CMS Imposes Sanctions on Theranos; CEO Barred from Lab for Two Years
The Centers for Medicare & Medicaid Services imposed sanctions on Theranos following a litany of quality control failures at the blood testing company.
As part of those sanctions, CEO Elizabeth Holmes is barred from owning or operating a laboratory for at least two years.
CMS also yanked the company’s CLIA certificate, imposed monetary penalties, suspended the lab’s approval to be reimbursed by Medicare and Medicaid and will oversee a directed correction plan for the beleaguered company.
Following a CMS noncompliance determination in March, Theranos rescinded test results from the past two years for its Edison blood testing diagnostics. The company issued corrected test results to doctors and patients and also voided results for some tests. In addition to filing a plan of correction, the company suspended further testing.
But the firm’s response did not go far enough, and CMS said the seriousness of the deficiencies resulted in “immediate jeopardy to patient health and safety.”
CMS had threatened sanctions in March if the company could not provide acceptable evidence of correction for the deficiencies.
After receiving unacceptable responses from Theranos, the agency issued a 33-page imposition of sanctions notice on July 7. The letter details multiple quality control failures.
The laboratory failed to submit documentation of any quality control procedures before May 15, 2014, the letter said. When pressed for information, the laboratory conducted a retrospective analysis for 2014 and 2015, and that data noted multiple and recurrent shifts in QC target means, rule failures and QC coefficients of variation “far exceeding limits for a stable testing process.”
CMS said the QC failures identified by the retrospective analysis “reflect a global and longterm failure of the quality control program,” and the failures “should have alerted the laboratory to correct such an unstable process.”
The firm provided patient records via flash drives to the agency, but CMS said the information on the drives was difficult to evaluate because records were spread over numerous drives.
“We are uncertain as to what the laboratory intended to submit as a ‘complete record’ for each corrected patient test report submitted,” the CMS letter said. “Consequently, we could not determine whether the laboratory provided documented evidence showing what corrective actions were taken for all patients found to have been affected by the deficient practice, and what corrective actions were taken for any other patients.”
The company has 60 days to appeal the determination to revoke the CLIA certificate. The sanctions also impose a civil monetary penalty of $10,000 per day for each day of noncompliance beginning July 12. The agency directed the firm to provide within 10 days a list of the names and addresses of all physicians and clients who have used some or all of the laboratory’s services from January 2014 to now.
Theranos said it is working closely with CMS to resolve the sanctions. “It’s important to note that the CMS review pertained to the operations of the company’s Newark lab, not its technologies,” Theranos said.
“We accept full responsibility for the issues at our laboratory in Newark and have already worked to undertake comprehensive remedial actions. Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures.”
“If the revocation of Theranos’ Newark lab’s CLIA certificate takes effect, it automatically prevents the company from operating any labs for a two-year period; that means the Arizona lab would cease to operate,” the firm said.
Congress Wants Answers
Members of the House Energy and Commerce Committee also want answers, and they sent a letter to Holmes requesting information about the company’s compliance program.
“Given Theranos’ disregard for patient safety and its failure to immediately address concerns by federal regulators, we write to request more information about how company policies permitted systematic failures of federal law and how Theranos is working with regulators to address those issues,” the letter said.
Specifically, the committee requested the CEO to brief committee staff on the following issues:
- How is Theranos working with regulators to come into compliance with federal law?
- How has Theranos changed its internal policies to prevent future compliance issues associated with its laboratories?
- Is Theranos conducting an internal investigation into company policies and the actions of relevant personnel to determine the root cause of these widespread compliance failures?
- What steps is Theranos taking to assist medical professionals and patients who may have been harmed by inaccurate test results?
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