Removes requirements for surgical practices to be licensed as ambulatory care facilities and requires surgical practices to register with DOH.

A2237

ASSEMBLY, No. 2237

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblywoman SHANIQUE SPEIGHT

District 29 (Essex and Hudson)

SYNOPSIS

���� Removes requirements for surgical practices to be
licensed as ambulatory care facilities and requires surgical practices to
register with DOH.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
addressing surgical practices and amending P.L.1971,
c.136.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.� Section 12 of P.L.1971,
c.136 (C.26:2H-12) is amended to read as follows:

���� 12.� a.� No health care
service or health care facility shall be operated unless it shall: (1) possess
a valid license
or registration
issued pursuant to
[
this act
]

P.L.1971,
c.136 (C.26:2H-1 et seq.)
, which license
or registration
shall
specify the kind or kinds of health care services the facility is authorized to
provide; (2) establish and maintain a uniform system of cost accounting
approved by the commissioner; (3) establish and maintain a uniform system of
reports and audits meeting the requirements of the commissioner; (4) prepare
and review annually a long range plan for the provision of health care
services; and (5) establish and maintain a centralized, coordinated system of
discharge planning which assures every patient a planned program of continuing
care and which meets the requirements of the commissioner which requirements
shall, where feasible, equal or exceed those standards and regulations
established by the federal government for all federally-funded health care facilities
but shall not require any person who is not in receipt of State or federal
assistance to be discharged against his will.

���� b.� (1)� Application for a
license for a health care service or health care facility shall be made upon
forms prescribed by the department.� The department shall charge a single,
nonrefundable fee for the filing of an application for and issuance of a license
and a single, nonrefundable fee for any renewal thereof, and a single,
nonrefundable fee for a biennial inspection of the facility, as it shall from
time to time fix in rules or regulations; provided, however, that no such
licensing fee shall exceed $10,000 in the case of a hospital and $4,000 in the
case of any other health care facility for all services provided by the
hospital or other health care facility, and no such inspection fee shall exceed
$5,000 in the case of a hospital and $2,000 in the case of any other health
care facility for all services provided by the hospital or other health care
facility.� No inspection fee shall be charged for inspections other than
biennial inspections.� Any surgical practice required to apply for licensure by
the department as an ambulatory care facility pursuant to P.L.2017, c.283 shall
be exempt from the initial and renewal license fees required by this section.�
The application shall contain the name of the health care facility, the kind or
kinds of health care service to be provided, the location and physical
description of the institution, and such other information as the department
may require.

���� (2)�� A license shall be
issued by the department upon its findings that the premises, equipment,
personnel, including principals and management, finances, rules and bylaws, and
standards of health care service are fit and adequate and there is reasonable
assurance the health care facility will be operated in the manner required by
this act and rules and regulations thereunder.

���� (3)�� The department shall
post on its Internet website each inspection report prepared following an
inspection of a residential health care facility, as defined in section 1 of
P.L.1953, c.212 (C.30:11A-1) or licensed pursuant to P.L.1971, c.136 (C.26:2H-1
et seq.), that is performed pursuant to this subsection, along with any other
inspection report prepared by or on behalf of the department for such facility.

����
(4)� Application for a
registration for a surgical practice shall be made upon forms prescribed by the
department.� The department shall charge a single, nonrefundable fee for the
filing of a registration that shall not exceed $1,000.� The registration shall
be valid for five years.� �

���� If an inspection reveals a
serious health and safety violation at a residential health care facility, the
department shall post the inspection report, including the name of the facility
and the owner of the facility, on its website no later than 72 hours following
the inspection.� If a license of a residential health care facility is
suspended, the department shall post the suspension on its website no later
than 72 hours following the suspension.� The department shall update its
website to reflect the correction of a serious health and safety violation, and
the lifting of a suspension.

���� The department shall notify,
as soon as possible, the Commissioner of Human Services, or the commissioner's
designee, and the director of the county board of social services or county
welfare agency, as appropriate, in the county in which a residential health
care facility is located, of a serious health and safety violation at the
facility and of any suspension of a license to operate such facility.

���� If the inspection
responsibilities under this subsection with respect to such facility are
transferred or otherwise assigned to another department, that other department
shall post on its Internet website each inspection report prepared following an
inspection of such facility performed pursuant to this subsection, along with
any other inspection report prepared by or on behalf of that department for
such facility, and shall comply with the other requirements specified in this
subsection.

���� c.���� (Deleted by amendment,
P.L.1998, c.43)

���� d.��� The commissioner may
amend a facility's license to reduce that facility's licensed bed capacity to
reflect actual utilization at the facility if the commissioner determines that
10 or more licensed beds in the health care facility have not been used for at
least the last two succeeding years. For the purposes of this subsection, the
commissioner may retroactively review utilization at a facility for a two-year
period beginning on January 1, 1990.

���� e.���� If a prospective
applicant for licensure for a health care service or facility that is not
subject to certificate of need review pursuant to P.L.1971, c.136 (C.26:2H-1 et
al.) so requests, the department shall provide the prospective applicant with a
pre-licensure consultation.� The purpose of the consultation is to provide the
prospective applicant with information and guidance on rules, regulations,
standards and procedures appropriate and applicable to the licensure process.�
The department shall conduct the consultation within 60 days of the request of
the prospective applicant.

