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Bill Requiring Licensure of One-Room Ambulatory Surgery Centers In New Jersey Dies in Gov. Christie’s Pocket

Posted Jan 24 2012 11:36pm

Photo by ArnoldReinhold

Governor Christie has pocket vetoed a bill that would have required one-room ambulatory surgery centers (ASCs) in New Jersey to be licensed by the State Department of Health and Senior Services (DHSS), as ASCs with more than one operating room already are.

More than One Room

Under current law (e.g., N.J.S.A. 26:2H-1 et seq.; N.J.A.C. 8:43A), ASCs with more than one operating room are subject to a variety of statutes and regulations, including that they must obtain a license that specifies the health care services they are authorized to perform (N.J.S.A. 26:2H-12(a)) and report certain information to DHSS on a quarterly basis (N.J.S.A. 26:25-5.1e).  ASCs providing surgical and related services must “obtain ambulatory care accreditation from an accredited body recognized by [CMS]” as a condition of licensure (N.J.S.A. 26:2H-12(h)).  They also must establish and maintain a uniform system of cost accounting, reports and audits; prepare and annually review a long range plan; and establish and maintain a centralized, coordinated system of discharge planning (N.J.S.A. 26:2H-12(a)).  The statute also assesses various fees, which it caps at $4,000 for applications for licensure or renewal and $2,000 for biennial inspections (N.J.S.A. 26:2H-12(b)).    Since 2004, licensed ASCs with gross receipts greater than $300,000 also must pay an annual assessment based on its gross receipts and the assessment, capped at $200,000 (N.J.S.A. 26:2H-18.57(b); N.J.A.C. 8:31A)), is deposited in the Health Care Subsidy Fund (N.J.S.A. 26:2H-18.58).

DHHS’s implementing regulations cover a broad array of topics, including the qualifications of  persons working at these facilities, housekeeping protocols, emergency equipment, disaster plans, physical plant requirements, and laundry policies and procedures (NJAC 8:43a-1 et seq.).   The regulations impose a biennial inspection fee (N.J.A.C. 8:43A-2.2(m), although DHSS’s web site says that it inspects licensed ASCs every three years.

One Room

room-of-ones-own1 ASCs with only one operating room presently escape this licensure requirement (and its corresponding regulatory demands) because they are defined as physician’s surgical practices, which are excluded from the definition of surgical facilities that must be licensed.   (N.J.S.A. 26:2H-12(g)(5); N.J.A.C. 8:43A-1.3)  While surgical practices do not yet need to obtain a license,  they must register with DHSS, which registration, in turn, carries a variety of conditions.  For one, they must “obtain certification by the Centers for Medicare and Medicaid Services [(CMS)] as [] ambulatory surgery center provider[s] or obtain ambulatory care accreditation from an accrediting body recognized by [CMS]” - similar to larger ASCs.  They also must annually report to DHSS data regarding patients serviced by payment source and staffing levels.   The Commissioner of DHSS has the ability to revoke, suspend, or deny an application for a registration if the surgical practice is not in compliance.   The statute also prohibits ownership, management, or operation of a surgical practice “by any person convicted of a crime relating adversely to the person’s capability of owning, managing, or operating the practice.”  (N.J.S.A. 26:2H-12(j)) One-room ASCs also are regulated by the State Board of Medical Examiners as private physician practices .  The BME has enacted regulations establishing policies, procedures, staffing, and equipment requirements when practitioners perform surgery (other than minor surgery), special procedures, and anesthesia services in an office setting (N.J.A.C. 13:25-4A).  The BME has the authority to investigate and bring a licensing action against any physician who fails to comply with these regulations (N.J.S.A. 45:1-18, 45:1-21).  One-room ASCs serving Medicare or Medicaid patients also must satisfy federal standards and be certified by CMS.   If a one-room ASC is certified by CMS, DHSS conducts inspections on behalf of CMS every four years.  DHSS and the BME (N.J.S.A. 45:1-18(c)) also may conduct inspections to investigate complaints filed about a one-room ASC.  But there is no present state requirement that one-room ASCs be inspected by the BME or DHHS.

