What health care providers and hospital/health system administrators need to know as the Legislature returns from its summer recess.
Many of the 2008-2009 New Jersey Legislature's efforts to date have been influenced by (1) the increasing degree of hospital financial distress, as seen by an alarming number of hospital bankruptcies and closures; and (2) the uncertainty as to permissible ownership and business structures through which health care practitioners may provide services, as manifested by a series of law suits challenging providers' rights to payment if their ownership and/or business structures are not specifically authorized by law. This Bulletin will summarize selected Bills affecting the health care industry and their status as of the date of Legislature's summer recess.
1. Legislation Resulting From The NJ Commission On Rationalizing Health Care Resources
Pursuant to Executive Order No. 39, the NJ Commission on Rationalizing Health Care Resources was created and charged with the task of analyzing the financial condition of the state's health care system (with particular emphasis on hospitals), and recommending how to address adverse conditions. Subsequent to the release of the Commission's final report on January 24, 2008, the NJ Department of Health and Senior Services ("DHHS") has worked with members of the Legislature to draft the following set of bills, all of which were passed by both Houses of the Legislature and were signed into law by the Governor on August 8, 2008:
A2606/S1795 – Requires training for all trustees of general hospitals. Note that, in accordance with P.L. 2007, c.74, enacted on April 30, 2007, DHSS proposed rules in the New Jersey Register on June 16, 2008, pertaining to the training of new trustees (e.g., those appointed subsequent to April 30, 2007). The training required of all trustees is designed to equip board members to keep pace with best practices for nonprofit governance and changes in the health care industry.
A2607/S1794 – Requires each general hospital to conduct annual public meetings for the community it serves to discuss issues related to hospital operations. The public would have an opportunity to ask questions and raise any concerns about service delivery. A certain percentage of the hospital's board would be required to attend, as well as the hospital's CEO and board chair.
A2608/S1796 – Authorizes and enhances DHSS monitoring of hospital financial performance and intervention in management of identified distressed hospitals. This Bill authorizes progressive levels of monitoring and oversight by DHSS, including the ability to appoint a monitor, allowing DHSS "to move from a culture of crisis management to one of more stringent planning."
A2609/S1797 – Prohibits hospitals from charging certain uninsured persons more than 15% greater than the applicable Medicare rate. This Bill is intended to provide hospitals clear guidance as to how to charge in a uniform and clear way patients who lack health insurance but do not qualify for public health insurance.
2. Bills Addressing Payment Challenges Arising From Practitioner Ownership/Business Structures
New Jersey courts have been presented with a number of challenges involving payment obligations and practitioner ownership/business structures. Primarily, these cases have involved physicians (especially those referring surgical procedures to ambulatory surgical centers which they own), physical therapists and chiropractors. The courts have found in favor of plaintiffs seeking relief from payment obligations for services performed or referred by these practitioners where the structure or the ownership of the entity billing for the service is not expressly authorized by law. The following Bills address some of these issues:
A1933/S787 – Permits practitioners to refer patients to certain surgical practices and ambulatory care facilities in which they have a financial interest. This Bill makes it clear that practitioners can refer patients to surgical practices and licensed ambulatory surgical facilities in which they have a financial interest as follows:
- a "surgical practice" (e.g., a one-room dedicated operating room specifically equipped to perform surgery and designed and constructed to accommodate invasive diagnostic and surgical procedures; in which the practitioner who provides the referral also personally performs the surgical procedure; in which all of the ownership interests are held by investors who are referring practitioners, or referring practitioners in combination with other practitioners, with a licensed hospital or with closely allied health care professionals; from which the practitioner's remuneration as an owner/investor is directly proportional to his/her ownership interest and not to volume of patients the practitioner refers to the practice) for which a bill is issued directly in the name of the practitioner or the practitioner's medical/surgical practice.
