2. Regular Two-Year Increases for Inflation
In addition to an upfront increase, CMS is seeking to reform the entire CLIA fee system to make the program financially stable in the long term. The starting point would be to increase fees every two years based on the Consumer Price Index-Urban (CPI-U) to account for inflation, if needed to cover the costs of CLIA program activities.
If total fee amounts, including any increase applied, don’t match or exceed actual program obligations from the previous two years, the agency would impose an additional across-the-board increase to each lab’s fees by calculating the difference between total fee amounts and actual program obligations. If the inflation adjustment isn’t enough to cover program obligations, an additional across-the-board amount would be added to the adjustment to ensure that the fee increase is spread equally across all fees in a flat percentage amount. The adjusted fees would then become part of the baseline for the next two-year increase.
3. New CLIA User Fees
CMS has historically not exercised its authority under the CLIA regulations to collect other fees from labs covering administrative activities “due to technical difficulties,” according to CMS. The agency describes this as “a missed opportunity” and proposes to impose new fees, including:
- A fee for follow-up surveys to determine correction of any deficient practices found in either a Certificate of Compliance (CoC) survey or Certificate of Accreditation (CoA) validation survey;
- A new specialties survey fee when it’s necessary to determine compliance of testing in one or more additional specialties outside the CoC survey cycle;
- A fee for each substantiated complaint;
- A fee for a desk review of unsuccessful proficiency testing (PT) performance;
- A fee for a replacement certificate when a lab loses or destroys its CLIA certificate and requests a replacement; and
- A fee for issuing a revised certificate when the lab changes its laboratory director or other information found on a certificate and requests a new certificate to reflect the changes.
4. $25 CoW Fee Increase
Finally, CMS wants to charge a one-time $25 certificate fee increase on Certificate of Waiver (CoW) labs covering the costs of categorizing the waived tests (simple tests) by the FDA at the end of the public health emergency.
CMS has extended the comment period for the proposed rule, which was originally scheduled to end on August 25, to September 26, 2022. While there may be tweaks to formulas and increase amounts, it’s a pretty good bet that labs will have to shell out more money in direct CLIA compliance expenses, starting in October, when the 20 percent across-the-board fee increase is slated to take effect.