Medicare Program; Clinical Laboratory Improvement Amendments of 1988 (CLIA) Fees, 67723-67728 [2018-28359]

Download as PDF Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices identified in this section. The State Medicaid/CHIP agency will report the existence of a system to collect all information needed to determine and redetermine eligibility for Medicaid and CHIP. The State Medicaid/CHIP agency will attest to using the PARIS system in determining beneficiary eligibility in Medicaid or CHIP benefit programs. Form Number: CMS–R–74 (OMB control number: 0938–0467); Frequency: Occasionally; Affected Public: State, Local, or Tribal Governments; Number of Respondents: 55; Total Annual Responses: 3,241; Total Annual Hours: 1,071. (For policy questions regarding this collection contact Stephanie Bell at 410–786–0617.) Dated: December 13, 2018. William N. Parham, III, Director, Paperwork Reduction Staff, Office of Strategic Operations and Regulatory Affairs. [FR Doc. 2018–27337 Filed 12–28–18; 8:45 am] BILLING CODE 4120–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services [CMS–3356–NC] RIN 0938–AT56 Medicare Program; Clinical Laboratory Improvement Amendments of 1988 (CLIA) Fees Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Notice with comment period. AGENCY: This notice with comment period announces the increase of certain fees established under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The Public Health Service Act (PHSA) requires the Secretary to impose certificate fees to cover the general costs of administering the CLIA program, as well as additional fees, including Inspection fees for nonaccredited laboratories. We are increasing these fees to cover the cost of administering the CLIA program as required by statute. We seek public comment regarding this increase, which we believe is necessary to meet the statutory requirements. DATES: Comments: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on March 1, 2019. ADDRESSES: In commenting, refer to file code CMS–3356–NC. Because of staff and resource limitations, we cannot khammond on DSK30JT082PROD with NOTICES SUMMARY: VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 accept comments by facsimile (FAX) transmission. Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the ‘‘Submit a comment’’ instructions. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–3356–NC, P.O. Box 8016, Baltimore, MD 21244–8016. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–3356–NC, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: For policy related questions, please contact Cindy Flacks, 410–786–6520, and Caecilia Blondiaux, 410–786–2190. For the Budget and Financial Impact, please contact Jeffrey Pleines, 410–786– 0684. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http:// www.regulations.gov. Follow the search instructions on that website to view public comments. I. Background A. CLIA Fees On October 31, 1988, Congress enacted the Clinical Laboratory Improvement Amendments of 1988 (CLIA) (Pub. L. 100–578), which replaced in its entirety section 353 of the Public Health Service Act (PHSA). Section 353(m) of the PHSA requires the Secretary to impose two separate types of fees: ‘‘certificate fees’’ and ‘‘additional fees.’’ Certificate fees are imposed for the issuance and renewal of certificates and must be sufficient to PO 00000 Frm 00012 Fmt 4703 Sfmt 4703 67723 cover the general costs of administering the CLIA program, including evaluating and monitoring approved proficiency testing (PT) programs and accrediting bodies and implementing and monitoring compliance with program requirements. Additional fees are imposed for inspections of nonaccredited laboratories and for the cost of performing PT on laboratories that do not participate in approved PT programs intended to cover the cost of evaluating a laboratory to determine overall if an accreditation organization’s standards and inspection process is equivalent to the CLIA program. These evaluations are referred to as validation inspections. The additional fees must be sufficient to cover, among other things, the cost of carrying out such inspections and PT. Certificate and additional fees vary by group or classification of laboratory, based on such considerations as the Secretary determines are relevant, which may include the dollar volume and scope of the testing being performed by the laboratories, and only a nominal fee may be required for the issuance and renewal of Certificates of Waiver (CoWs). The regulations provide for a methodology for determining fee amounts (§ 493.649) and periodic updating of the certificate fee amounts (§ 493.638(b)) and compliance fee amounts (§ 493.643(b)). Under § 493.645(b)(1), laboratories that are issued a certificate of accreditation (CoA) are assessed a fee to cover the cost of validation inspections. All accredited laboratories share in the cost of these inspections. These costs are the same as those that are incurred when inspecting non-accredited laboratories. B. CLIA Budget Process With the exception of the ‘‘CLIA Program; Fee Schedule Revision’’ notice published in the August 29, 1997 Federal Register (62 FR 45815 through 45821), the fees imposed to cover the costs of administering the CLIA program have not been updated since 1992. The fee amounts currently collected under the CLIA regulations are based on preliminary assumptions made in 1992 about future program operations and workload requirements. After decades of actual program experience, we have determined that it is necessary to increase certain CLIA fees to fund current and future program operations as required by section 353(m) of the PHSA. Specifically, as discussed in section II. of this notice with comment period, we are increasing those CLIA fees collected under § 493.638(b) (hereinafter referred to as ‘‘Certificate Fees’’), with the exception of fees for E:\FR\FM\31DEN1.SGM 31DEN1 67724 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices issuing a Certificate of Registration (CoR); § 493.643(b) (hereinafter referred to as ‘‘Compliance Fees’’); and § 493.645(b)(1) (hereinafter referred to as ‘‘Additional Fees’’) (collectively referred to hereinafter as ‘‘CLIA Fees’’). We routinely monitor incoming CLIA Fee collections and compare them on a monthly basis with the corresponding amounts of obligations and expenditures for all costs required to support the operation of the CLIA program, including state survey agency (SA) awards, CMS administrative costs, other federal agency costs, and contract support. Over the past several years, we have observed that the total amount of incurred obligations in a given fiscal year has outpaced the corresponding amount of CLIA Fees collected over the same timeframe, leading to decreases in the level of budgetary resources available to support program operations. Factors contributing to the increased obligations incurred by the CLIA program include an increase in the amount of time it takes to perform surveys in laboratories that are using more complex testing platforms and laboratory developed tests, as well as the overall inflation of the economy. Based on our observations, we performed a retrospective comparative analysis of federal fiscal year (FY)-end CLIA Fee collections and incurred obligations over the prior six FYs (FY 2012 through FY 2017). As shown in Table 1, the amount of incurred obligations in each fiscal year has exceeded the corresponding amount of collected CLIA Fees. TABLE 1—CMS COMPARATIVE ANALYSIS FYS 2012 THROUGH 2017 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Certificate Fees Collected ........................ Compliance Fees Collected ..................... Sequester 1 ............................................... Total, CLIA Fees Collected 2 ............ $36,343,753 13,213,680 0 49,557,433 $42,169,869 13,040,589 (2,760,521) 52,449,907 $41,173,724 12,823,731 (3,887,817) 50,109,639 $41,185,755 12,466,102 (3,916,586) 49,735,271 $42,369,451 13,468,981 (3,795,483) 52,042,948 $41,544,575 12,527,235 (3,730,969) 50,340,842 Total, CLIA Obligations 2 3 ................ Total, CLIA (Shortfall)/Surplus .......... 54,539,917 (4,982,484) 54,169,837 (1,719,930) 57,360,315 (7,250,677) 56,404,651 (6,669,380) 56,778,918 (4,735,970) 59,680,186 (9,339,344) 1 Sequester is a reduction in budget authority authorized by Public Law 112–25, the Budget Control Act of 2011. and obligations data taken from FY-end Healthcare Integrated General Ledger Accounting System (HIGLAS) reporting. Exempt State Fees are categorized as Certificate Fees, because the state surveys their own laboratories and State Fees charged go to the state. 3 CLIA obligations include FY-end obligations for CMS administration (payroll, travel, training, supplies, contracts), other federal agencies (CDC, FDA, Treasury, DHHS/OGC), and SA awards (surveys, PT, etc.). 