- an "ambulatory surgical facility" (e.g., an
ambulatory surgical facility licensed by DHHS that does not meet
the definition of a "surgical practice"), so long as all
of the following conditions are met: the practitioner who provided
the referral also personally performs the surgery or procedure; and
the practitioner's remuneration as an owner/investor in the
facility is directly proportional to his/her ownership interest and
not tied to the volume or value of referrals. Where an
"ambulatory surgical facility" is owned in part by
non-practitioners, clinically-related decisions must be made by
practitioners and must be in the best interests of patients.
Regardless of whether the surgical services are provided in a "surgical practice" or an "ambulatory surgical facility," the Bill requires the practitioner to provide the patient with a written disclosure form at or prior to the time that the referral is made setting forth the health care service(s) in which the practitioner has a financial interest and that the patient may seek treatment at a health care service provider of his/her choice (which disclosure must be in the form set forth at N.J.S.A. 45:9-22.6). This disclosure must also be posted in a conspicuous public place in the practitioner's office. Additionally, the written disclosure must inform the patient whether the services provided at the surgical practice/ambulatory surgical facility will be considered to be, and reimbursed at, an "out-of-network" rate.
A2123/No Identical Bill Number in Senate – This Bill was passed by the Assembly on June 23, but does not have currently have a sponsor in the Senate. This Bill permits the public direct access to physical therapists' services delivered outside the context of a comprehensive outpatient rehabilitation facility (e.g., a "CORF"). It specifically prohibits most pre-approval requirements by health plans or the requirement of a referral as a condition to physical therapy service access. The Bill expressly states that "physical therapy treatment ... shall be accessible without the need of a referral from a licensed physician, dentist, podiatrist or chiropractor ... ."
3. Bills Addressing ASC Moratorium; Facilities Licensure; Access To Care And Certificate Of Need
A1933/S787 – In addition to addressing permissible practice structures for the lawful referral of patients to surgical practices and ambulatory care facilities, this Bill also imposes a two-year moratorium on the issuance of initial licenses to ambulatory surgical facilities, beginning on September 1, 2008 (likely to be extended). In any event the moratorium will not:
- Apply to an ambulatory surgical facility that has filed plans, specifications and required documents with the Health Care Plan Review Unit of the Department of Community Affairs prior to the moratorium date;
- Restrict the transfer of ownership of an ambulatory surgical facility;
- Restrict the expansion at the same location of an ambulatory surgical facility which has filed its plans, etc., in accordance with the first bullet point above;
- Restrict any licensed ambulatory surgical facility that is in operation on the effective date of the Bill from relocating its operations to a new location.
S99/A116 – This Bill was introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on January 8, 2008. It provides for regulation by DHSS of single-room surgical facilities operated by physicians in their private medical practices. Existing surgical practices would have one year to comply with the licensure requirement.
S1642/A1120 – Introduced in the Senate, and referred to the Senate Health, Human Services and Senior Citizens Committee on May 5, 2008, this Bill requires certain ambulatory care facilities to provide services to patients without regard to ability to pay. Specifically, ambulatory care facilities that are not owned in the majority by a New Jersey general hospital, which have a total square footage in excess of 20, 000 square feet and provide primarily cancer-related diagnostic and treatment services (including but not limited to radiation, chemotherapy, diagnostic radiology and medical and surgical consultation) would be prohibited from denying appropriate services to a patient on the basis of that patient's ability to pay or source of payment.
S939/A307 – This Bill eliminates the certificate of need requirement for home health services provided by a hospital. It does not alter applicable licensure requirements. It was introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on January 28, 2008.
