Theranos Submits Lab Correction Plan to CMS

February 19, 2016

Facing possible penalties and loss of Medicare reimbursement, Theranos has submitted a plan to government regulators on how it will correct violations at its laboratory in Newark, California, including one that poses "immediate jeopardy to patient health and safety," according to a recent inspection.

The Centers for Medicare and Medicaid Services (CMS) informed Theranos on January 25 that it had 10 days to demonstrate that it had eliminated the "immediate jeopardy" problem — which involved hematology practices — and taken action to rectify the other violations. The agency extended the deadline to February 12, the day the plan was submitted.

CMS spokesperson Aaron Albright told Medscape Medical News that the plan is under review. Both CMS and Theranos declined to share the correction plan, as well as the inspection report, which detailed the violations.

The CMS warning letter in January followed an inspection of the California laboratory conducted on November 20, 2015. In response to the CMS letter, Theranos said that it had already addressed many of the issues spotted by the agency. It also noted that the inspection had nothing to do with its lab in Arizona, where the company processes 90% of its tests.

Unfolding Crisis in Confidence

For Theranos, which promised to revolutionize its industry with inexpensive, finger-prick tests in lieu of venous draws, a lot is riding on staying in the good graces of CMS. Walgreens, which hosts Theranos Wellness Centers in 40 pharmacies in Arizona and one in California, publicly announced that no more blood samples will be sent to the lab in Newark until Theranos resolves its issues with the government. The Wall Street Journal (WSJ) reported last week that the giant drugstore chain had threatened to sever its relationship with Theranos if it didn't come into regulatory compliance within a 30-day period ending in late February.

The warning letter from CMS also has rattled a partnership that Theranos formed with Capital BlueCross in Pennsylvania to provide blood testing at the insurer's retail store in suburban Harrisburg. Capital BlueCross announced that it was suspending Theranos blood draws at the store "until further notice."

The crisis in confidence for the 13-year-old company began last fall when WSJ began publishing stories questioning the accuracy of its in-house testing technology. The US Food and Drug Administration (FDA) also warned Theranos that its "Nanotainer" for collecting a few drops of blood was an "uncleared medical device" except in a test for herpes simplex virus-1 immunoglobulin G, which had been approved in July 2015.

In response to the FDA warning, Theranos voluntarily switched from finger-pricks and Nanotainers to venous draws and collection tubes for the rest of its 250-odd assays until the FDA approves them in conjunction with the tiny collection vial.

The company has repeatedly stated that it welcomes FDA review of its tests, and "value[s] engagement with our regulators."

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