2 Collections Over the past few years, we have been diligent in controlling administrative costs, including use of carryover funds, in an attempt to avoid a fee increase. For example, we have controlled costs by enhancing monitoring and control over funds awarded to SAs for surveys, reducing federal travel and training expenses, as well as imposing strict oversight of incurred contract costs. Despite these efforts, a portion of CLIA’s administrative obligations and expenditures remains fixed and cannot be further reduced without significant disruption in program operations (for example, limiting planned regulatory and enforcement actions). Taking into account annual inflation in the overall economy, we anticipate that program costs and concurrent obligations will continue to increase, further contributing to a projected shortfall in collections. Moreover, our ability to continue using carryover funds is limited since we have used this carryover to supplement shortfalls in new collections over a number of years. We project that without a fee increase, the CLIA program would cease to be self-sustaining at some point in FY 2020, as shown in Table 2. TABLE 2—CMS PROJECTIONS FYS 2018 THROUGH 2020 [No Fee Increase] Prior Year Carryover (SOY) 1 ...................................................................................................... Projected CLIA Fee Collections .................................................................................................. Projected Sequester (6.6%, 6.2%) .............................................................................................. Budgetary Resources .................................................................................................................. Projected Obligations ................................................................................................................... Projected Carryover (EOY) 2 ....................................................................................................... FY 2018 FY 2019 FY 2020 $43,494,763 51,900,306 (3,425,420) 91,969,649 62,500,000 29,469,649 $29,469,649 51,900,306 (3,217,819) 78,152,136 63,687,500 14,464,636 $14,464,636 51,900,306 (3,217,819) 63,147,123 65,024,938 (1,877,815) 1 Start khammond on DSK30JT082PROD with NOTICES 2 End of year balances. of year balances. Based on these projections, absent a fee increase, our ability to maintain effective program operations may be jeopardized, potentially comprising public health and safety. As a result, we need to increase currently assessed CLIA Fees to ensure effective program operations. VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 C. CLIA RFI Feedback In January 2018, we published the ‘‘Request for Information: Revisions to Personnel Regulations, Proficiency Testing Referral, Histocompatibility Regulations and Fee Regulations under the Clinical Laboratory Improvement Amendments (CLIA) of 1988’’ (83 FR 1004). As part of the general solicitation for comments related to the CLIA Fees, PO 00000 Frm 00013 Fmt 4703 Sfmt 4703 more than a few commenters noted the CLIA Compliance and Additional fees have not been updated since 1992 and supported increasing the fees. Some of these commenters suggested the CLIA Fees be reviewed annually and updated as needed to cover the program costs of performing biennial surveys. One commenter raised concerns related to increases to the CLIA Fees, linking them to the recent changes to E:\FR\FM\31DEN1.SGM 31DEN1 67725 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices the Clinical Laboratory Fee Schedule (CLFS) (see 81 FR 41036). While we appreciate this commenter’s concerns, we note that changes to the CLFS are issued by Medicare and are separate and distinct from changes to CLIA Fees. As a result of the feedback received from the 2018 RFI, as well as through assessing the current program needs, we are increasing the fees as outlined in section II of this notice with comment period. Additionally, we will consider the comments received in response to the 2018 RFI as well as this notice with comment period in future rulemaking. insufficient to keep pace with the CLIA program costs. As shown in Table 1, we must close the $9.3 million gap between incurred obligations and CLIA Fee collections in FY 2017 to keep the program on a sustained solvent basis projected over time. To close this $9.3 million gap, we first determined the appropriate fee drivers, as shown in Table 3, and then added the results together, along with current State-Exempt Fees at about $1.1 million, to calculate the total projected fees. II. CLIA Fees Increase For the reasons discussed in section I. of this notice with comment period, we are increasing the following CLIA Fees: Certificate Fees (collected under § 493.638(b), with the exception of fees for the issuance of a CoR); Compliance Fees (collected under § 493.643(b)); and Additional Fees (collected under§ 493.645(b)(1)). These increases are based on our review of historical revenue and expenditure data, which have shown that expenditures in comparison to collections are TABLE 3—CMS PROJECTED LABORATORY POPULATION AND SURVEY WORKLOAD, FY 2018 Schedule Codes Waived PPMP 1 LVA 2 Total A B C D E F G H I J Non-Accredited .. Accredited .......... Other .................. 0 0 178,616 0 0 33,411 6,466 2,103 0 4,245 2,700 0 183 184 0 2,022 1,895 0 249 228 0 1,493 1,631 0 793 959 0 497 599 0 1,721 3,081 0 200 1,107 0 167 1,794 0 18,036 16,281 212,027 Total, CLIA Lab Population ........ 178,616 33,411 8,569 6,975 367 3,917 477 3,124 1,752 1,096 4,802 1,307 1,961 246,344 Total, CLIA Compliance Surveys ......... 0 0 3,500 2,330 110 1,124 145 839 445 285 995 141 144 10,058 1 Provider-Performed Microscopy Procedures Laboratories (PPMP). 2 Low-Volume Laboratory (LVA). For Certificate Fees, the driver used in our calculations is one half of the projected laboratory population for FY 2018 (123,172 CLIA laboratories), broken out by state and laboratory schedule code. We used one half of the projected laboratory population to determine an average annual collection because all CLIA laboratories are billed on a biennial basis. For Compliance Fees, the driver used in our calculations is the projected number of surveys budgeted for FY 2018 (10,058 total surveys). For Additional Fees for accredited laboratory validation inspections, the driver used in our calculations is the projected number of validation surveys budgeted for FY2018 (about 407). Using this methodology, we project increased CLIA Fee collections at $61.0 million in FY 2018, as opposed to the currently collected $50.8 million, plus the collection of $1.1 million in State-Exempt Fees, for a total projected collection of $62.1 million. We have projected that we need to increase the CLIA Fees described previously by at least 18.6 percent ($9.339 million/$50.341 million, per Table 1). In calculating projected collections for FYs 2018 through 2021, we rounded up to a 20 percent increase to ensure a sufficient level of carryover to maintain operations in the first two quarters of FYs 2019 and 2020. Generally, carryover funds are needed to support program operations at the start of any given FY, until a sufficient amount of current FY collections is accumulated and made available for obligation. In rounding up to the 20 percent increase, we projected increased FY 2018 collections at $62.1 million, enough to reasonably approximate projected FY 2018 obligations. To calculate the $62.1 million in projected collections, we multiplied the increased fees by the appropriate fee drivers, as shown in Table 3, and then added the results together, along with current State-Exempt Fees at about $1.1 million, to calculate the total projected fees. The total of fees collected by HHS must be sufficient to cover the general costs of administering the CLIA program, and as indicated in Table 4, upon publication of the final notice, we project that the 20 percent increase will be sufficient to fund the CLIA program into FY 2022. TABLE 4—CMS PROJECTIONS FYS 2018 THROUGH 2021 khammond on DSK30JT082PROD with NOTICES [With 20 percent fee increase] Prior Year Carryover (SOY) 1 .......................................................................... Projected CLIA Fee Collections ....................................................................... Projected Sequester (6.6%, 6.2%) .................................................................. Budgetary Resources ...................................................................................... Projected Obligations ....................................................................................... Projected Carryover (EOY) 2 ............................................................................ 1 Start FY 2018 FY 2019 FY 2020 FY 2021 $43,494,763 51,900,306 (3,425,420) 91,969,649 62,500,000 29,469,649 $29,469,649 58,714,011 (3,640,269) 84,543,392 63,687,500 20,855,892 $20,855,892 62,070,016 (3,848,341) 79,077,566 65,024,938 14,052,629 $14,052,629 62,070,016 (3,848,341) 72,274,303 66,390,461 5,883,842 of year balances. VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 PO 00000 Frm 00014 Fmt 4703 Sfmt 4703 E:\FR\FM\31DEN1.SGM 31DEN1 67726 khammond on DSK30JT082PROD with NOTICES 2 End Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices of year balances. With this notice, we are increasing all currently assessed CLIA Fees by 20 percent to close the gap between current obligations and current collections, and to account for a small increase in costs for the current fiscal year. Fees for the issuance of registration certificates would not be increased as these increases would not have substantial impact. The 20 percent increase would apply to the following CLIA fee types: 1. Certificate Fees—collected under § 493.638(b), with the exception of fees for the issuance of a CoR. Under § 493.638(b), the fee amount is based on the category of test complexity, or on the category of test complexity and schedules or ranges of annual laboratory test volume (excluding waived tests and tests performed for quality control, quality assurance, and PT purposes) and specialties tested, with the amounts of the fees in each schedule being a function of the costs for all aspects of general administration of CLIA as set forth in § 493.649(b) and (c). Under § 493.649(a), the fee for issuance of a CoR or CoC is based on the laboratory’s scope and volume of testing. The current Certificate Fees are already based on each laboratory’s schedule’s scope and volume of testing, including test complexity and specialties tested. Following the application of a uniform 20 percent increase to Certificate Fees across all schedules, with the exception of fees for the issuance of a CoR, the new Certificate Fees will continue to satisfy §§ 493.638(b) and 493.649(a). 