Committee Introduces Ambulatory Care Facility Legislation

Committee Introduces Ambulatory Care Facility Legislation

The Bill, crafted by the New Jersey Association of Ambulatory Surgery Centers (“NJAASC”), is an act concerning registered one room practices and ambulatory care facilities which would permit registered surgical practices to convert to or combine with ambulatory care facilities. In addition, the Bill would provide for a phase-in of the ambulatory care facility gross receipts assessment and would authorize non-profit hospitals to acquire joint ownership interest in practices.

The Bill

Conversion or Combination

Under the Bill, surgical practices registered with the Department of Health (“DOH”) would be authorized to (1) convert to an ambulatory surgery facility, (2) combine with an existing ambulatory care facility to expand the services offered through that facility, or (3) allow a non-profit hospital, or an entity in which a non-profit hospital is an owner, to acquire a joint ownership interest in the facility. In addition, the Bill would allow two or more licensed ambulatory surgical facilities to combine unless the combination would result in a net increase in the total number of operating rooms. The current certificate of need requirement will not apply to a combination or conversion approved under the Bill.

Currently, the State of New Jersey has a moratorium on the construction of new licensed ambulatory care centers unless plans were submitted prior to the moratorium or the construction is being performed with a hospital partner.

The Bill states that any action taken to combine or convert will require approval by the Commissioner of Health and each entity included in the application will be required to possess a current registration or license and be in compliance with all rules and regulations necessary to complete the action. The application must include the following information:

Ambulatory Care Facility Assessment

Currently, a licensed ambulatory care facility is required to report and pay an assessment to the State of New Jersey equal to 2.95% of its gross receipts from the prior fiscal year. Under the Bill, any facility created under the Bill would not be subject to a full 2.95% assessment until the completion of a phase-in period. Under this phase-in period, the converted or combined facility under the Bill would not be subject to an assessment in its first complete fiscal year following the restructuring under the Bill. The assessment would begin to apply in its second complete fiscal year and will be equal to .74% of its gross receipts from the preceding fiscal year. The assessment will increase to 1.48% in its third year; 2.22% in its fourth year and 2.95% in its fifth year where it will remain for all subsequent years.

If the licensed ambulatory care facility is combined with a registered surgical practice to expand the services provided by the facility, the assessment during the phase-in period will only apply to the gross receipts generated by the expanded portion of the facility.

Finally, consistent with current New Jersey law, no assessment will apply to a facility with gross receipts that are less than $300,000, and the assessment to be paid by any one facility will be capped at a maximum of $350,000.

Joint Ownership

The Bill also provides that the exception that currently applies to registered surgical practices prohibiting practitioner self-referrals will be extended to registered surgical practices in which a nonprofit hospital acquires joint ownership. As outlined in the Bill, the exception requires that the practitioner who provided the referral personally performs the procedure, the practitioner’s remuneration as an owner of or investor in the registered surgical practice is directly proportional to the practitioner’s ownership interest and not to the volume of patient referrals, all clinically-related decisions at the registered surgical practice are made by practitioners and are in the best interests of the patient, and the practitioner provides written disclosure of the significant beneficial interest at or prior to the time the referral is made.

Conclusion

According to Becker’s ASC Review, “the Bill was created with the hopes of helping ‘one room’- registered centers in New Jersey, in light of issues that had come up over the past several years.”

Jeff Shanton, the Chairman of the Government Affairs Committee of NJAASC, said “Since the enactment of the ‘Codey Law’ in 2009, the healthcare landscape in New Jersey has changed dramatically. There has been concern in the legislature regarding the quality and regulation of New Jersey’s registered practices. This bill seeks to encourage investment and improve physical plant standards in registered surgical practices, as well as enhancing quality and patient safety, while stimulating provider integration.”
The Bill also changes the duration of a registration for a surgical practice from one year to two years.

Shanton also stated “Consistent with the existing Codey Law, this bill would not increase the total number of operating rooms, but encourages conversion into licensed facilities, investment in them, and consolidation of ambulatory surgery settings. It is important to understand that this bill does not mandate these changes, but is an option, so if registered practices wish to continue as they are, that is up to them.”

The sponsor of the Bill believes that facilitating the consolidation and restructuring of registered surgical practices is consistent with current market trends in the healthcare industry and will help improve and advance the quality and safety of patient care. We will keep you informed of the Bill as it progresses through the approval process.

A copy of the Bill can be accessed below:

https://www.njleg.state.nj.us/2016/Bills/A3500/3101_I1.HTM

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