Under the Bill, referrals for ambulatory surgery and procedures requiring anesthesia performed at a registered "Surgical Practice" (defined below) or at a licensed ASC would be exempt from the Codey Law if the following conditions are satisfied:
- the referring practitioner must personally perform the procedure,
- the practitioner's remuneration as an owner of or investor in the Surgical Practice or ASC must be directly proportional to his or her ownership interest and not to the volume of patients the practitioner refers, and
- all clinically related decisions at an ASC owned in part by non-practitioners are made only by practitioners in the best interests of the patient, and written disclosure of the referring practitioner's interest is made to the patient at or prior to the time of the referral.
The New Jersey State Board of Medical Examiners ("BME") will prescribe the information that must be disclosed to a referred patient. The Bill also specifies such disclosure must include whether any services or fees associated with a referral will be considered to be, and reimbursed at, an "out-of-network" level by the patient's insurance carrier or other third-party payor.
The Bill provides that a Surgical Practice must register annually with the Department of Health and Senior Services ("DHSS"). A Surgical Practice is defined as having the following characteristics:
- no more than one operating room, equipped to perform surgery and designed to accommodate invasive diagnostic and surgical procedures;
- one or more post-anesthesia care units where a patient may be closely monitored until discharge; and
- is established by a physician, physician professional association, or other professional practice form specified by the BME solely for private medical practice. A Surgical Practice existing prior to the effective date of the Bill will be required to register with DHSS within one year of the effective date of the Bill. The registration must be renewed annually.
As a condition of registration with DHSS, a Surgical Practice must obtain certification by CMS or accreditation from an accrediting body recognized by CMS, and must comply with certain annual reporting requirements concerning utilization and staffing. A Surgical Practice will be required to annually report the number of patients served by payment source, including the number of Medicaid-eligible and medically indigent persons served; the number of new patients accepted; and the number of physicians, physician assistants, and advance practice nurses providing professional services at the Surgical Practice.
Effective one year after enactment, the Bill would also remove the current exemptions from the Codey Law for self-referrals for lithotripsy or radiation therapy pursuant to an oncological protocol. However, practitioners holding interests in such services before the Bill becomes effective will be permitted to continue referring patients, provided they comply with the Bill's disclosure requirements.
With respect to ASCs, the Bill adds a new requirement that ASCs must obtain accreditation from an accrediting body recognized by CMS within one year from the effective date of the Bill.
Following the effective date of the Bill, DHSS will NOT issue a registration to a Surgical Practice unless:
- the registration is issued to an existing Surgical Practice in order to comply with the Bill;
- the registration is issued to an entity that has not commenced business prior to the effective date of the Bill, but filed its plans and specifications in the municipality in which it is or will be located within six months following the effective date of the Bill;
- the registration relates to a transfer of ownership of the Surgical Practice, provided the transfer of ownership is approved by DHSS; or
- the registration relates to a relocation of the Surgical Practice, if the relocation is within 20 miles of the current location or in a medically underserved area.
Similarly, following the effective date of the Bill, DHSS will NOT issue any new ASC licenses unless:
- the new license relates to a transfer of ownership of the ASC, provided the transfer of ownership is approved by DHSS;
- the new license relates to a relocation of an existing licensed ASC and the new location is within 20 miles of the current location, or is in a medically underserved area;
- the license is issued to a new ASC that has filed its plans and specifications with the Health Care Plan Review Unit of the Department of Community Affairs within six months following the effective date of the Bill; or
- the new license is issued to a new ASC that is owned solely or in part by a hospital or solely by a medical school.
Following enactment, the Bill will become effective immediately except as otherwise provided in the Bill. Additionally, referrals made to a Surgical Practice or any ASC within the 12-month period following enactment will be deemed compliant with the Codey Law if the referring practitioner personally performs the services and discloses his or her beneficial interest to the patient in writing.
Mr. Schaff (mschaff@wilentz.com) is a healthcare attorney and chair of the corporate and healthcare departments for Wilentz, Goldman & Spitzer.