One Rooms Cited for ‘Immediate Jeopardy’

Photo by Justin_Levy via Flickr

A report issued by the New Jersey Health Care Quality Institute (NJHCQI) in April 2011 shined the spotlight on the lack of oversight of one-room ASCs.  NJHCQI reviewed reports of inspections in 2009 and 2010 of 91 ASCs in New Jersey that reportedly were funded by a one-time federal grant.  40 of the 91 inspected facilities were unlicensed one-room ASCs, 17 of which (43%) were cited for “immediate jeopardy,” which is “defined as noncompliance with established rules that has caused, or is likely to cause, serious injury, harm, impairment or death to a patient.”  (In comparison, 8 of the 51 licensed facilities (15%) that were inspected were found in “immediate jeopardy.”)   The cited violations included, among others, a variety of improper sterilization and infection control procedures; inadequate tracking of medications, including controlled substances and expired medications; improper anesthesia administration; and failing to have necessary emergency medications or an agreement to transfer patients requiring emergency care to a hospital.  The report concluded that, “[b]ased on this snapshot,  . . there is evidence that consumers may be at greater risk in Surgical Practices than in ASCs” (emphasis in original).  Thus, the NJHCQI urged the State to require regular inspections of one-room ASCs and warned patients, in the mean time, not to use these unlicensed facilities.

What Could have Been

But S.2780 also included provisions that treated one-room ASCs differently than larger ASCs.  All one-room ASCs would have been exempt from paying the ambulatory care facility assessment required by N.J.S.A. 26:2H-18.57.  Those that are certified by CMS (whether in operation on the day of enactment or not) or accredited by the American Association for Accreditation of Ambulatory Surgery Facilities or other CMS-recognized accrediting body (and in operation on the day of enactment) would not have had to meet the physical plant and structural requirements detailed in N.J.A.C. 8:43A-19.1 et seq.  The rest of the one-room ASCs that fail these exemptions would still have been able to seek a waiver (N.J.A.C. 8:43A-2.9) of the physical plant and structural requirements, which the Commissioner could have granted if it would not have “endanger[ed] the life, safety, or health of patients of the public.”  These concessions seemed to respond to reported warnings from some one-room ASC owners that “a new fee and a potential requirement to remodel their offices might drive [them] out of business.”  The bill also would not have subjected one-room ASCs to the current restrictions on DHSS’s ability to issue new licenses to ASCs with more than one operating room (N.J.S.A. 26:2H-12(i)).

Jeffrey Shanton, chair of Advocacy & Legislative Affairs Committee for the New Jersey Association of Ambulatory Surgery Centers , is quoted as describing S2780 as “one of the most important pieces of legislation concerning the ASC industry in New Jersey in years.”   Reportedly , the New Jersey Hospital Association and the Medical Society of New Jersey joined NJAASC in supporting its passage (in addition to consumer groups, like NJHCQI).

But now, S.2780 is dead.  Governor Christie did not veto it - directly.  Instead, by not taking action on this bill, which was passed on the last day of the legislative session, he has killed it via a “pocket veto.”

Going Forward

high-contrast-media-skip-forwardsvg Legislators can’t override a pocket veto, but they may re-introduce the bill and try again.  If they do, it seems eminently reasonable to require inspections of one-room ASCs, whether by DHHS or BME, as long as there is adequate funding and staffing to complete these inspections without draining resources from other critical public health programs.    It would be critical to ensure that the $2,000 inspection fee is sufficient to cover DHSS’s costs and that the Department would not be prohibited from hiring necessary staff to fulfill this legislative requirement.

The Legislature also should be sure public safety requires the one-size fits all regulation model that this bill proposed.  If the costs of complying are too high, small offices may not seek licensure as an ASC and cease performing procedures that patients may have appreciated.  Perhaps that’s an acceptable outcome, but the Legislature should study the public safety benefits against the potential costs on physicians patient access to services.  The standard of care and quality should not vary in different settings, but perhaps there is a way for the level of formality and overhead to be in proportion to the size of the facility without compromising public safety.

It also is notable that S.2780 did nothing to resolve the existing tangle of issues caused when in-network providers refer their patients to out-of-network ambulatory surgery centers that then charge an out-of-network facility fee.    (Senator Vitale’s earlier amendment to S.2780 conditioning waiver of the ambulatory care facility assessment on the one-room ASCs’ agreement “not to charge patients or third party payors a facility fee, room charge, or other similar fee or charge” did not survive legislative negotiations.)  S.2780 also would have amended N.J.S.A. 45:9-22.5 to extend the exception to the Codey Act’s self-referral prohibitions for larger ASCs to one-room ASCs.  As Kate Greenwood has discussed, there are reasons to question the wisdom of this exception (much less to extend it).

While legislators tackle these issues, one-room ASCs still do not have to be licensed in New Jersey.  But the State may investigate complaints, so be sure to speak up, if you have concerns.  There are links here to check if a facility is licensed, get copies of inspection reports, file a complaint, and search for information about providers.

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