Begin Preparing for Pennsylvania’s Enforcement of Act 122

Posted by Health Law Informer Author on July 02, 2014
Pennsylvania Department of Health

The Pennsylvania Department of Health (“DOH”) Bureau of Laboratories (“Bureau”) recently announced that it will begin to phase-in enforcement of Act 122, which amended the Pennsylvania Clinical Laboratory Act (“Lab Act”), even though Act 122 became effective on December 18, 2013. The Bureau also issued additional guidance regarding Act 122 in its Frequently Asked Questions, Volume 1 and Volume 2 (“FAQs”).

According to its Senate Co-Sponsorship Memoranda, the purpose of Act 122 was to: (1) prohibit the “placing of phlebotomists or specimen collectors in physician and other health care provider offices in the Commonwealth;” and (2) afford Pennsylvania laboratories “the ability to compete on a level playing field with out-of-state labs” who had been able to place staff in providers’ offices “without fear of sanction.” However, the broad language of Act 122 will also affect laboratories’ ability to collect specimens from skilled nursing facilities (“SNFs”).

Key Provisions of Act 122:

  • The scope of the Lab Act was expanded so that both in-state and out-of-state laboratories must have a Pennsylvania clinical laboratory permit.
  • Laboratories may not lease or rent space, shelves, or equipment within a health care provider’s office for any purpose. This includes leasing or renting space for the purpose of establishing a specimen collection station.
  • Laboratories may not place any personnel in health care providers’ offices for any purpose, regardless of whether fair market value is offered or given. Laboratories must remove specimen collectors or personnel who process or package specimens from providers’ offices before September 15, 2014.

Exceptions under Act 122:

  • Providers who own and operate their own clinical laboratory may place their employees in the laboratory.
  • Licensed clinical laboratories can refer specimens to another licensed clinical laboratory or to a CLIA-accredited or certified laboratory.
  • Clinical laboratories may own or invest in a building in which space is leased or rented for adequate and fair consideration to health care providers.

According to DOH’s FAQs, Act 122 applies to SNFs. However, SNFs may: (1) have SNF personnel collect specimens and ship them to licensed laboratories or place them in onsite collection boxes for licensed clinical laboratories to pick up; or (2) hire independent contractors to collect specimens. Despite the fourth key provision noted above, existing agreements between SNFs and laboratories may be permissible under certain circumstances. According to FAQ 30:

A nursing home patient is considered a resident of the nursing facility, regardless of whether the patient is ambulatory or non-ambulatory. Because of the specialized needs of nursing facility residents, a nursing facility must either provide its own Department-licensed laboratory services or have a written agreement with a clinical laboratory licensed by the Department that meets the requirements of state law and applicable federal law as set forth in the Social Security Act and implementing regulations at 42 CFR § 483.75(j). These federal requirements have been incorporated into the Department’s nursing facility licensure regulations at 28 Pa. Code § 201.2(10). Provided the provision of laboratory services by the nursing facility or the agreement between the clinical laboratory and the nursing facility complies with these state and federal regulations, as well as applicable anti-kickback laws, the agreement entered into under 42 CFR § 483.75(j), as incorporated at 28 Pa. Code § 201.2(10), meets the requirements of Act 122 permitting such clinical laboratories to provide phlebotomy and other laboratory services to the residents of nursing facilities.

Practice Tip: Laboratories have until September 15, 2014 to comply with Act 122. SNFs should begin reviewing contracts with clinical laboratories and restructure arrangements to be in compliance with the Act 122 requirements to avoid potentially incurring fines of up to $500 per day.

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