On Tuesday, President Obama signed into law the “Taking Essential Steps for Testing Act of 2012,” H.R. 6118, granting the Centers for Medicare and Medicaid Services (CMS) discretion to choose appropriate sanctions for clinical laboratories that are found to have intentionally referred proficiency test samples in violation of the Clinical Laboratory Improvement Amendments (CLIA).

In simple terms, the TEST Act repeals what some viewed as a mandatory “death penalty” for these labs.  Previously, 42 U.S.C. § 263a(i)(4) stated that a lab found to have intentionally referred a proficiency test “shall have its certificate revoked for at least one year”; the word “shall” has been replaced with “may.”  The new law also repeals an automatic two-year ban on owning or operating a lab for anyone whose certificate was revoked,  now allowing CMS to choose intermediate sanctions instead of the ban.

Many viewed the previous law as draconian.  Although CMS occasionally discovers cases of intentional cheating, many revocations occurred in cases where a lab employee referred a PT sample (sometimes following standard referral procedures) without knowing that CLIA prohibits the practice.  These outcomes were due in part to decisions of the HHS Departmental Appeals Board and the Tenth Circuit finding that the term “intentionally” meant the referral action was knowing and willful, even if the person did not mean to commit a violation of law.