Life has changed for physicians who own ambulatory surgery centers in New Jersey. And for physicians who plan to open their own ASC, life probably has become much more hectic.
Amendments to New Jerseys existing physician self-referral law were signed by Gov. Jon Corzine last month, making it legal for patients to be referred to ASCs their referring physician owns, under certain circumstances, and also giving hospitals an eventual lock on owning at least part of new ASCs.
The amendments changed the existing legislation, known as the Codey Law, which contains the states regulated physician self-referral provisions. The amendments were made in response to a Nov. 20, 2007 decision by state Superior Court Judge Robert Contillo, who ruled that physicians were violating the Codey Law when they referred patients to ASCs that they owned.
With the changes, physicians can refer to ASCs they own only if the referring physician performs the surgery and the compensation the physician receives from the ASC is not based on the volume of patients they refer. The law also now calls for all one-operating-room ASCs that are an extension of a medical practice to register with the New Jersey Health and Senior Services Department within one year and for all licensed ASCs to be accredited by a CMS-recognized accrediting body.
Legislators also had discussed enacting a two-year moratorium on new ASC licenses, but instead gave physicians considering opening their own ASC 180 days to file architectural plans and any required documents with the municipality where they plan to build.
Once this period expires, physicians will only be able to open a new ASC if it is done in partnership with a New Jersey hospital or medical school. That was sort of a tip of the hat to the hospital community, says Mark Manigan, a partner with the Roseland, N.J.-based law firm WolfBlock. If you had an ASC deal on the radar screen, you better hustle to put it together.
Randy Minniear, the New Jersey Hospital Associations vice president for legislation and policy, says this provision was a step in the right direction for quality improvement.
The whole intent of our interest in the bill was to level the playing field, Minniear says, adding that ASCs are proliferating throughout the state and hurting hospitals financially while not being subject to the same regulations and quality oversight as hospitals. There is no parity.
According to Manigan, one of the most important items in the new legislation is a provision making referrals made between the judges ruling and the governors bill-signing retroactively compliant with the law. Manigan says that some insurers were using the Contillo ruling as an excuse to withhold payment or to request the return of previously made payments on the grounds that insurance fraud had been committed. It would have been a disaster without that retroactive protection, Manigan says. Were representing about 14 or 15 surgery centers in actions like this. Were talking about $15, $20, $30 million in claims.
Minniear, who notes that there was much give-and-take in the legislation, says the retroactive protection was not that important to the hospitals, but they recognized it made the other regulations in the bill easier for physicians to swallow buteven sosome hospital interests wanted more regulation. Some members of the industry thought it could go further, he says. But sometimes you have to accept incremental change.Submit a letter to the Modern Physician Reader Blog. Please include your name, title, company and hometown. Modern Physician reserves the right to edit all submissions.