A New Jersey Chancery Court in Garcia v. Healthnet of New Jersey, Inc sent shockwaves through surgery offices when it held that a surgeon’s referrals of patients to an Ambulatory Surgery Center (“ASC”) he or she owns runs afoul of the New Jersey’s Codey law prohibition against self-referrals. It is common practice (not only in New Jersey but throughout the country) for surgeons to own ASCs with other surgeons and for those surgeon owners to perform their surgeries at the ASC. This model is cost effective, efficient and promotes quality. The Centers for Medicare and Medicaid Services("CMS") recognizes the model in a safe harbor to the federal anti-kickback statute. The New Jersey Medical Board has acknowledged in advisory letters, under a limited factual setting, that a surgeon owned ASC is an extension of his or her practice.
While this court decision has created uncertainty and concern in the health care community, New Jersey regulators should soon adopt regulations clarifying that such a referral is not a violation of Codey. That is the right result, not only legally but also for patients and their health care providers. For many years the Board has been working on draft amendments to its corporate practice of medicine regulations which, among other changes, would have clarified the model everyone believed to be permissible. The Board has likely taken its time publishing the amendments in order to “get it right.” Because of the lack of clarity and gaps inherent in the Codey law, “getting it right” is imperative. Hopefully the court’s recent ruling will not accelerate the process at the expense of New Jersey finally achieving clarity in its regulation of the corporate practice of medicine and of self-referrals. In view of all the other issues impacted by Codey and the present Board regulations, the ASC question is an easy one for the Board.
Thomas J. Tamburelli
