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F I S C A L I M P A C T R E P O R T

SPONSOR Smith

ORIGINAL DATE

LAST UPDATED

01/29/08

HB

SHORT TITLE Hospital Clinical Lab Testing Use Project

SB 408

ANALYST Geisler

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$100,000

Recurring

General

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: HB 389

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

SUMMARY

Synopsis of Bill

Senate Bill 408 would appropriate $100,000 from the general fund to the Department of Health

(DOH) to fund a pilot project that is intended to reduce utilization of laboratory testing within

hospital settings in New Mexico. DOH would develop standards for the pilot project and may

contract with a clinical laboratory for this pilot project. DOH will also be required to seek

federal matching funds for this pilot project. Any unexpended funds at the end of fiscal year

2010 would revert to the general fund.

FISCAL IMPLICATIONS

The appropriation contained in SB 408 was not included in the FY09 DOH budget request. The

request in the bill to “seek federal matching funds" for the pilot project could lead to questions

about the adequacy of the appropriation in the bill if the federal match is not received.

Senate Bill 408 – Page

2

SIGNIFICANT ISSUES

DOH notes that unnecessary laboratory testing is seen in many parts of the health care system

with great variation in laboratory test ordering patterns between providers of similar patients.

Unnecessary laboratory tests increase the cost of health care, may cause discomfort for the

patient and do not improve health care. This issue has been studied in several hospital settings

and potential means of reducing unnecessary laboratory testing have been identified. Strategies

found to decrease unnecessary testing include: not allowing standing orders for patients admitted

with some medical conditions; monitoring patterns of lab testing and providing feedback to

providers; and using technology such as electronic medical records and test ordering that can

help to guide clinical decision-making and that allow providers to see what tests have already

been completed.

Currently, the regulatory oversight of clinical laboratory hospitals is under the Centers for

Medicare and Medicaid Services (CMS) through the implementation of the Clinical Laboratory

Improvement Act, (CLIA), section 5(a) Part F of Title III of the Public Health Service (PHS) Act

(42 U.S.C. 262-3). While there are no state regulations for laboratories or laboratory personnel,

the Department, through the CLIA program, assists clinical laboratory in hospitals in setting

minimum standards for all laboratories to follow and to determine if laboratories are achieving

those standards through certification and survey.

HPC notes that since the late 1990s, much of the laboratory testing within the three larger

hospitals systems in New Mexico (Presbyterian, University of New Mexico Hospital and St.

Vincent’s Hospital) has been done outside of a hospital. The creation of TriCore Reference Lab

as a consolidated regional laboratory, moved most of the laboratory testing within the hospital

setting for these three organizations to a central location outside of the hospital. The volume of

lab testing that remained within the hospital setting has been greatly reduced over the last decade

for the three large New Mexico hospital organizations. What remained within the hospital

settings were specimen collection locations and “stat" labs for tests of an emergent basis that had

to have a very rapid (within minutes) turnaround.

DUPLICATION

SB 408 relates to HB 389, which appropriates $500 thousand for the same purpose.

OTHER SUBSTANTIVE ISSUES

HPC provided background on clinical testing

:

According to the American College of Chest Physicians’ published article, Laboratory-Clinical

Interface: Point-of-Care Testing, point-of-care (POC) testing refers to the performance of

diagnostic testing at or near the site of patient care rather than in the traditional central

laboratory. Sites for POC testing include areas of the hospital that provide care to patients in the

most urgent need of rapid diagnosis and therapy. These sites include the emergency department,

the operating room, critical care units, and certain outpatient areas.

Historically, diagnostic technology has influenced where testing is performed. Large and

complex laboratory analyzers have allowed testing to be batched efficiently and economically in

centralized locations. With the evolution of the central laboratory, methods of quality control

Senate Bill 408 – Page

3

matured significantly and produced accurate and precise results. Current technologic

advancement is characterized by microchemistry (biosensors and whole-blood analysis), micro-

computerization, miniaturization, and noninvasive testing procedures.

The Centers for Disease Control and Prevention’s report, Good Laboratory Practices for Waived

Testing Sites, discusses the Clinical Laboratory Improvement Amendments relating to testing.

The following information pertains to waived testing:

Clinical Laboratory Improvement Amendments (CLIA) Requirements for Waived Testing

All facilities in the United States that perform laboratory testing on human specimens for health

assessment or the diagnosis, prevention, or treatment of disease are regulated under CLIA. The

CLIA program is administered by Centers for Medicare and Medicaid Services and is

implemented through three federal agencies—the Centers for Disease Control and Prevention,

Centers for Medicare and Medicaid Services, and the Food and Drug Administration. When

CLIA was implemented in 1992, CLIA Committee was chartered to provide scientific and

technical advice and guidance to the U.S. Department of Health and Human Services about

laboratory standards and their impact on medical and laboratory practice.

By law, CLIA regulations are based on a complexity model, with more complicated testing

subject to more stringent requirements. The three categories of testing for CLIA purposes are

waived, moderate complexity (including the provider performed microscopy procedures [PPMP]

subcategory), and high complexity. Facilities performing only waived tests have no routine

oversight and no personnel requirements and are only required to obtain a Certificate of Waiver,

pay biennial certificate fees, and follow manufacturers’ test instructions. Tests can be waived

under CLIA if they are determined to be simple tests with an insignificant risk of an erroneous

result. Approximately 1,600 test systems representing at least 76 analysts are waived under

CLIA.

GG/mt