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The health inspectors referenced in this particular Wall Street Journal’s (WSJ) investigative report were from the US regulator Centers for Medicare and Medicaid Services (CMS), which has two main responsibilities, one, to ensure healthcare contractors comply with Medicare and Medicaid regulations, and two, to oversee and regulate CLIA accreditations of clinical labs in the US. To understand the issues CMS may have with a CLIA-accredited lab like Theranos, it would help to first understand the process of CLIA-accreditation and then ascertain how often CMS discovers serious problems in a CLIA-accredited lab.

The Process Of CLIA-accreditation

In 1988, the US Congress passed the Clinical Laboratory Improvement Amendments (CLIA) to establish quality standards for all laboratory testing to assure patients their tests were accurate and reliable no matter where they’re performed. As part of this process, laboratories that perform diagnostic tests on US patients need to apply for CLIA accreditation. There are 6 CMS-approved accreditation organizations and thousands of CLIA-accredited clinical labs in the US, (see below from https://www.cms.gov/Regulations-…  and https://www.cms.gov/Regulations-…). Thus, according to CMS, there are >16000 CLIA-accredited labs in the US. Some labs are accredited by more than one accreditation organization. A clinical entity, Theranos may have more than one CLIA accredited lab and may be accredited by more than one accreditation organization, especially since its labs are located in more than one state.

Part of CLIA accreditation requires enrolling in the CLIA Proficiency testing (PT) program. Three times a year, a CLIA-accredited lab will receive some unknown samples from a CMS-approved PT program provider (https://www.cms.gov/Regulations-…) that it has to test the same way it does patient samples and report these results back to their PT program provider. As the CMS web-site states (Proficiency Testing Programs),

‘Section 353(d)(1)(E) of the Public Health Service Act requires the laboratory to “treat proficiency testing samples in the same manner as it treats materials derived from the human body referred to it for laboratory examinations or other procedures in the ordinary course of business, except that no proficiency testing sample shall be referred to another laboratory for analysis as prohibited under subsection (i)(4)”’.

Clinical testing labs perform a variety of tests. As far as PT is concerned, tests are either waived or nonwaived. PT applies to all nonwaived tests a CLIA accredited lab performs on patient samples. The program then grades these test results using prescribed CLIA grading criteria and reports scores that show how well the lab performed in the PT. As Section 353(d)(1)(E) of the Public Health Service Act clearly states, PT applies to the entire lab test process, i.e., a lab has to run PT samples in the same manner and on the same instruments it uses to run patient samples.

How often CMS Discovers Serious Problems In A CLIA-accredited Lab

CMS explains in detail both PT (https://www.cms.gov/Regulations-…) as well as detailed instructions on how to anonymously report complaints about a CLIA-accredited lab (https://www.cms.gov/Regulations-…). Complaints, which include PT cheating, are part of a system of checks and balances that ensure a feed-back loop to help CMS become aware of CLIA violations, a huge deal since CLIA-accredited labs perform clinical tests that impact human health outcomes. Thus, apart from audits and inspections, such complaints are part of the process by which CMS discovers problems in CLIA-accredited labs.

With respect to publicly available statistics, CMS has listed its top 10 Deficiencies and Conditions in all US CLIA-accredited labs as of Jan 2016 (see below) (https://www.cms.gov/Regulations-…).

Since WSJ’s Theranos reports of Oct 15, Dec 20, Dec 27, 2015, allege PT cheating and inappropriate patient sample dilutions, issues that fall under CMS purview (Hot Startup Theranos Has Struggled With Its Blood-Test Technology; U.S. Probes Theranos Complaints; At Theranos, Many Strategies and Snags), this answer highlights nation-wide rates of PT violations reported by CMS to serve as a comparator.

As these tables show, deficiencies pertaining to PT were reported in 360 CLIA-accredited labs (2.1%) under regulation 493.803 (https://www.gpo.gov/fdsys/pkg/CF…), and in 221 (1.3%) under 493.801 (https://www.gpo.gov/fdsys/pkg/CF…). These PT complaints refer to Improper PT and Intentional PT referral, specifically to violations of the following CLIA regulations:

42 CFR  493.801(b)

Testing of proficiency testing samples.

42 CFR 493.801(b)(3)

Laboratories that perform tests on  proficiency testing samples must not engage in any inter -laboratory communications.

42 CFR 493.801(b)(4)q

The laboratory must not send PT samples or portions of samples to another laboratory.

So based on publicly available data, if CMS’ latest issues with Theranos pertain to PT, such problems are less common compared to others.

However, WSJ’s latest report in Jan 2016 (The Wall Street Journal, John Carreyrou, Christopher Weaver, Michael Siconolfi, Jan 24, 2016. Deficiencies Found at Theranos Lab), the one this question references, is much less specific about the alleged deficiencies.

‘U.S. health inspectors have found serious deficiencies at Theranos Inc.’s laboratory in Northern California, according to people familiar with the matter.

The problems were found during an inspection by the Centers for Medicare and Medicaid Services, the chief federal regulator of clinical labs, at the bloodtesting company’s facility in Newark, Calif. Failing to fix the problems could put the Theranos lab at risk of suspension from the Medicare program.

The inspection results are expected to be publicly released soon, these people said. A spokesman for the agency said it “can’t confirm any survey conclusions or results at this time’.

Since WSJ’s latest report doesn’t specify which regulations these deficiencies pertain to, it isn’t presently possible to estimate how common such problems might be. If such data’s made available in the future, these CMS tables would be useful reference guides.