2. Compliance Fees collected under § 493.643(b). Under § 493.649(a), the amount of the fee in each schedule for compliance determination inspections is based on the average hourly rate (which includes the costs to perform the required activities and necessary administration costs) multiplied by the average number of hours required or, if activities are performed by more than one of the entities listed in § 493.649(b), the sum of the products of the applicable hourly rates multiplied by the average number of hours required by the entity to perform the activity. As discussed in section I. of this notice with comment period, current Compliance Fees were established in 1992 based on estimates as to the average time a survey would take, the cost of the surveyor salary per hour, as well as the size of the laboratory. Based on FY 2017 available compliance fee collections, we estimate that current Compliance Fee collections cover approximately 55 percent of current and VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 future compliance determination costs. Following the application of a uniform 20 percent increase to Compliance Fees across all schedules, in combination with the aforementioned increase to Certificate Fees, the new Compliance Fees will continue to satisfy § 493.649(a). 3. Additional Fees collected under § 493.645(b)(1). Under § 493.645(b)(1), laboratories that are issued a CoA are assessed an additional fee to cover the cost of validation inspections. These costs are the same as those that are incurred when inspecting nonaccredited laboratories. As discussed in section I. of this notice with comment period, current Additional Fees were established in 1992 based on estimates as to the average time a survey would take, the cost of the surveyor salary per hour, as well as the size of the laboratory. Following the application of a uniform 20 percent increase to additional fees across all schedules, in combination with the aforementioned increases to Certificate Fees and Compliance Fees, the new Additional Fees will continue to satisfy §§ 493.645(b)(1) and 493.649(a). While we recognize that the 20 percent increase to CLIA Fees across all schedule codes can be perceived as a major increase for laboratories, we intend for this approach to be a onetime adjustment to address the projected shortfall to ensure the program can remain self-sustaining into FY 2022. We will continue to review our obligations and collections and may make future adjustments as needed to avoid shortfalls. We considered multiple options prior to this notice with comment period, including limiting the increase to varying percentages and timeframes across a single fee type, specifically Compliance Fees. For example, we considered the following options: • Update the existing Compliance Fees by updating the hours for all classifications (schedules) of laboratories and the hourly rates for all states and territories. • A one-time 70 percent increase in Compliance Fees alone to meet projected obligations, with a phased-in two 35 percent Compliance Fee increases over a two biennial survey cycles. As discussed previously, in regard to the estimates established in 1992, we are proposing the one-time 20 percent increase across most CLIA Fees, including Certificate (excluding CoR fees) and Compliance Fees based on our PO 00000 Frm 00015 Fmt 4703 Sfmt 4703 comparison of FY 2017 obligations and collections (see Table 1). Analysis indicates that the difference between collections and obligations results primarily from inflationary increases incurred since Compliance Fees were set in 1992 and since Certificate Fees user fees were last increased in 1997. Furthermore, analysis shows that the relative proportions of the certification and compliance work to total program obligations has remained virtually consistent over time, at about 34 percent for compliance and 66 percent for certification. We believe the original methodology for calculating CLIA fees was reasonable at the time, with the exception of excluding adjustments for inflation, which has remained relatively constant. Therefore, we determined that a one-time 20 percent increase across most currently assessed fees is the most appropriate approach. The 20 percent increase also meets our policy objectives to keep any increase reasonably limited, given the elapsed time since the CLIA Fees were last updated. III. Collection of Information Requirements This document does not impose information collection requirements, that is, reporting, recordkeeping or third-party disclosure requirements. Consequently, there is no need for review by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). IV. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, if we proceed with a subsequent document, we will respond to the comments in the preamble to that document. V. Regulatory Impact Statement A. Statement of Need As discussed in section I. of this notice with comment period, when CLIA was enacted, and its implementing regulations were finalized in 1992, CLIA Fees were established based on estimates as to the average time a survey would take; cost of the surveyor salary per hour; as well as the size of the laboratory (schedules A, B, etc.). As discussed in section III. of this notice with comment period, we are increasing E:\FR\FM\31DEN1.SGM 31DEN1 67727 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices certain CLIA Fees based on our analysis of the overall level of collections relative to the costs of maintaining the CLIA program, which project a shortfall to begin in calendar year 2020. B. Overall Impact We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96– 354), section 1102(b) of the Social Security Act (the Act), section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104–4), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any one year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. A regulatory impact analysis (RIA) is required for economicallysignificant regulatory actions that are likely to impose costs or benefits of $100 million or more in any given year. This notice with comment period is not economically significant within the meaning of section 3(f)(1) of the Executive Order since the estimated cost alone is not likely to exceed the $100 million annual threshold. Our upper limit of estimated impact is under the threshold of $150 million for the year of 2018 under Unfunded Mandates Reform Act (UMRA). This notice with comment period increases certain CLIA Fee requirements and will affect approximately 251,010 clinical laboratories, resulting in some budget implications. The RFA requires agencies to analyze options for regulatory relief of small entities if a rule has a significant impact on a substantial number of small entities. For purposes of the RFA, we assume that the great majority of clinical laboratories are small entities, either by virtue of being nonprofit organizations or by meeting the Small Business Administration definition of a small business by having revenues of less than $7.5 million to $38.5 million in any one year. For purposes of the RFA, we believe that approximately 82 percent of clinical laboratories qualify as small entities based on their nonprofit status as reported in the American Hospital Association Fast Fact Sheet, updated January 2017 (https://www.aha.org/ system/files/2018-01/fast-facts-ushospitals-2017_0.pdf ). Individuals and states are not included in the definition of a small entity. We are voluntarily preparing a Regulatory Impact Analysis and are requesting public comments in this area to assist us in making this determination. