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F I S C A L I M P A C T R E P O R T
SPONSOR Smith
ORIGINAL DATE
LAST UPDATED
01/29/08
HB
SHORT TITLE Hospital Clinical Lab Testing Use Project
SB 408
ANALYST Geisler
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY08
FY09
$100,000
Recurring
General
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to: HB 389
SOURCES OF INFORMATION
LFC Files
Responses Received From
Department of Health (DOH)
Health Policy Commission (HPC)
SUMMARY
Synopsis of Bill
Senate Bill 408 would appropriate $100,000 from the general fund to the Department of Health
(DOH) to fund a pilot project that is intended to reduce utilization of laboratory testing within
hospital settings in New Mexico. DOH would develop standards for the pilot project and may
contract with a clinical laboratory for this pilot project. DOH will also be required to seek
federal matching funds for this pilot project. Any unexpended funds at the end of fiscal year
2010 would revert to the general fund.
FISCAL IMPLICATIONS
The appropriation contained in SB 408 was not included in the FY09 DOH budget request. The
request in the bill to “seek federal matching funds" for the pilot project could lead to questions
about the adequacy of the appropriation in the bill if the federal match is not received.
pg_0002
Senate Bill 408 – Page
2
SIGNIFICANT ISSUES
DOH notes that unnecessary laboratory testing is seen in many parts of the health care system
with great variation in laboratory test ordering patterns between providers of similar patients.
Unnecessary laboratory tests increase the cost of health care, may cause discomfort for the
patient and do not improve health care. This issue has been studied in several hospital settings
and potential means of reducing unnecessary laboratory testing have been identified. Strategies
found to decrease unnecessary testing include: not allowing standing orders for patients admitted
with some medical conditions; monitoring patterns of lab testing and providing feedback to
providers; and using technology such as electronic medical records and test ordering that can
help to guide clinical decision-making and that allow providers to see what tests have already
been completed.
Currently, the regulatory oversight of clinical laboratory hospitals is under the Centers for
Medicare and Medicaid Services (CMS) through the implementation of the Clinical Laboratory
Improvement Act, (CLIA), section 5(a) Part F of Title III of the Public Health Service (PHS) Act
(42 U.S.C. 262-3). While there are no state regulations for laboratories or laboratory personnel,
the Department, through the CLIA program, assists clinical laboratory in hospitals in setting
minimum standards for all laboratories to follow and to determine if laboratories are achieving
those standards through certification and survey.
HPC notes that since the late 1990s, much of the laboratory testing within the three larger
hospitals systems in New Mexico (Presbyterian, University of New Mexico Hospital and St.
Vincent’s Hospital) has been done outside of a hospital. The creation of TriCore Reference Lab
as a consolidated regional laboratory, moved most of the laboratory testing within the hospital
setting for these three organizations to a central location outside of the hospital. The volume of
lab testing that remained within the hospital setting has been greatly reduced over the last decade
for the three large New Mexico hospital organizations. What remained within the hospital
settings were specimen collection locations and “stat" labs for tests of an emergent basis that had
to have a very rapid (within minutes) turnaround.
DUPLICATION
SB 408 relates to HB 389, which appropriates $500 thousand for the same purpose.
OTHER SUBSTANTIVE ISSUES
HPC provided background on clinical testing
:
According to the American College of Chest Physicians’ published article, Laboratory-Clinical
Interface: Point-of-Care Testing, point-of-care (POC) testing refers to the performance of
diagnostic testing at or near the site of patient care rather than in the traditional central
laboratory. Sites for POC testing include areas of the hospital that provide care to patients in the
most urgent need of rapid diagnosis and therapy. These sites include the emergency department,
the operating room, critical care units, and certain outpatient areas.
Historically, diagnostic technology has influenced where testing is performed. Large and
complex laboratory analyzers have allowed testing to be batched efficiently and economically in
centralized locations. With the evolution of the central laboratory, methods of quality control
pg_0003
Senate Bill 408 – Page
3
matured significantly and produced accurate and precise results. Current technologic
advancement is characterized by microchemistry (biosensors and whole-blood analysis), micro-
computerization, miniaturization, and noninvasive testing procedures.
The Centers for Disease Control and Prevention’s report, Good Laboratory Practices for Waived
Testing Sites, discusses the Clinical Laboratory Improvement Amendments relating to testing.
The following information pertains to waived testing:
Clinical Laboratory Improvement Amendments (CLIA) Requirements for Waived Testing
All facilities in the United States that perform laboratory testing on human specimens for health
assessment or the diagnosis, prevention, or treatment of disease are regulated under CLIA. The
CLIA program is administered by Centers for Medicare and Medicaid Services and is
implemented through three federal agencies—the Centers for Disease Control and Prevention,
Centers for Medicare and Medicaid Services, and the Food and Drug Administration. When
CLIA was implemented in 1992, CLIA Committee was chartered to provide scientific and
technical advice and guidance to the U.S. Department of Health and Human Services about
laboratory standards and their impact on medical and laboratory practice.
By law, CLIA regulations are based on a complexity model, with more complicated testing
subject to more stringent requirements. The three categories of testing for CLIA purposes are
waived, moderate complexity (including the provider performed microscopy procedures [PPMP]
subcategory), and high complexity. Facilities performing only waived tests have no routine
oversight and no personnel requirements and are only required to obtain a Certificate of Waiver,
pay biennial certificate fees, and follow manufacturers’ test instructions. Tests can be waived
under CLIA if they are determined to be simple tests with an insignificant risk of an erroneous
result. Approximately 1,600 test systems representing at least 76 analysts are waived under
CLIA.
GG/mt