On the eve of the one year anniversary of the infamous Garcia decision (S-787), Sen. Richard J. Codey 's bill amending the 1991 Codey Law, has been amended on the floor of the New Jersey State Senate by a vote of 32-0. This is hopefully the final step prior to a full vote on the floor of both the Senate and Assembly on Dec. 15, 2008.

The bill would modify the Codey Law in a number of significant ways by (1) creating an exception from New Jersey's ban on self-referrals for referrals to ambulatory surgery centers ("ASCs"); (2) deeming all pre-effective date referrals to ASCs compliant with the Codey Law; and (3) permitting corporate ownership of licensed ASCs to continue.

The bill would also increase regulatory oversight of the entire industry by requiring within one year of the effective date (1) all unlicensed one-room ASCs to become "registered" with NJDOH and (2) all licensed ASCs to become accredited by an "accrediting body recognized by Medicare" (currently the Joint Commission, the Accreditation Association for Ambulatory Healthcare and the American Association for the Accreditation of Ambulatory Surgery Facilities, hereafter collectively referred to as an "Accrediting Body").

The conditions of "registration" include the requirement that unlicensed centers obtain (1) Medicare certification or (2) accreditation from an Accrediting Body. Further, only existing unlicensed ASCs, as well as those that (1) change ownership; (2) have construction plans filed before the 6 month anniversary of the effective date of the bill or (3) relocate within 20 miles or to a "Health Enterprise Zone" (provided there was no expansion in the ASCs scope of services), would qualify for "registration" and therefore the ASC self-referral exemption contained in the bill. Finally, "registered" ASCs will not be subject to the ambulatory care facility assessment (currently 2.95 percent on gross receipts and capped at $200,000 per year).

The revised bill would prohibit NJDOH from issuing any new ambulatory surgery facility licenses unless one of the following scenarios apply: (1) a change of ownership; (2) the relocation of an ASC within 20 miles or to a "Health Enterprise Zone" (provided there was no expansion in the ASCs scope of services); (3) entities that have filed architectural plans within 6 months of the effective date; (4) entities that are owned in whole or in part by a New Jersey hospital; or (5) entities that are owned in whole by a medical school.

Finally, the bill would abolish the current Codey Law exceptions for lithotripsy and radiation oncology by prohibiting physicians from referring patients to lithotripsy or radiation oncology entities in which they hold an interest, unless the interest "was held" within one year following the effective date of the bill.

Again,  we hope that the amended bill will be voted on by the Senate and Assembly and sent to Gov. Corzine during the next voting session on Dec. 15, 2008.   

- Mr. Manigan ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) is a partner in WolfBlock's Health Law Practice Group.