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. We do not expect this notice with comment period will have a significant impact on small rural hospitals. Laboratories in small rural hospitals are already subject to CLIA Fees. We are requesting public comments in this area to assist us in making this determination. C. Anticipated Effects This notice with comment period impacts approximately 251,010 CLIA certified laboratories. TABLE 5—CURRENT AND NEW NATIONAL AVERAGE OF COMPLIANCE FEE UPDATE [Compliance fee updates at 20 percent increase] Current average (c) Laboratory classification (schedules) khammond on DSK30JT082PROD with NOTICES LVA .......................................................................................................................................................................... A ............................................................................................................................................................................... B ............................................................................................................................................................................... C .............................................................................................................................................................................. D .............................................................................................................................................................................. E ............................................................................................................................................................................... F ............................................................................................................................................................................... G .............................................................................................................................................................................. H .............................................................................................................................................................................. I ................................................................................................................................................................................ J ............................................................................................................................................................................... Table 5 reflects the national average of compliance fees for each classification of laboratories (schedules) that requires inspection. Specifically, Table 5 represents the national average for each schedule for the current Compliance VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 Fees (noted with a ‘‘c’’) as paid biennially by laboratories that hold a CoC and the national average for each schedule for the new Compliance Fees (noted with a ‘‘n’’) that will be paid biennially by laboratories that hold a PO 00000 Frm 00016 Fmt 4703 Sfmt 4703 $300 994 1,325 1,657 1,947 2,237 2,527 2,817 3,107 3,397 3,673 New average (n) $360 1,192 1,591 1,988 2,336 2,684 3,032 3,380 3,728 4,076 4,408 CoC. As discussed section II. of this notice with comment period, Table 5 reflects a total increase of 20 percent across all schedules. E:\FR\FM\31DEN1.SGM 31DEN1 67728 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices TABLE 6—CURRENT AND NEW NATIONAL AVERAGE OF ADDITIONAL FEES FOR ACCREDITED LABORATORIES UPDATE [Additional fee updates at 20 percent increase] Current average (c) Laboratory classification (schedules) LVA .......................................................................................................................................................................... A ............................................................................................................................................................................... B ............................................................................................................................................................................... C .............................................................................................................................................................................. D .............................................................................................................................................................................. E ............................................................................................................................................................................... F ............................................................................................................................................................................... G .............................................................................................................................................................................. H .............................................................................................................................................................................. I ................................................................................................................................................................................ J ............................................................................................................................................................................... Table 6 shows the national average of Additional Fees for each schedule of accredited laboratory. Specifically, Table 6 represents the national average fees for each schedule for the current Additional Fees (noted with a ‘‘c’’) as paid biennially by laboratories that hold a CoA and the national average for the new Additional Fees (noted with a ‘‘n’’) that will be paid biennially by New average (n) $15 50 60 83 97 112 126 141 155 170 184 $18 60 80 99 117 134 152 169 186 204 220 laboratories that hold a CoA. As discussed in section II. of this notice with comment period, Table 6 reflects a total increase of 20 percent across all schedules. TABLE 7—CLIA BIENNIAL CERTIFICATE FEES Type of CLIA certificate Laboratory schedule Certificate of Waiver (CoW) ......................................... PPM .............................................................................. CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... CoC and CoA ............................................................... Not applicable ............................................................... Not applicable ............................................................... LVA ............................................................................... A ................................................................................... B ................................................................................... C ................................................................................... D ................................................................................... E ................................................................................... F .................................................................................... G ................................................................................... H ................................................................................... I ..................................................................................... J .................................................................................... Table 7 depicts the current and new Certificate Fees, which reflects the 20 percent increase across all schedules, with the exception of fees for the issuance of a CoR. E. Conclusion khammond on DSK30JT082PROD with NOTICES D. Regulatory Reform Analysis Under E.O. 13771 Executive Order 13771, titled Reducing Regulation and Controlling Regulatory Costs, was issued on January 30, 2017 and requires that the costs associated with significant new regulations ‘‘shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.’’ It has been determined that this notice with comment period is not a ‘‘significant regulatory action’’ under E.O. 12866 and thus is not considered regulatory action under Executive Order 13771. VerDate Sep<11>2014 16:24 Dec 28, 2018 Jkt 247001 Although the effect of the changes will increase laboratory costs, implementation of these changes will be negligible in terms of workload for laboratories as these fee increases are operational and technical in nature and do not require additional time to be spent by laboratory employees. We have determined that this notice with comment period would not have a significant economic impact on a substantial number of small entities or a significant impact in the operations of a substantial number of small rural hospitals and for these reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act. In accordance with the provisions of Executive Order 12866, this notice with comment period was reviewed by the Office of Management and Budget. PO 00000 Frm 00017 Fmt 4703 Sfmt 4703 Current fee $150.00 200.00 150.00 150.00 150.00 430.00 440.00 650.00 1,100.00 1,550.00 2,040.00 6,220.00 7,940.00 New fee $180.00 240.00 180.00 180.00 180.00 516.00 528.00 780.00 1,320.00 1,860.00 2,448.00 7,464.00 9,528.00 Dated: December 14, 2018. Seema Verma, Administrator, Centers for Medicare & Medicaid Services. Dated: December 18, 2018. Alex M. Azar II, Secretary, Department of Health and Human Services. [FR Doc. 2018–28359 Filed 12–28–18; 11:15 am] BILLING CODE 4120–01–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Physician-Focused Payment Model Technical Advisory Committee; Meetings ACTION: Notice of meetings. This notice announces the 2019 meetings of the Physician-Focused Payment Model Technical Advisory Committee (PTAC). These meetings will include deliberation and voting on SUMMARY: E:\FR\FM\31DEN1.SGM 31DEN1

