Report 2015-507 Recommendations

To eliminate the State's redundant and ineffective oversight of labs and to ensure labs do not pay unnecessary or duplicative fees, the Legislature should repeal existing state law requiring that labs be licensed or registered by Laboratory Services and that Laboratory Services perform oversight of these labs. Instead, the State should rely on the oversight the Centers for Medicare and Medicaid Services provides.

To eliminate the State's redundant and ineffective oversight of labs and to ensure labs do not pay unnecessary or duplicative fees, the Legislature should repeal existing state law requiring labs to pay fees for state-issued licenses or registrations.

If the Legislature decides to continue requiring that clinical labs be licensed or registered through the State, it should amend state law establishing how Laboratory Services annually adjusts its fee amounts to ensure the revenue it collects does not exceed the cost of its oversight. Such an amendment might authorize Public Health to temporarily suspend or reduce fees when the Clinical Laboratory Improvement Fund's ending balance exceeds a prudent reserve amount that the Legislature establishes.

Regardless of whether it decides to repeal existing law, the Legislature should direct Laboratory Services to advise it on how best to address the millions of dollars in the Clinical Laboratory Improvement Fund in excess of a prudent reserve.

While the Legislature considers eliminating the requirement that labs obtain state-issued licenses or registrations and receive oversight from Laboratory Services, Laboratory Services should begin taking action to address its deficiencies by developing a corrective action plan by December 31, 2015. The corrective action plan should address its plans for implementing the recommendations from our 2008 audit and from this follow-up audit. For each item in its corrective action plan, Laboratory Services should identify the individuals responsible for ensuring it takes the corrective action, the resources it needs to carry out the corrective action, and the time frame in which it expects to successfully complete the corrective action.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should inspect all in-state and out-of-state labs it has licensed every two years.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should develop and implement proficiency testing policy and procedures for ensuring that it can promptly identify out-of-state labs that fail proficiency testing.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should improve its complaints policy and procedures to ensure that it either investigates allegations promptly or clearly documents its management's rationale for not investigating. It should also establish clear expectations for when staff must visit a lab to verify successful corrective action.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should dedicate multiple staff to sanctioning efforts and update its sanctioning policy and procedures, including identifying steps to ensure that labs adhere to sanctions and that it collect civil money penalties. In addition, it should develop a single sanctions tracking system that multiple managers can monitor and that will allow it to periodically reconcile the monetary penalties it receives with Public Health's accounting records.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should work with Public Health's budget section and other appropriate parties in developing a process to assess the budget act annually and to adjust its fees accordingly. The process should include its management's review and approval of fee adjustments before it posts those fees publicly.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should maximize the opportunity to partner with accreditation organizations by developing an accreditation organization program and issuing an All Clinical Laboratories Letter detailing the program's components. In addition, it should consult with legal counsel and draft an agreement outlining the role and the responsibilities that Laboratory Services and the accreditation organizations will assume.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should address staffing issues by preparing and resubmitting to Public Health a recruitment and retention proposal, developing a succession plan, and taking necessary steps to implement its planned reorganization.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should ensure that its information technology data systems have necessary safeguards, contain accurate and complete data, and support its program needs.

To ensure it can provide effective oversight of labs as state law requires, Laboratory Services should update and develop its regulations as necessary to ensure consistency with existing state law.