Developments in the Law Governing Physician-Owned Ambulatory Surgery Centers in New Jersey

December 19, 2009 – In The News
Health Reform Watch

The issue of physicians making referrals to ambulatory surgery centers (ACSs) has been brought to light by the recent decision in Garcia v. Health Net. The Appellate Division ruled in this case that physicians who make referrals to ASCs in which they have ownership interest violate the Codey Law, New Jersey’s version of the Stark Law. However, it also ruled the physicians committed no fraud. In response, the New Jersey State Legislature enacted revisions to the Codey Law, and essentially stopped the establishment of new physician-owned ASCs, unless they are jointly owned by a general hospital.

Elizabeth Litten notes that this “resonates more of long-forgotten certificate of need and health planning policy than it does of the original law’s concern with physician profit motives and overutilization.”