Agencies

[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Notices]
[Pages 67723-67728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28359]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-3356-NC]
RIN 0938-AT56


Medicare Program; Clinical Laboratory Improvement Amendments of 
1988 (CLIA) Fees

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Notice with comment period.

-----------------------------------------------------------------------

SUMMARY: This notice with comment period announces the increase of 
certain fees established under the Clinical Laboratory Improvement 
Amendments of 1988 (CLIA). The Public Health Service Act (PHSA) 
requires the Secretary to impose certificate fees to cover the general 
costs of administering the CLIA program, as well as additional fees, 
including Inspection fees for non-accredited laboratories. We are 
increasing these fees to cover the cost of administering the CLIA 
program as required by statute. We seek public comment regarding this 
increase, which we believe is necessary to meet the statutory 
requirements.

DATES: Comments: To be assured consideration, comments must be received 
at one of the addresses provided below, no later than 5 p.m. on March 
1, 2019.

ADDRESSES: In commenting, refer to file code CMS-3356-NC. Because of 
staff and resource limitations, we cannot accept comments by facsimile 
(FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-3356-NC, P.O. Box 8016, 
Baltimore, MD 21244-8016. Please allow sufficient time for mailed 
comments to be received before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-3356-NC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. For 
information on viewing public comments, see the beginning of the 
SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: For policy related questions, please 
contact Cindy Flacks, 410-786-6520, and Caecilia Blondiaux, 410-786-
2190.
    For the Budget and Financial Impact, please contact Jeffrey 
Pleines, 410-786-0684.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments.

I. Background

A. CLIA Fees

    On October 31, 1988, Congress enacted the Clinical Laboratory 
Improvement Amendments of 1988 (CLIA) (Pub. L. 100-578), which replaced 
in its entirety section 353 of the Public Health Service Act (PHSA). 
Section 353(m) of the PHSA requires the Secretary to impose two 
separate types of fees: ``certificate fees'' and ``additional fees.'' 
Certificate fees are imposed for the issuance and renewal of 
certificates and must be sufficient to cover the general costs of 
administering the CLIA program, including evaluating and monitoring 
approved proficiency testing (PT) programs and accrediting bodies and 
implementing and monitoring compliance with program requirements. 
Additional fees are imposed for inspections of non-accredited 
laboratories and for the cost of performing PT on laboratories that do 
not participate in approved PT programs intended to cover the cost of 
evaluating a laboratory to determine overall if an accreditation 
organization's standards and inspection process is equivalent to the 
CLIA program. These evaluations are referred to as validation 
inspections. The additional fees must be sufficient to cover, among 
other things, the cost of carrying out such inspections and PT. 
Certificate and additional fees vary by group or classification of 
laboratory, based on such considerations as the Secretary determines 
are relevant, which may include the dollar volume and scope of the 
testing being performed by the laboratories, and only a nominal fee may 
be required for the issuance and renewal of Certificates of Waiver 
(CoWs).
    The regulations provide for a methodology for determining fee 
amounts (Sec.  493.649) and periodic updating of the certificate fee 
amounts (Sec.  493.638(b)) and compliance fee amounts (Sec.  
493.643(b)). Under Sec.  493.645(b)(1), laboratories that are issued a 
certificate of accreditation (CoA) are assessed a fee to cover the cost 
of validation inspections. All accredited laboratories share in the 
cost of these inspections. These costs are the same as those that are 
incurred when inspecting non-accredited laboratories.

B. CLIA Budget Process

    With the exception of the ``CLIA Program; Fee Schedule Revision'' 
notice published in the August 29, 1997 Federal Register (62 FR 45815 
through 45821), the fees imposed to cover the costs of administering 
the CLIA program have not been updated since 1992. The fee amounts 
currently collected under the CLIA regulations are based on preliminary 
assumptions made in 1992 about future program operations and workload 
requirements. After decades of actual program experience, we have 
determined that it is necessary to increase certain CLIA fees to fund 
current and future program operations as required by section 353(m) of 
the PHSA. Specifically, as discussed in section II. of this notice with 
comment period, we are increasing those CLIA fees collected under Sec.  
493.638(b) (hereinafter referred to as ``Certificate Fees''), with the 
exception of fees for

[[Page 67724]]

issuing a Certificate of Registration (CoR); Sec.  493.643(b) 
(hereinafter referred to as ``Compliance Fees''); and Sec.  
493.645(b)(1) (hereinafter referred to as ``Additional Fees'') 
(collectively referred to hereinafter as ``CLIA Fees'').
    We routinely monitor incoming CLIA Fee collections and compare them 
on a monthly basis with the corresponding amounts of obligations and 
expenditures for all costs required to support the operation of the 
CLIA program, including state survey agency (SA) awards, CMS 
administrative costs, other federal agency costs, and contract support. 
Over the past several years, we have observed that the total amount of 
incurred obligations in a given fiscal year has outpaced the 
corresponding amount of CLIA Fees collected over the same timeframe, 
leading to decreases in the level of budgetary resources available to 
support program operations. Factors contributing to the increased 
obligations incurred by the CLIA program include an increase in the 
amount of time it takes to perform surveys in laboratories that are 
using more complex testing platforms and laboratory developed tests, as 
well as the overall inflation of the economy. Based on our 
observations, we performed a retrospective comparative analysis of 
federal fiscal year (FY)-end CLIA Fee collections and incurred 
obligations over the prior six FYs (FY 2012 through FY 2017). As shown 
in Table 1, the amount of incurred obligations in each fiscal year has 
exceeded the corresponding amount of collected CLIA Fees.

                                                 Table 1--CMS Comparative Analysis FYs 2012 Through 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              FY 2012         FY 2013         FY 2014         FY 2015         FY 2016         FY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
Certificate Fees Collected..............................     $36,343,753     $42,169,869     $41,173,724     $41,185,755     $42,369,451     $41,544,575
Compliance Fees Collected...............................      13,213,680      13,040,589      12,823,731      12,466,102      13,468,981      12,527,235
Sequester \1\...........................................               0     (2,760,521)     (3,887,817)     (3,916,586)     (3,795,483)     (3,730,969)
    Total, CLIA Fees Collected \2\......................      49,557,433      52,449,907      50,109,639      49,735,271      52,042,948      50,340,842
                                                         -----------------------------------------------------------------------------------------------
    Total, CLIA Obligations \2\ \3\.....................      54,539,917      54,169,837      57,360,315      56,404,651      56,778,918      59,680,186
    Total, CLIA (Shortfall)/Surplus.....................     (4,982,484)     (1,719,930)     (7,250,677)     (6,669,380)     (4,735,970)     (9,339,344)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Sequester is a reduction in budget authority authorized by Public Law 112-25, the Budget Control Act of 2011.
\2\ Collections and obligations data taken from FY-end Healthcare Integrated General Ledger Accounting System (HIGLAS) reporting. Exempt State Fees are
  categorized as Certificate Fees, because the state surveys their own laboratories and State Fees charged go to the state.
\3\ CLIA obligations include FY-end obligations for CMS administration (payroll, travel, training, supplies, contracts), other federal agencies (CDC,
  FDA, Treasury, DHHS/OGC), and SA awards (surveys, PT, etc.).

