Simple mistake leads to CLIA compliance nightmare

                Thomas McGovern
By Thomas W. McGovern, MD, FAAD

For over a decade, my single specialty group maintained its Clinical Laboratory Improvement Amendments (CLIA) certificate of compliance. We have multiple practice locations. We took the steps necessary to comply with a CLIA certificate and passed every inspection.

But then, in March 2013, something went terribly wrong with the inspection at one of our offices. The CLIA inspector returned for a routine visit, accused us of deliberately attempting to cheat on proficiency testing, and launched a process that threatened to strip my group of its CLIA certification for two years.

What was the great crime that almost destroyed our business? We didn’t correctly fill out a form.

CLIA was established by the federal government in 1988 for the purpose of setting quality standards for all laboratory testing. A laboratory is defined as any facility for the biological, microbiological, serological, chemical, immunohematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings. All labs meeting this definition must receive a CLIA certificate of compliance.

CLIA, which is managed by Centers for Medicare & Medicaid Services (CMS), has different certificates for labs based on the complexity levels of the tests they perform: waived (simple tests that don’t require additional quality assessment); moderate complexity (tests that do not meet the waiver criteria, e.g., KOH exams, Tzanck smears, fungal cultures with DTM, and staining procedures or provider-performed microscopy procedures); and high complexity (non-automated tests.)

 CLIA manual Clinical Laboratory Improvement Amendments (CLIA) for Dermatology Manual

The AAD's CLIA manual will help you understand the latest CLIA regulations and prepare your office for an inspection.

Our group fell within the moderate complexity group. As such, about a decade ago, we were told by a CLIA representative that our group should consider participating in CLIA’s proficiency testing. Dermatology practices that offer Mohs surgery or have arrangements such that they have chosen to seek accreditation from an outside body may need a proficiency testing program. For most, though, dermatology practices need only take quality control steps, including developing a lab procedure manual and implementing a self-directed quality assessment program for tests.

Although our group wasn’t required to participate in CLIA’s proficiency testing, we decided to take part because it was recommended. For years, the testing went on without incident. Every quarter we’d receive a test kit and it would be routed to the physicians in our group. Each physician would perform the test and sign an accompanying form. This form included multiple lines for multiple signatures.

Little did we know at the time that by signing the form, we’d be sealing our fate.

Down the rabbit hole

Last March, during a routine inspection, the CLIA inspector reviewed one of the testing forms. She stared at it for a moment in shock and said, “This is serious. This is as serious as it gets.” We thought she was joking. She was looking at the same type of form we’d been signing for the past decade.

The problem, she explained, was that we had all signed the same form—the form that had multiple lines for multiple signatures! What we didn’t know was that each physician who received the testing kit was required to sign an individual form. Our understanding was that each tester had to signoff on each kit that was sent. However, we have since learned that is not the case. By signing the same form, she said, it was obvious that our group was cheating on our test results.

In addition, the CLIA inspector said that because we had “tinea versicolor” listed in a chart after a KOH exam that we were speciating fungus.  Apparently, CLIA did not realize that is a clinical diagnosis and not a species of fungus.

Even though this was clearly a simple misunderstanding, the inspector immediately escalated the case and it quickly was brought to the federal level, where it was presented to an administrative law judge. The CMS attorneys felt their case against us was so strong that they asked the judge to bring a summary judgment, meaning that we were so clearly guilty there was no need for a trial. Even our own attorneys thought we’d lose based on the draconian CLIA rules.

CMS was looking to strip us of our CLIA certification at all four of our practice locations for two years. That would mean we couldn’t make or read slides or perform Mohs surgery at a different office that was not part of the March 2013 inspection. A CLIA representative suggested we allow another physician to purchase our practice and that we work under that physician's CLIA certification for two years and then repurchase the practice. It was pure madness!  I was told that I could also choose to do Mohs surgery at someone else’s ambulatory surgery center. Little does CLIA understand the complexity of setting up a Mohs surgery office and laboratory.

To the surprise of everyone, the judge told the CMS attorneys that not only would he not declare a summary judgment, but CMS would most likely lose the case if it went to trial.

So CMS made us a settlement offer. They said we had two options: hire someone to oversee the laboratory that was accused of the violation or shut down the lab for two years. The “lab” in question was simply a microscope in the corner of one of our satellite offices. We decided to take the second option since we could perform testing in our other facilities and we didn’t want to hire an overseer for a microscope.

Protect your practice

Recently, CMS issued a rule that makes significant changes to the existing regulations governing the proficiency testing process. The rule recognizes that CMS has not always considered the circumstances surrounding the infraction and, therefore, often assumes malicious intent, as it did in our case. This and other measures in the rule might offer welcome relief from CMS’s rigid enforcement of proficiency testing requirements, which can result in automatic revocation of a laboratory’s CLIA certificate even where the laboratory did not intend to violate testing rules.

However, as I’ve discovered in the past year, you can’t rely on CMS to be reasonable. They won’t sit down across a table to settle a simple misunderstanding; instead, requiring communication to go through lawyers. Therefore, your practice needs to take protective steps to avoid a confrontation with CMS. After spending tens of thousands of dollars in legal fees, here’s what I’ve learned:

1. Do NOT enroll in CLIA’s proficiency testing program unless you are required to do so. Most dermatology practices need only take quality steps measures to comply with CLIA.

2. If you do participate in proficiency testing, follow the instructions to the letter. Get clarification from CLIA on how to do the testing, and don’t rely on the PT company. Any minor error may result in suspension of your certification.  

Dr. McGovern is a fellow of the American College of Mohs Surgery and has practiced dermatology and Mohs surgery at Fort Wayne Dermatology PC since 2000 and became a co-owner of Fort Wayne Dermatology Consultants, Inc. in 2003.  He has written numerous book chapters, articles, and editorials and has given oral presentations on various aspects of skin disease. His special interests are the diagnosis and treatment of skin cancer and botanical dermatology. He graduated from Mayo Medical School in Rochester, Minn. and entered the United States Army for eight years. While in the Army, he worked in defensive biological warfare research at Fort Detrick, Md., completed a dermatology residency at Fitzsimons Army Medical Center in Aurora, Colo. and ran the dermatology clinic at Fort Riley, Kan. He performed a one-year fellowship in Mohs and Advanced Dermatologic Surgery at the Yale University School of Medicine.

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What do I need to comply with after I receive a CLIA certificate?

There are four main steps you need to perform to comply with CLIA:

1. Develop a laboratory procedure manual for each of your tests and equipment used.

2. Establish and implement a quality assessment program for your tests. This includes policies and procedures for maintaining quality control of not only your patient specimens but also competency assessments of your testing personnel and safety procedures. You must assess the quality of your testing through two specimens twice a year. This can be done by splitting samples with another provider in your area and comparing results or you can enroll in a proficiency testing program.

3. Enroll in a proficiency testing program — if applicable. Dermatology practices that offer Mohs surgery or have arrangements such that they have chosen to seek accreditation from an outside body may need a proficiency testing program; for most, the quality control steps described above will suffice. Specifically, if your lab performs regulated analytes testing and is either a moderate or high complexity lab, it must abide by proficiency testing guidelines. A list of regulated analytes is available on the COLA (formerly the Commission on Office Laboratory Accreditation) website. If you perform one of these tests and you are a non-waived laboratory, you must enroll in a proficiency testing program through a CMS accredited agency. A list of approved agencies is available at