4. Bills Affecting Disclosure Of Information, Reporting Requirements And Health Records
S2040/A3103 – Introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on June 16, 2008, this Bill requires practitioners to disclose business relationships with out-of-state facilities when making patient referrals to those facilities. The Bill seeks to ensure that when patients are referred to health care services located or owned by an entity that is outside New Jersey, the referring practitioner (physician or podiatrist) notify the patient of any business relationships the practitioner may have with the out-of-state entity. The Bill contains a particular form that must be used by practitioners when making such disclosure, requiring the following information:
- The nature of the business relationship;
- The identification and addresses of health care service providers located in the same county and contiguous counties in the State that are licensed to provide the referred service;
- Whether the entity with which the practitioner has a financial relationship and to which the practitioner would refer the patient does or does not participate in the patient's health plan or other third party's provider network;
- Information about the cost differential (if any) between receiving the service from an out-of-state provider versus and in-state provider; and
- A statement that, if "the referral involves an over night stay, your recovery may be affected by the location of the health care service, in terms of the ability of family and friends to provide needed support during and after hospitalization, and with respect to post-hospitalization care or rehabilitation."
S807/A1264 – This Bill would require DHSS to make information about certain adverse events publicly available. It would amend the Patient Safety Act so that DHSS would be required to use the information reported by health care facilities as to medical errors and adverse events to develop and make available to the public a report "to enable comparison among health care facilities in particular facility categories," with an eye toward "assess[ing] the progress made by health care facilities ... and mak[ing] such recommendations for operational changes" as the commissioners of DHSS and Human Services determine appropriate. While the report would be made available on the official website of DHSS, DHSS would be prohibited from providing any identifying information about any person connected with any adverse event or the day or month on which any such event occurred. This Bill was introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on January 28, 2008.
A435/No Identical Bill Number in the Senate – Paralleling a similar requirement for health care facilities to report certain information about physician misconduct/quality of care concerns to the Medical Practitioner Review Board, this Bill would require heath care facilities, health care services firms and nurses' registries, to report to the appropriate licensing board certain health care professionals (e.g., nurses, homemaker-home health aides, pharmacists, nurse aides and personal care assistants) whose conduct or care has been called into question. This Bill was introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008.
A1428/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill would require hospital governing boards to report certain information to DHSS. In essence, this Bill requires hospital boards to report annually board conflict of interest policies, codes of ethic and financial relationships involving board members and administrators, as well as contracts executed by the hospital with any business not 100% owned by the hospital which exceed $20,000 in value.
A824/S1018 – Requires in-network hospitals to notify patients of out-of-network health care professionals who provide services in the hospital. Introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on January 28, 2008, this Bill seeks to provide patients with information in advance of receiving services about the insurance participation of health care professional at the hospital, so as to enable patients to make informed decisions about the providers who treat them, especially in connection with emergency room, radiology and anesthesia services.
A1390/No Identical Bill Number in the Senate – Passed by the Assembly on February 7, 2008, this Bill was received in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on February 14, 2008. The Bill prohibits hospitals from executing a contract for the purchase, lease, or other use of an electronic health records system, or any part thereof, that would directly or indirectly preclude the entity with which the hospital contracts from selling, leasing, or otherwise making that system, or any part thereof, available to another hospital.
5. Bills Pertaining To Pharmaceutical Companies, Clinical Trials, Retail Pharmacies And Pressure Mattresses
A754/No Identical Bill Number in the Senate – This Bill restricts gifts from drug companies to health care professionals and prohibits health care professionals with financial ties to drug companies from serving on formulary committees. Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill precludes health care practitioners who are licensed pursuant to Title 45 of the New Jersey Statutes from accepting a gift in excess of $100 from a pharmaceutical marketer or drug manufacturing business. This limitation would not apply to free drug samples for use by patients. The Bill would also preclude a health care professional who has any direct or indirect personal interest in a drug manufacturing business from serving on the pharmacy or therapeutics committee of a licensed health care facility.
S1945/No Identical Bill Number in the Assembly – This Bill requires pharmaceutical manufacturers to disclose gifts, fees and other economic benefits provided to heath care providers for promotional and marketing purposes. Introduced in the Senate and referred to the Senate Health, Human Services and Senior Citizens Committee on June 9, 2008, this Bill would require annual disclosures by pharmaceutical companies to the DHSS commissioner of any gifts, fees, payments, subsidies or economic benefits in excess of $25 "in connection with detailing, promotional other marketing activities ... to any physician, hospital, nursing home, pharmacist, administrator of a health benefits plan or any other person in the State who is authorized to prescribe, dispense or purchase prescription drugs," and would permit a civil penalty of up to $10,000 for noncompliance.