    Over the past few years, we have been diligent in controlling 
administrative costs, including use of carryover funds, in an attempt 
to avoid a fee increase. For example, we have controlled costs by 
enhancing monitoring and control over funds awarded to SAs for surveys, 
reducing federal travel and training expenses, as well as imposing 
strict oversight of incurred contract costs. Despite these efforts, a 
portion of CLIA's administrative obligations and expenditures remains 
fixed and cannot be further reduced without significant disruption in 
program operations (for example, limiting planned regulatory and 
enforcement actions). Taking into account annual inflation in the 
overall economy, we anticipate that program costs and concurrent 
obligations will continue to increase, further contributing to a 
projected shortfall in collections. Moreover, our ability to continue 
using carryover funds is limited since we have used this carryover to 
supplement shortfalls in new collections over a number of years.
    We project that without a fee increase, the CLIA program would 
cease to be self-sustaining at some point in FY 2020, as shown in Table 
2.

                                 Table 2--CMS Projections FYs 2018 Through 2020
                                                [No Fee Increase]
----------------------------------------------------------------------------------------------------------------
                                                                      FY 2018         FY 2019         FY 2020
----------------------------------------------------------------------------------------------------------------
Prior Year Carryover (SOY) \1\..................................     $43,494,763     $29,469,649     $14,464,636
Projected CLIA Fee Collections..................................      51,900,306      51,900,306      51,900,306
Projected Sequester (6.6%, 6.2%)................................     (3,425,420)     (3,217,819)     (3,217,819)
Budgetary Resources.............................................      91,969,649      78,152,136      63,147,123
Projected Obligations...........................................      62,500,000      63,687,500      65,024,938
Projected Carryover (EOY) \2\...................................      29,469,649      14,464,636     (1,877,815)
----------------------------------------------------------------------------------------------------------------
\1\ Start of year balances.
\2\ End of year balances.

    Based on these projections, absent a fee increase, our ability to 
maintain effective program operations may be jeopardized, potentially 
comprising public health and safety. As a result, we need to increase 
currently assessed CLIA Fees to ensure effective program operations.

C. CLIA RFI Feedback

    In January 2018, we published the ``Request for Information: 
Revisions to Personnel Regulations, Proficiency Testing Referral, 
Histocompatibility Regulations and Fee Regulations under the Clinical 
Laboratory Improvement Amendments (CLIA) of 1988'' (83 FR 1004). As 
part of the general solicitation for comments related to the CLIA Fees, 
more than a few commenters noted the CLIA Compliance and Additional 
fees have not been updated since 1992 and supported increasing the 
fees. Some of these commenters suggested the CLIA Fees be reviewed 
annually and updated as needed to cover the program costs of performing 
biennial surveys.
    One commenter raised concerns related to increases to the CLIA 
Fees, linking them to the recent changes to

[[Page 67725]]

the Clinical Laboratory Fee Schedule (CLFS) (see 81 FR 41036). While we 
appreciate this commenter's concerns, we note that changes to the CLFS 
are issued by Medicare and are separate and distinct from changes to 
CLIA Fees.
    As a result of the feedback received from the 2018 RFI, as well as 
through assessing the current program needs, we are increasing the fees 
as outlined in section II of this notice with comment period. 
Additionally, we will consider the comments received in response to the 
2018 RFI as well as this notice with comment period in future 
rulemaking.

II. CLIA Fees Increase

    For the reasons discussed in section I. of this notice with comment 
period, we are increasing the following CLIA Fees: Certificate Fees 
(collected under Sec.  493.638(b), with the exception of fees for the 
issuance of a CoR); Compliance Fees (collected under Sec.  493.643(b)); 
and Additional Fees (collected underSec.  493.645(b)(1)). These 
increases are based on our review of historical revenue and expenditure 
data, which have shown that expenditures in comparison to collections 
are insufficient to keep pace with the CLIA program costs.
    As shown in Table 1, we must close the $9.3 million gap between 
incurred obligations and CLIA Fee collections in FY 2017 to keep the 
program on a sustained solvent basis projected over time. To close this 
$9.3 million gap, we first determined the appropriate fee drivers, as 
shown in Table 3, and then added the results together, along with 
current State-Exempt Fees at about $1.1 million, to calculate the total 
projected fees.

                                        Table 3--CMS Projected Laboratory Population and Survey Workload, FY 2018
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Schedule Codes
                                       Waived    PPMP     LVA  --------------------------------------------------------------------------------   Total
                                                  \1\     \2\      A       B       C       D       E       F       G       H       I       J
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Accredited......................         0       0   6,466   4,245     183   2,022     249   1,493     793     497   1,721     200     167    18,036
Accredited..........................         0       0   2,103   2,700     184   1,895     228   1,631     959     599   3,081   1,107   1,794    16,281
Other...............................   178,616  33,411       0       0       0       0       0       0       0       0       0       0       0   212,027
                                     -------------------------------------------------------------------------------------------------------------------
    Total, CLIA Lab Population......   178,616  33,411   8,569   6,975     367   3,917     477   3,124   1,752   1,096   4,802   1,307   1,961   246,344
                                     -------------------------------------------------------------------------------------------------------------------
    Total, CLIA Compliance Surveys..         0       0   3,500   2,330     110   1,124     145     839     445     285     995     141     144    10,058
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Provider-Performed Microscopy Procedures Laboratories (PPMP).
\2\ Low-Volume Laboratory (LVA).

    For Certificate Fees, the driver used in our calculations is one 
half of the projected laboratory population for FY 2018 (123,172 CLIA 
laboratories), broken out by state and laboratory schedule code. We 
used one half of the projected laboratory population to determine an 
average annual collection because all CLIA laboratories are billed on a 
biennial basis. For Compliance Fees, the driver used in our 
calculations is the projected number of surveys budgeted for FY 2018 
(10,058 total surveys). For Additional Fees for accredited laboratory 
validation inspections, the driver used in our calculations is the 
projected number of validation surveys budgeted for FY2018 (about 407). 
Using this methodology, we project increased CLIA Fee collections at 
$61.0 million in FY 2018, as opposed to the currently collected $50.8 
million, plus the collection of $1.1 million in State-Exempt Fees, for 
a total projected collection of $62.1 million.
    We have projected that we need to increase the CLIA Fees described 
previously by at least 18.6 percent ($9.339 million/$50.341 million, 
per Table 1). In calculating projected collections for FYs 2018 through 
2021, we rounded up to a 20 percent increase to ensure a sufficient 
level of carryover to maintain operations in the first two quarters of 
FYs 2019 and 2020. Generally, carryover funds are needed to support 
program operations at the start of any given FY, until a sufficient 
amount of current FY collections is accumulated and made available for 
obligation. In rounding up to the 20 percent increase, we projected 
increased FY 2018 collections at $62.1 million, enough to reasonably 
approximate projected FY 2018 obligations. To calculate the $62.1 
million in projected collections, we multiplied the increased fees by 
the appropriate fee drivers, as shown in Table 3, and then added the 
results together, along with current State-Exempt Fees at about $1.1 
million, to calculate the total projected fees.
    The total of fees collected by HHS must be sufficient to cover the 
general costs of administering the CLIA program, and as indicated in 
Table 4, upon publication of the final notice, we project that the 20 
percent increase will be sufficient to fund the CLIA program into FY 
2022.

