Theranos Flagged by CMS for “Condition-Level Deficiencies” In Labs

Jan. 29, 2016
The Centers for Medicare & Medicaid Services (CMS) sent a letter to blood analysis startup Theranos citing “deficient practices” at the company’s northern California lab which pose “immediate jeopardy to patient health and safety.”

The Centers for Medicare & Medicaid Services (CMS) sent a letter to blood analysis startup Theranos citing “deficient practices” at the company’s northern California lab which pose “immediate jeopardy to patient health and safety.”

Palo Alto, Calif.-based Theranos is a biomedical startup that has developed proprietary testing technology for blood testing.

The CMS letter dated January 25th, which was posted online, states that the company has 10 days to provide “acceptable evidence of correction.” The document specifically cites problems with hematology, analytics systems, the laboratory director, the technical supervisor and laboratories performing high complexity testing that were found during an inspection late last year at the company’s Newark, California lab.

CMS has not released the laboratory inspection report that led to this letter, so the details of these infractions remain unclear.

Theranos posted a statement on its website stating that the company is continuing to take corrective action and will submit a full plan of correction to CMS within days.

“It’s important to note this particular survey was conducted months ago and is not a reflection of the current state of our lab in Newark, CA. As the survey took place we were simultaneously conducting a comprehensive review of our laboratory’s systems, processes and procedures to ensure that we have best-in-class quality systems,” the company said.

“To be clear, that finding does not apply to the whole lab, and none of these findings relate to our Arizona lab, where we currently process over 90 percent of our tests,” the company stated.

And, Theranos offered more detail about the condition-level deficiencies stating that three of the deficiencies are related to personnel, “such as documentation and oversight; one is related to analytic systems; and the one referenced above to hematology. CMS found that within hematology, certain policies, procedures, and associated events did not meet the relevant standards.”

The company also said in the statement that it has made policy and personnel changes in its Newark, CA lab, including adding a new CLIA lab director.

However, there has been fallout for the company following the critical regulatory inspection report as Walgreens announced Thursday that it has ceased Theranos testing services at its Palo Alto store and it has informed Theranos to immediately cease sending any clinical laboratory tests provided through Theranos Wellness Centers at Walgreens to the lab in Newark.

“Walgreens informed Theranos that tests collected at 40 Theranos Wellness Centers located at stores in Arizona must be sent only to Theranos’ certified lab in the Phoenix area or to an accredited third-party lab for analysis. No patient samples will be sent to the Newark lab until all issues raised by CMS have been fully resolved,” Walgreens said in a statement posted on its website.

In order for a laboratory to perform testing under the Clinical Laboratory Improvement Amendments of 1988, it must comply with all CLIA requirements. In the letter, CMS stated that as a result of its CLIA recertification and complaint survey of the California lab it was determined that the facility “is not in compliance with all of the conditions required for certification in the CLIA program.” And CMS specifically cited the hematology condition-level deficiency as posing an immediate jeopardy.

“Immediate jeopardy is defined by the CLIA requirements as a situation in which immediate corrective action is necessary because the laboratory’s non-compliance with one or more condition-level requirements has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or the health and safety of the general public,” the letter stated.

CMS also stated in the letter that laboratories found to be in non-compliance and that do not meet the condition-level requirements of CLIA may not be certified to perform laboratory testing under the CLIA program.

And, the letter states that if Theranos submits a credible allegation of compliance and acceptable evidence of correction that it removed jeopardy and comes into condition-level compliance, and CMS is then able to verify compliance with all CLIA requirements through a follow-up survey, sanctions will not be imposed.

If Theranos does not take immediate action and does not bring the lab into compliance, CMS could suspend, revoke or limit the lab’s CLIA certificate and cancel its approval for Medicare payments. Other possible sanctions include a fine of $10,000 per day of non-compliance or state onsite monitoring.

As previously reported by Healthcare Informatics, back in October the U.S. Food and Drug Administration founds flaws in the process that Theranos used to validate its blood-testing products. In two inspection reports, the FDA referred to the company’s capillary tube nanotainer (CTN), a blood specimen collection device, as an “uncleared medical device.”

The company has been under fire since a Wall Street Journal report last October suggested that the company’s inventions, including its Edison blood analyzer and its Nanotainer were only used on a small number of tests sold to patients.

In the statement on its website, Theranos addressed what it called “allegations” mentioned in recent media coverage and highlighted that CMS issued no findings on those particular allegations, such as issues related to proficiency testing “cheating” and that Theranos improperly hid the existence of its lab holding its proprietary technologies.

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