Items in excess of $25 also exempt from the disclosure requirement would be:
- Free samples of prescription drugs intended to be distributed to patients;
- The payment of reasonable compensation and reimbursement of expenses in connection with clinical trials; and
- Scholarships and other support for medical students, residents and fellows to attend a significant educational, scientific or policymaking conference of a national, regional or specialty medical or other professional association, if the recipient of the scholarship or other support is selected by the association.
The first annual disclosure of this type is targeted for on or before January 1, 2011 for the 12-month period ending June 30, 2010.
A1377/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill would establish the "Prescription Drug Right-to-Know Act." The Bill establishes a clinical trial registry in DHSS and requires pharmaceutical companies to publicly disclose clinical trial data. DHSS is to make the information reported to the registry available on its website "in clearly understandable language that is designed to assist consumers in understand the content of, and how to access, the information." Additional information to be provided to the DHSS commissioner would include: outcomes of the trial; number of patients initially enrolled and completing the trial; frequency, severity, and nature of adverse events and description of same on packages inserts; and citation of any publication in which data is published and the name of and employer of any author of a published study.
S1486/A123 – This Bill requires retail pharmacies to stock and dispense emergency contraception. Introduced in the Senate and referred to the Senate Heath, Human Services and Senior Citizens Committee on March 6, 2008, this Bill amends the New Jersey Pharmacy Practice Act (N.J.S.A. 45:14-69) to require retail pharmacies to stock emergency contraception in pill form and to dispense the same upon presentation of a valid prescription. The Bill is intended to ensure that women in the State can readily access postcoital contraception, based upon the determination that "the sooner a woman gets [emergency contraception] after vaginal intercourse, the better it works."
S1517/A2733 – This Bill, passed by the Senate and now before the Assembly Health and Senior Services Committee, requires nursing homes to start replacing their current mattresses with pressure redistribution mattresses "[n]o later than three years after the effective date of this act." Citing a 2007 survey conducted by the Centers for Medicare and Medicaid Services, the Bill notes that New Jersey's nursing home residents ranked fourth and fifth in the nation, respectively, in the percentage of nursing home residents with pressure ulcers upon stay and admission. To address the pain and complications from infection that pressure ulcers present to elderly persons, the Bill requires the phasein of pressure redistribution mattresses, which are "widely recognized as one of the more effective ways to prevent and treat pressure sores."
6. Bills Affecting Air Ambulance Services
A1058/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill authorizes licensed air ambulance services to be dispatched as air medical unit ("AMU") first responders in New Jersey. In response to the increase in available air ambulance units, as well as the expansion and geographic dispersion of trauma centers throughout New Jersey, this Bill permits air ambulance services other than the two State-designated air ambulance services (e.g., NorthSTAR and SouthSTAR) to be dispatched as an "AMU first responder," if those air ambulance services meet the conditions set forth in the Bill.
A1386/S629 – Introduced in the both the Assembly and the Senate, and respectively referred to the Assembly Health and Senior Services Committee and the Senate Heath, Human Services and Senior Citizens Committee on January 8, 2008, the intent of this Bill is "to improve the current air ambulance dispatch system in New Jersey by requiring the utilization of a global positioning tracking system to identify and locate the closest available licensed air ambulance service, and [to] establish[] dispatch procedures that ensure that the most timely response to the of an accident or trauma" occurs. This Bill provides instructions as to timing and deployment of primary AMU responders and backup AMU responders, and certification requirements for a backup AMU designation.
7. Bills Providing Exemptions From/Eliminations Of Gross Receipts Taxes And/Or Assessments
Many of the subjects addressed in the following Bills were considered in connection with the State Budget Appropriations Bill (S2009/A2800), but were not signed into law by the Governor, as part of S2009/A2800 itself or as one of the component pieces of legislation incident thereto. Accordingly, while the substance of these Bills may not have received significant "Budget cycle" consideration, the Bills remain active and warrant some attention.