                                 Table 4--CMS Projections FYs 2018 Through 2021
                                         [With 20 percent fee increase]
----------------------------------------------------------------------------------------------------------------
                                                      FY 2018         FY 2019         FY 2020         FY 2021
----------------------------------------------------------------------------------------------------------------
Prior Year Carryover (SOY) \1\..................     $43,494,763     $29,469,649     $20,855,892     $14,052,629
Projected CLIA Fee Collections..................      51,900,306      58,714,011      62,070,016      62,070,016
Projected Sequester (6.6%, 6.2%)................     (3,425,420)     (3,640,269)     (3,848,341)     (3,848,341)
Budgetary Resources.............................      91,969,649      84,543,392      79,077,566      72,274,303
Projected Obligations...........................      62,500,000      63,687,500      65,024,938      66,390,461
Projected Carryover (EOY) \2\...................      29,469,649      20,855,892      14,052,629       5,883,842
----------------------------------------------------------------------------------------------------------------
\1\ Start of year balances.

[[Page 67726]]

 
\2\ End of year balances.

    With this notice, we are increasing all currently assessed CLIA 
Fees by 20 percent to close the gap between current obligations and 
current collections, and to account for a small increase in costs for 
the current fiscal year. Fees for the issuance of registration 
certificates would not be increased as these increases would not have 
substantial impact.
    The 20 percent increase would apply to the following CLIA fee 
types:
    1. Certificate Fees--collected under Sec.  493.638(b), with the 
exception of fees for the issuance of a CoR. Under Sec.  493.638(b), 
the fee amount is based on the category of test complexity, or on the 
category of test complexity and schedules or ranges of annual 
laboratory test volume (excluding waived tests and tests performed for 
quality control, quality assurance, and PT purposes) and specialties 
tested, with the amounts of the fees in each schedule being a function 
of the costs for all aspects of general administration of CLIA as set 
forth in Sec.  493.649(b) and (c). Under Sec.  493.649(a), the fee for 
issuance of a CoR or CoC is based on the laboratory's scope and volume 
of testing. The current Certificate Fees are already based on each 
laboratory's schedule's scope and volume of testing, including test 
complexity and specialties tested. Following the application of a 
uniform 20 percent increase to Certificate Fees across all schedules, 
with the exception of fees for the issuance of a CoR, the new 
Certificate Fees will continue to satisfy Sec. Sec.  493.638(b) and 
493.649(a).
    2. Compliance Fees collected under Sec.  493.643(b). Under Sec.  
493.649(a), the amount of the fee in each schedule for compliance 
determination inspections is based on the average hourly rate (which 
includes the costs to perform the required activities and necessary 
administration costs) multiplied by the average number of hours 
required or, if activities are performed by more than one of the 
entities listed in Sec.  493.649(b), the sum of the products of the 
applicable hourly rates multiplied by the average number of hours 
required by the entity to perform the activity.
    As discussed in section I. of this notice with comment period, 
current Compliance Fees were established in 1992 based on estimates as 
to the average time a survey would take, the cost of the surveyor 
salary per hour, as well as the size of the laboratory. Based on FY 
2017 available compliance fee collections, we estimate that current 
Compliance Fee collections cover approximately 55 percent of current 
and future compliance determination costs. Following the application of 
a uniform 20 percent increase to Compliance Fees across all schedules, 
in combination with the aforementioned increase to Certificate Fees, 
the new Compliance Fees will continue to satisfy Sec.  493.649(a).
    3. Additional Fees collected under Sec.  493.645(b)(1). Under Sec.  
493.645(b)(1), laboratories that are issued a CoA are assessed an 
additional fee to cover the cost of validation inspections. These costs 
are the same as those that are incurred when inspecting nonaccredited 
laboratories. As discussed in section I. of this notice with comment 
period, current Additional Fees were established in 1992 based on 
estimates as to the average time a survey would take, the cost of the 
surveyor salary per hour, as well as the size of the laboratory. 
Following the application of a uniform 20 percent increase to 
additional fees across all schedules, in combination with the 
aforementioned increases to Certificate Fees and Compliance Fees, the 
new Additional Fees will continue to satisfy Sec. Sec.  493.645(b)(1) 
and 493.649(a).
    While we recognize that the 20 percent increase to CLIA Fees across 
all schedule codes can be perceived as a major increase for 
laboratories, we intend for this approach to be a one-time adjustment 
to address the projected shortfall to ensure the program can remain 
self-sustaining into FY 2022. We will continue to review our 
obligations and collections and may make future adjustments as needed 
to avoid shortfalls. We considered multiple options prior to this 
notice with comment period, including limiting the increase to varying 
percentages and timeframes across a single fee type, specifically 
Compliance Fees. For example, we considered the following options:
     Update the existing Compliance Fees by updating the hours 
for all classifications (schedules) of laboratories and the hourly 
rates for all states and territories.
     A one-time 70 percent increase in Compliance Fees alone to 
meet projected obligations, with a phased-in two 35 percent Compliance 
Fee increases over a two biennial survey cycles.
    As discussed previously, in regard to the estimates established in 
1992, we are proposing the one-time 20 percent increase across most 
CLIA Fees, including Certificate (excluding CoR fees) and Compliance 
Fees based on our comparison of FY 2017 obligations and collections 
(see Table 1). Analysis indicates that the difference between 
collections and obligations results primarily from inflationary 
increases incurred since Compliance Fees were set in 1992 and since 
Certificate Fees user fees were last increased in 1997. Furthermore, 
analysis shows that the relative proportions of the certification and 
compliance work to total program obligations has remained virtually 
consistent over time, at about 34 percent for compliance and 66 percent 
for certification. We believe the original methodology for calculating 
CLIA fees was reasonable at the time, with the exception of excluding 
adjustments for inflation, which has remained relatively constant. 
Therefore, we determined that a one-time 20 percent increase across 
most currently assessed fees is the most appropriate approach. The 20 
percent increase also meets our policy objectives to keep any increase 
reasonably limited, given the elapsed time since the CLIA Fees were 
last updated.

III. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, if we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Statement

A. Statement of Need

    As discussed in section I. of this notice with comment period, when 
CLIA was enacted, and its implementing regulations were finalized in 
1992, CLIA Fees were established based on estimates as to the average 
time a survey would take; cost of the surveyor salary per hour; as well 
as the size of the laboratory (schedules A, B, etc.). As discussed in 
section III. of this notice with comment period, we are increasing

[[Page 67727]]

certain CLIA Fees based on our analysis of the overall level of 
collections relative to the costs of maintaining the CLIA program, 
which project a shortfall to begin in calendar year 2020.

B. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act (the 
Act), section 202 of the Unfunded Mandates Reform Act of 1995 (March 
22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 
4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)), and 
Executive Order 13771 on Reducing Regulation and Controlling Regulatory 
Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any one year, 
or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order. A regulatory impact 
analysis (RIA) is required for economically-significant regulatory 
actions that are likely to impose costs or benefits of $100 million or 
more in any given year.
    This notice with comment period is not economically significant 
within the meaning of section 3(f)(1) of the Executive Order since the 
estimated cost alone is not likely to exceed the $100 million annual 
threshold. Our upper limit of estimated impact is under the threshold 
of $150 million for the year of 2018 under Unfunded Mandates Reform Act 
(UMRA). This notice with comment period increases certain CLIA Fee 
requirements and will affect approximately 251,010 clinical 
laboratories, resulting in some budget implications.
    The RFA requires agencies to analyze options for regulatory relief 
of small entities if a rule has a significant impact on a substantial 
number of small entities. For purposes of the RFA, we assume that the 
great majority of clinical laboratories are small entities, either by 
virtue of being nonprofit organizations or by meeting the Small 
Business Administration definition of a small business by having 
revenues of less than $7.5 million to $38.5 million in any one year. 
For purposes of the RFA, we believe that approximately 82 percent of 
clinical laboratories qualify as small entities based on their 
nonprofit status as reported in the American Hospital Association Fast 
Fact Sheet, updated January 2017 (https://www.aha.org/system/files/2018-01/fast-facts-us-hospitals-2017_0.pdf ). Individuals and states 
are not included in the definition of a small entity. We are 
voluntarily preparing a Regulatory Impact Analysis and are requesting 
public comments in this area to assist us in making this determination.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. We do not expect this 
notice with comment period will have a significant impact on small 
rural hospitals. Laboratories in small rural hospitals are already 
subject to CLIA Fees. We are requesting public comments in this area to 
assist us in making this determination.

C. Anticipated Effects

    This notice with comment period impacts approximately 251,010 CLIA 
certified laboratories.

   Table 5--Current and New National Average of Compliance Fee Update
             [Compliance fee updates at 20 percent increase]
------------------------------------------------------------------------
                                              Current       New average
  Laboratory classification (schedules)     average (c)         (n)
------------------------------------------------------------------------
LVA.....................................            $300            $360
A.......................................             994           1,192
B.......................................           1,325           1,591
C.......................................           1,657           1,988
D.......................................           1,947           2,336
E.......................................           2,237           2,684
F.......................................           2,527           3,032
G.......................................           2,817           3,380
H.......................................           3,107           3,728
I.......................................           3,397           4,076
J.......................................           3,673           4,408
------------------------------------------------------------------------

    Table 5 reflects the national average of compliance fees for each 
classification of laboratories (schedules) that requires inspection. 
Specifically, Table 5 represents the national average for each schedule 
for the current Compliance Fees (noted with a ``c'') as paid biennially 
by laboratories that hold a CoC and the national average for each 
schedule for the new Compliance Fees (noted with a ``n'') that will be 
paid biennially by laboratories that hold a CoC. As discussed section 
II. of this notice with comment period, Table 5 reflects a total 
increase of 20 percent across all schedules.

[[Page 67728]]



    Table 6--Current and New National Average of Additional Fees for
                     Accredited Laboratories Update
             [Additional fee updates at 20 percent increase]
------------------------------------------------------------------------
                                              Current       New average
  Laboratory classification (schedules)     average (c)         (n)
------------------------------------------------------------------------
LVA.....................................             $15             $18
A.......................................              50              60
B.......................................              60              80
C.......................................              83              99
D.......................................              97             117
E.......................................             112             134
F.......................................             126             152
G.......................................             141             169
H.......................................             155             186
I.......................................             170             204
J.......................................             184             220
------------------------------------------------------------------------

    Table 6 shows the national average of Additional Fees for each 
schedule of accredited laboratory. Specifically, Table 6 represents the 
national average fees for each schedule for the current Additional Fees 
(noted with a ``c'') as paid biennially by laboratories that hold a CoA 
and the national average for the new Additional Fees (noted with a 
``n'') that will be paid biennially by laboratories that hold a CoA. As 
discussed in section II. of this notice with comment period, Table 6 
reflects a total increase of 20 percent across all schedules.

                                     Table 7--CLIA Biennial Certificate Fees
----------------------------------------------------------------------------------------------------------------
           Type of CLIA certificate                    Laboratory schedule          Current fee       New fee
----------------------------------------------------------------------------------------------------------------
Certificate of Waiver (CoW)...................  Not applicable..................         $150.00         $180.00
PPM...........................................  Not applicable..................          200.00          240.00
CoC and CoA...................................  LVA.............................          150.00          180.00
CoC and CoA...................................  A...............................          150.00          180.00
CoC and CoA...................................  B...............................          150.00          180.00
CoC and CoA...................................  C...............................          430.00          516.00
CoC and CoA...................................  D...............................          440.00          528.00
CoC and CoA...................................  E...............................          650.00          780.00
CoC and CoA...................................  F...............................        1,100.00        1,320.00
CoC and CoA...................................  G...............................        1,550.00        1,860.00
CoC and CoA...................................  H...............................        2,040.00        2,448.00
CoC and CoA...................................  I...............................        6,220.00        7,464.00
CoC and CoA...................................  J...............................        7,940.00        9,528.00
----------------------------------------------------------------------------------------------------------------

    Table 7 depicts the current and new Certificate Fees, which 
reflects the 20 percent increase across all schedules, with the 
exception of fees for the issuance of a CoR.

D. Regulatory Reform Analysis Under E.O. 13771

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017 and requires that the 
costs associated with significant new regulations ``shall, to the 
extent permitted by law, be offset by the elimination of existing costs 
associated with at least two prior regulations.'' It has been 
determined that this notice with comment period is not a ``significant 
regulatory action'' under E.O. 12866 and thus is not considered 
regulatory action under Executive Order 13771.

E. Conclusion

    Although the effect of the changes will increase laboratory costs, 
implementation of these changes will be negligible in terms of workload 
for laboratories as these fee increases are operational and technical 
in nature and do not require additional time to be spent by laboratory 
employees.
    We have determined that this notice with comment period would not 
have a significant economic impact on a substantial number of small 
entities or a significant impact in the operations of a substantial 
number of small rural hospitals and for these reasons, we are not 
preparing analyses for either the RFA or section 1102(b) of the Act.
    In accordance with the provisions of Executive Order 12866, this 
notice with comment period was reviewed by the Office of Management and 
Budget.

    Dated: December 14, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: December 18, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-28359 Filed 12-28-18; 11:15 am]
BILLING CODE 4120-01-P