(a) Basis for cancellation.

1. (1) CMS always cancels a laboratory's approval to receive Medicare payment for its services if CMS suspends or revokes the laboratory's CLIA certificate.

2. (2) CMS may cancel the laboratory's approval under any of the following circumstances:

   1. (i) The laboratory is out of compliance with a condition level requirement.
   2. (ii) The laboratory fails to submit a plan of correction satisfactory to CMS.
   3. (iii) The laboratory fails to correct all its deficiencies within the time frames specified in the plan of correction.

(b) Notice and opportunity to respond. Before canceling a laboratory's approval to receive Medicare payment for its services, CMS gives the laboratory—

1. (1) Written notice of the rationale for, effective date, and effect of, cancellation;

2. (2) Opportunity to submit written evidence or other information against cancellation of the laboratory's approval.

   This sanction may be imposed before the hearing that may be requested by a laboratory, in accordance with the appeals procedures set forth in § 493.1844.