In The Eye of the Political Storm: N.J. Association Advocates for ASCs

Throughout the country, ambulatory surgery center (ASC) associations are fighting back against assaults on their industry. No association has fought harder than the New Jersey Association of Ambulatory Surgery Centers (NJAASC), which has been at the eye of the storm in the attack on physician ownership and referrals. The NJAASC works closely with other specialty medical societies and healthcare groups, and its board is composed of physicians who have ownership interests in ASCs as well as ASC administrators and ASCs that are co-owned by physicians and development companies.

One issue that has taken precedence lately is a recent New Jersey Superior Court decision adopting a strict interpretation of the state’s anti-kickback statute. A Nov. 20, 2007 ruling, Joseph Garcia, MD, et al v. Health Net of New Jersey, Inc. v Wayne Surgical Center, LLC, established that referrals of a patient to an ASC in which the referring physician owns an interest violate N.J.S.A. 45:9-22.5, known as the Codey Act. This ruling prohibits a physician from referring a patient to a healthcare service in which the physician has a significant beneficial interest. The statute contains an exception for physicians who provide the patient with a written disclosure form and post this disclosure form in a conspicuous public place.

The Garcia case had been on appeal; at press time in late November, the Appellate Division upheld the trial court’s determination that Wayne Surgical Center (WSC) and its physician owners did not violate the Insurance Fraud Prevention Act (IFPA) because they failed to disclose that WSC frequently waived collection of co-insurance due on WSC’s facility fees. Further, the Appellate Division held that there is no New Jersey rule, regulation or directive from any administrative or licensing agency barring the waiver of co-payments or other co-insurance amounts. In support of its decision, the Appellate Division noted that WSC required each patient to sign a form stating that “he or she is fully responsible for 100 percent of the center’s charge.” And further, that at the time claims were submitted, WSC did not know whether it would enforce the patient’s agreement to pay co-insurance.

In March, then-New Jersey Gov. Jon Corzine signed Senate Bill 787, amending the state’s existing physician self-referral statute and significantly changing how ASCs are regulated under state law. In short, the law disallows new ASCs unless an exception applies; allows hospitals to establish new ASCs and enter into ASC joint ventures with physicians or other parties; prohibits indirect referrals from physician owners to their ASCs; requires certain state reporting requirements; and requires accreditation of all ASCs.