Medicare and Medicaid Clinical Laboratory Improvement Amendments of 1988

Medicare and Medicaid Clinical Laboratory Improvement Amendments of 1988 - Amends titles XVIII (Medicare) and XIX (Medicaid) of the Social Security Act to require that clinical diagnostic laboratories be licensed under the Public Health Service Act.

Limits Medicare payments for clinical diagnostic laboratory tests to no more than the lowest amount which the laboratory charged others for such tests. Directs the Secretary of Health and Human Services to report to the Congress within 18 months of this Act's enactment on the changes and Medicare and Medicaid savings wrought by such payment policy.

Requires that health maintenance organizations' quality assurance programs assure that outpatient clinical diagnostic laboratory tests are provided only in laboratories which meet this Act's licensing requirements.

Allows direct Medicare payments to a laboratory which refers a test to another laboratory only if such other laboratory has no ownership or management relationship with the referring laboratory.

Prohibits an entity from providing clinical diagnostic laboratory tests at a physician's direction if such physician has a financial interest in the entity that poses a substantial risk of program abuse. Imposes a civil money penalty and assessment against a person who improperly bills for laboratory services.

Requires a physician who orders an unnecessary clinical diagnostic laboratory test to reimburse the laboratory for the performance of such test, unless such physician: (1) did not or could not reasonably be expected to know that such test was unnecessary; or (2) informed the individual to be tested that Medicare will not pay for such test and such individual agreed to pay for it.