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New Jersey Legislative Update


Email Alert

November 6, 2009

By Katherine Benesch, Karen Palestini, Michael Schaff, and Joyce Tichy*

During the summer and into the early fall of 2009, a number of legislative initiatives were passed in New Jersey. These new enactments represent a continuation of legislative efforts began sometime ago, which recently came to fruition.

Involuntary Commitment to Outpatient Treatment to Be Added as Mental Health Treatment Option

In an effort to enhance mental health treatment options, on August 11, 2009, then Governor Jon Corzine (D) signed legislation (S-735/A-1618) revising the state's civil commitment laws to allow for involuntary commitment to outpatient treatment. Presently, New Jersey law provides only for commitment to treatment in an inpatient facility for individuals who are established to be dangerous to themselves, others, or property.

Effective one year after enactment, the bill requires a phase-in period of three years to implement involuntary commitment to outpatient treatment statewide. The Department of Human Services has been directed to identify community-based treatment services needed to safely and adequately carry out the new law and to work with other representatives of the state to support the services identified.

OB Providers to Be Reimbursed in Installments; Nurse Midwives Able to Certify Certain Medical Conditions for Disability Decisions

On August 12, 2009, Corzine signed two pieces of legislation affecting reimbursement to providers of maternity services and nurse midwives' ability to certify patient medical conditions for certain disability decisions.

The first bill, A-2539/S-1125, requires healthcare insurance carriers to reimburse obstetrical providers in installment payments for maternity services provided over the term of a woman's pregnancy, rather than after the child's birth. Covered payments will now occur on an ongoing basis and include office visits, other prenatal care, and baby delivery.

The second bill, S-2231/A-3110, adds nurse midwives to the list of medical professionals who can certify medical conditions of individuals under New Jersey's "Temporary Disability Benefits Law" and "Work First New Jersey Act." The new law expands upon New Jersey nurse midwives' current authority to make a host of medical decisions for women, including the ability to write prescriptions.

Insurance Coverage for Autism Screening and Other Developmental Disabilities Enhanced

On August 13, 2009, Corzine signed legislation requiring New Jersey health insurers to provide diagnostic coverage for screening for autism and other developmental disabilities. The measure, A-2238/S-1651, also includes therapeutic services, including any medically necessary occupational, physical, and speech therapy.

Under this bill, insurance companies would be required to provide up to $36,000 per year for medically necessary behavioral early intervention for all patients who are under twenty-one years old with autism and with other developmental disabilities. New Jersey is the first state in the nation to include other developmental disabilities along with autism in this type of insurance legislation.

New Jersey Amends Hospital Report of Serious Medical Errors and Bars Hospitals from Seeking Reimbursement for Costs of Certain Medicare "Never Events"

On August 31, 2009, Corzine signed into law an act requiring hospitals to publicly report fourteen serious medical errors. One of the first laws of its kind in the United States, this legislation also bars New Jersey hospitals from seeking reimbursement for costs associated with the following never events for which Medicare does not allow payment: surgery on the wrong side, body part, or person; the wrong surgery; air embolism; transfusion reaction; and a foreign object left inside a patient during a procedure.

Commencing in November 2009, New Jersey's annual hospital performance report--published by the state Department of Health and Senior Services (DHSS)--will include data on the number and rate of the following serious indicators of patient safety in each of the hospitals in the state:

  1. Foreign body left during procedure;

  2. Iatrogenic pneumothorax;

  3. Postoperative hip fracture;

  4. Postoperative hemorrhage or hematoma;

  5. Postoperative deep vein thrombosis or pulmonary embolism;

  6. Postoperative sepsis;

  7. Postoperative wound dehiscence;

  8. Accidental puncture or laceration;

  9. Transfusion reaction;

  10. Birth trauma;

  11. Obstetric trauma-vaginal delivery with instrument;

  12. Obstetric trauma-vaginal delivery without instrument;

  13. Air embolism; and

  14. Surgery on wrong side, wrong body part, or wrong person, or wrong surgery performed on a patient.

Currently, DHSS publishes a hospital performance report each year on hospital-specific treatment of heart attacks, pneumonia and heart failure, and prevention of surgical infections. The state health department also issues a report on indicators of quality of inpatient care used to measure the performance of the state's hospitals in treating common medical conditions. According to DHSS Commissioner Heather Howard, "We know that public reporting of hospital performance improves quality and promotes excellence in patient safety--as we have seen with dramatic decreases in cardiac surgery deaths." Publicizing more patient-safety data may assist patients and their families to make informed decisions about their care and the hospitals they choose.

