Specifically, the document cites problems with the laboratory director, the technical supervisor, hematology, and the lab’s analytic systems during an inspection completed in December. CMS has not released the laboratory inspection report that led to this letter, so the details of these infractions remain unclear. But the level assigned to these determinations — “Condition-level deficiencies” — are among the most serious that CMS can make. They mean that Theranos’ Newark lab was found to be in violation of accepted professional standards. CMS declined to comment on the letter.
If Theranos doesn’t take immediate action, the lab could lose its certification, which which would bar the lab from performing testing. CMS may also decide to cancel that lab’s approval for Medicare payments or fine the lab up to $10,000 per day.
In an email, Theranos told The Verge that the inspection of the Newark lab “began months ago and does not reflect the current state of the lab.” Theranos further explained that CMS found a number of deficiencies, including one finding at the “immediate jeopardy” level, based on a condition-level deficiency in hematology. “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.”
Theranos, a company that’s been valued at $9 billion, has been under fire since an October Wall Street Journal expose around the fact that the company’s much touted inventions — including the now-famous Edison blood analyzer, as well as the Nanotainer, a blood collection device — were only used on a small number of tests sold to patients. Then, in December, a follow-up report said that Theranos had actively hidden its proprietary technology from lab inspectors during previous inspections, opting only to show its commercial machines to regulators.
Days later, an investigation by The Verge revealed that federal officials inspected Theranos’ inventions for the first time in August 2015 — almost two years after Theranos first started testing patients commercially — during a surprise inspection by the FDA. The deficiencies cited by CMS today represent the most serious actions taken by the federal government against the company thus far.
This isn’t Theranos’ first run-in with CMS, the federal agency that’s responsible for making sure that Theranos tests and technologies function properly. In December 2013, a lab inspector found that the lab didn’t meet the required standards for at least 10 different blood tests.