New Jersey’s new law about ASCs might change the state’s ASC landscape as hundreds of registered (but unlicensed) ASCs must decide whether they will apply for licensure by January 2019. If they do not apply, they may have to close their surgery operations or sell their companies.

New Jersey Gov. Chris Christie signed the bill, S-287/A-4995, in January 2018, shortly before Christie’s term ended, to unify standards that both licensed ASCs and registered surgical practices meet (http://bit.ly/2vtrcAq).

The change was prompted by major payers refusing to pay separate facility fees for unlicensed surgery centers, says John Fanburg, Esq., general counsel at New Jersey Association of Ambulatory Surgery Centers (NJAASC) in Trenton, NJ.

NJAASC pushed for the bill to raise the bar of quality and standards, as well as ensure reimbursement for ASC services, Fanburg says.

“In New Jersey, for many years, we’ve had two types of regulated ASCs. One is a licensed ASC, defined as more than one operating room suite,” he explains.

Licensed ASCs could be owned by corporations, physicians, or others, and these businesses are regulated by the New Jersey Department of Health. Also, non-owner surgeons can perform procedures in a licensed ASC.

“The other type was a registered surgical practice, which falls under the jurisdiction of the state Board of Medical Examiners, and it must be physician-owned, and only owners and full-time employees of owners can do surgery there,” Fanburg explains. Since the passage of the ASC licensure bill, all ASCs will need to be licensed, which could be a major challenge for some surgery centers, he notes.

Another issue is that there has been a moratorium in New Jersey on most new surgery centers since 2009, Fanburg says. There are complicated exceptions, but the result has been that there’s been very little growth of ASCs for almost a decade in the state, he adds.

Licensed ASCs in New Jersey must be Medicare accredited if they accept patients through CMS, says Marcy Sasso, CASC, principal and director of compliance at Sasso Consulting in Point Pleasant, NJ.

There are more than 150 registered, but unlicensed, ASCs in the state, and up to 20% likely will close before the licensing deadline, Sasso predicts.

Physicians who perform surgical procedures in their clinics and offices will have to close the surgery part of their business if they do not apply for a license. “They will have to cease and desist and only bill for physician services,” Sasso says. “They could do procedures as a doctor’s office, but a lot of payers won’t pay for that.”

The accreditation process takes a long time, so this will be a challenge unlicensed ASCs will have to meet if they are to continue to operate, she adds. Other actions registered centers have to take to become licensed include designating an infection control person, employing a pharmacy person, and preparing for compliance surveys.

Some registered ASCs might choose to sell their center to a licensed surgery center, which could use the extra operating room to expand their own services. Licensed surgery centers might find this option appealing since their growth has been limited by the ASC moratorium in the state, Sasso explains.

“A licensed center could buy the registered center just to have the third operating room,” she says. “They’d transfer their ownership.”

Registered ASCs that offer general anesthesia will be especially popular among licensed ASCs, Sasso says.

For those centers that decide to become accredited and seek a license, they’ll benefit from the ability to capture more reimbursement, Fanburg says.

“It is good for the ambulatory surgery center industry,” he says. “It raises the bar and puts everyone on the same level in terms of complying with surveying by the department of health.”

Editor's Note: This article was updated 08/16/2018.