An interesting aspect of the new law is likely to be the determination of whether a cost or expense is associated with any of the "never events" for which payment will be denied by third parties. This factor is anticipated to generate further debate, and many other states are likely to undertake similar efforts to publicize and restrict reimbursement associated with medical errors in hospitals.

Moratorium on New Ambulatory Surgical Facilities in New Jersey

On September 17, 2009, a moratorium on new licenses for ambulatory surgical facilities (ASFs) and registrations for surgical practices in New Jersey took effect as part of the amendments to the "Codey Law" (P.L. 2009, c. 24). By that date, physicians who intended to open a new surgical practice or an ASF that would not be jointly owned by a New Jersey hospital were required to file their plans, specifications, and other documentation with the municipality in which the facility would be located or with the New Jersey Department of Community Affairs in order to obtain a new registration or license. As a result of this new restriction, DHSS will only issue new licenses for ASFs and registrations for surgical practices under limited circumstances discussed in detail below. However, surgical practices that existed prior to March 21, 2009, have until March 20, 2010, to register with the DHSS.


On January 24, 2008, Senator Richard Codey introduced an amendment to the Codey Law proposing the aforementioned moratorium. After a number of revisions, the New Jersey State Senate passed this amendment, as well as other changes to the Codey Law, on December 15, 2008, and the New Jersey State Assembly, in turn, passed the amendments on February 5, 2009. On March 21, 2009, Governor Jon S. Corzine signed the amendments into law.

The Moratorium

As a result of this new restriction, the DHSS (DHSS) will only issue new licenses for ASFs and registrations for surgical practices under the following limited circumstances:

  1. Transfer of ownership if the DHSS reviews the qualifications of the new owners and approves the transfer;

  2. Relocation within twenty miles or to a "Health Enterprise Zone" provided that there is no expansion in the scope of services and the DHSS approves the relocation;

  3. The entity is a surgical practice required to be registered and meets the registration requirements;

  4. The facility is owned jointly by a general hospital in New Jersey and one or more other parties; or

  5. The facility is owned by a hospital or medical school.

The New Jersey Administrative Code defines an "ambulatory surgical facility" as a healthcare facility "in which preventive, diagnostic, and treatment services are provided to persons who come to the facility to receive services and depart from the facility on the same day." (See N.J.A.C. § 8:43A-1.3).

A "Health Enterprise Zone" is defined as an area designated by the DHSS Commissioner as a medically underserved area. (See P.L. 2004, c. 139 and N.J.S.A. § 18A:71C-35).

The Codey Law defines a "surgical practice" as a structure or suite that:

  1. Has only one room that is specifically equipped for performance of operations and is utilized for surgical procedures;

  2. Has a dedicated recovery area where the patient can be monitored until discharged; and

  3. Is established by a physician, surgical practice, or other professional practice form specified in the New Jersey State Board of Medical Examiners' Regulations solely for the physician, practice, or entity's private medical practice.

A surgical practice also includes an unlicensed entity that is certified by the Centers for Medicare & Medicaid Services (CMS).

Existing Surgical Practices

A surgical practice existing prior to March 21, 2009, will be required to register with the DHSS by March 20, 2010. The registration must be renewed annually.

As a condition of registration with the DHSS, a surgical practice must obtain certification by CMS as an ambulatory surgery center or ambulatory care accreditation from an accrediting body recognized by CMS, and must comply with certain annual reporting requirements concerning utilization and staffing. A surgical practice will be required to annually report the number of patients served by payment source, including the number of Medicaid-eligible and medically indigent persons served, the number of new patients accepted, and the number of physicians, physician assistants, and advance practice nurses providing professional services at the surgical practice.

Existing Ambulatory Surgical Facilities

An ASF licensed by the DHSS is required to obtain ambulatory care accreditation from an accrediting body recognized by CMS as a condition of licensure by the DHSS. Existing facilities have until March 20, 2010, to comply with this requirement.

Access these amendments and others to the Codey Law.

*We would like to thank Katherine Benesch, Esquire (Duane Morris LLP, Hamilton, NJ), Karen Palestini, Esquire (Saul Ewing LLP, Princeton, NJ), Michael Schaff, Esquire (Wilentz Goldman & Spitzer PA, Woodbridge, NJ), and Joyce Tichy, Esquire (APS Healthcare Inc, White Plains, NY), for providing this email alert.

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