A724/No Identical Bill Number in the Senate – This Bill exempts reimbursements from Medicaid and NJ FamilyCare, and allows a deduction for charity care, in the calculation of gross receipts for purposes of the assessment on ambulatory care facilities ("ACFs"). Introduced and referred to the Assembly Appropriations Committee on January 8, 2008, this Bill allows ACFs that provide services on-site to a person who meets the eligibility criteria for charity care and is not reimbursed for those services, to deduct from the calculation of its gross receipts an amount equal to the rate paid to ACFs by the Medicaid program for those services. Under existing law, an ACF must pay an assessment of approximately 2.95% of its gross receipts in excess of $300,000.
A2521/No Identical Bill Number in the Senate – This Bill would increase the ACF gross receipts assessment to 7.0%, and would increase the maximum payment from $200, 000 to $400,000 per year for ACFs subject to the assessment whose annual gross receipts are $300,000 or more. ACFs subject to the gross receipts assessment (see N.J.S.A. 26:2H- 18.57) are those that offer the following services: ambulatory surgery; computerized axial tomography; CORFs; extracorporeal shock wave lithotripsy; magnetic resonance imaging, megavoltage radiation oncology; positron emission tomography; orthotripsy and sleep disorder services. The Bill anticipated that the increase in assessments would be effective beginning in Fiscal Year 2009 (effective July 1, 2008); however, at the time of this writing, the Bill remains in the Assembly Health and Senior Services Committee, where it was referred on May 5, 2008.
A728/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill exempt certain physician's offices operating magnetic resonance imaging ("MRI") or computer axial tomography ("CAT") services from licensure requirements. Since July 1, 2004, all entities initiating the provision of MRI and/or CAT services were required to obtain a license, and all existing providers of MRI and/or CAT services were required to obtain a license by July 1, 2005. The Bill would exempt physicians' offices that had been providing MRI and/or CAT services on a continuing basis since a date prior to July 1, 1991, from obtaining a license, and would give physician offices that began providing those services after July 1, 1991, but before July 1, 2004, until July 1, 2008 to obtain such a license. The Bill specifically states that third party payers may not deny payments to a physician office for MRI and/or CAT services solely based upon the physician office's lack of a license for such service(s).
A744/No Identical Bill Number in the Senate – This Bill exempts CORFs from the assessment on ACFs. Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill states that CORFs should be exempt from the 3.5% assessment on ACF gross receipts in excess of $300,000 because "CORFs serve primarily Medicare and low-income patients, often providing follow-up visits at no charge or reduced charges, and as such, receive lower reimbursement and generate much smaller revenue than do other types of ACFs. (See Statement accompanying the Bill).
A1087/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill eliminates cosmetic dentistry from the cosmetic medical procedures gross receipts tax and subjects tattooing procedures to the tax. This Bill adds tattooing procedures to the procedures currently listed at N.J.S.A. 54:32E-1 as subject to a 6% tax on gross receipts. It also amends the definition of "cosmetic medical procedures" that are already subject to the 6% tax on gross receipts such that cosmetic dentistry is no longer included. Cosmetic surgery, hair transplants, cosmetic injections, cosmetic soft tissue fillers, dermabrasion and chemical peel, laser hair removal, laser skin resurfacing, laser treatment of leg veins and sclerotherapy would remain subject to the 6% tax on gross receipts as "cosmetic medical procedures."
A1098/No Identical Bill Number in the Senate – Introduced in the Assembly and referred to the Assembly Health and Senior Services Committee on January 8, 2008, this Bill repeals the cosmetic medical procedure gross receipts tax. As explained in the Statement accompanying the Bill, the Bill "repeals the tax because the incoming revenues from the tax have been much lower that expected, particularly in light of the administrative burden on the Division of Taxation and the offices providing cosmetic medical procedures, and the economic burden on the customers and patients who pay for the procedures."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.