���� f.���� Notwithstanding the
provisions of any other law to the contrary, an entity that provides magnetic
resonance imaging or computerized axial tomography services shall be required
to obtain a license from the department to operate those services prior to commencement
of services, except that a physician who is operating such services on the
effective date of P.L.2004, c.54 shall have one year from the effective date of
P.L.2004, c.54 to obtain the license.

���� g. (1) (Deleted by amendment,
P.L.2017, c.283)

���� (2)�� (Deleted by amendment,
P.L.2017, c.283)

���� (3)�� (Deleted by amendment,
P.L.2017, c.283)

���� (4)
[
A
]

Notwithstanding
the provisions of any other law to the contrary, the operator of a new

surgical practice
[
in
operation on the date of enactment of P.L.2017, c.283 shall be required to
apply to the department for licensure as an ambulatory care facility licensed
to provide surgical and related services within one year of the date of
enactment of P.L.2017, c.283.
]

on or after the effective date of P.L.��� , c.��� (C.������� )(pending
before the Legislature as this bill) shall be required to file for registration
with the department prior to the commencement of the surgical practice�s
operations.

���� A surgical practice that is
[
certified
]

Medicare-certified

by the Centers for Medicare and Medicaid Services (CMS)
, the American
Association for Accreditation of Ambulatory Surgery Facilities, the
Accreditation Association for Ambulatory Health Care, the Joint Commission, or
any other accreditation organization recognized by CMS
shall not be
required to meet the physical plant and functional requirements specified in
N.J.A.C.8:43A-19.1 et seq.� A surgical practice that is not
[
Medicare
certified
]

Medicare-certified
, either by CMS or by any deeming authority recognized
by CMS, but which has obtained accreditation from the American Association of
Ambulatory Surgery Facilities
, the Accreditation Association for Ambulatory
Health Care, the Joint Commission,
or any accrediting body recognized by
CMS
[
and
is in operation on the date of enactment of P.L.2017, c.283
]
, shall not be
required to meet the physical plant and functional requirements specified in
N.J.A.C.8:43A-19.1 et seq.� A surgical practice not in operation on the date of
enactment of P.L.2017, c.283, if it is certified by CMS as an ambulatory
surgery center provider, shall also be exempt from these requirements.� A
surgical practice required by this subsection to meet the physical plant and
functional requirements specified in N.J.A.C.8:43A-19.1 et seq. may apply for a
waiver of any such requirement in accordance with N.J.A.C.8:43A-2.9.� The
commissioner shall grant a waiver of those physical plant and functional
requirements, as the commissioner deems appropriate, if the waiver does not
endanger the life, safety, or health of patients or the public.

���� A surgical practice required
to be
[
licensed
]

registered

pursuant to this subsection shall be exempt from the ambulatory care facility
assessment pursuant to section 7 of P.L.1992, c.160 (C.26:2H-18.57); except
that, if the entity expands to include any additional room dedicated for use as
an operating room, the entity shall be subject to the assessment.

���� (5)�� As used in this
subsection
[
and
subsection i. of this section
]
,
"surgical practice" means a structure or suite of rooms that has the
following characteristics:

���� (a)�� has no more than one
room dedicated for use as an operating room which is specifically equipped to
perform surgery, and is designed and constructed to accommodate invasive
diagnostic and surgical procedures;

���� (b)�� has one or more
post-anesthesia care units or a dedicated recovery area where the patient may
be closely monitored and observed until discharged; and

���� (c)�� is established by a
physician, physician professional association surgical practice, or other
professional practice form specified by the State Board of Medical Examiners
pursuant to regulation solely for the physician's, association's, or other
professional entity's private medical practice.

���� (6)�� Nothing in this
subsection shall be construed to limit the State Board of Medical Examiners
from establishing standards of care with respect to the practice of medicine.

���� h.��� An ambulatory care
facility licensed to provide surgical and related services shall be required to
obtain ambulatory care accreditation from an accrediting body recognized by the
Centers for Medicare and Medicaid Services as a condition of licensure by the
department.

���� An ambulatory care facility
that is licensed to provide surgical and related services on the effective date
of this section of P.L.2009, c.24 shall have one year from the effective date
of this section of P.L.2009, c.24 to obtain ambulatory care accreditation.

���� i.����
[
Beginning on
the effective date of this section of P.L.2009, c.24, and as provided in
P.L.2017, c.283, the department shall not issue a new license to an ambulatory
care facility to provide surgical and related services unless:

���� (1)�� in the case of a
licensed facility in which a transfer of ownership of the facility is proposed,
the commissioner reviews the qualifications of the new owner or owners and
approves the transfer;

���� (2) (a) except as provided in
subparagraph (b) of this paragraph, in the case of a licensed facility for
which a relocation of the facility is proposed, the relocation is within 20
miles of the facility's current location or the relocation is to a "Health
Enterprise Zone" designated pursuant to section 1 of P.L.2004, c.139
(C.54A:3-7), there is no expansion in the number of operating rooms provided at
the new location from that of the current location, and the commissioner
reviews and approves the relocation prior to its occurrence; or

���� (b)�� in the case of a
licensed facility described in paragraph (5) or (6) of this subsection for
which a relocation of the facility is proposed, the commissioner reviews and
approves the relocation prior to its occurrence;

���� (3)�� the entity is a surgical
practice required to be licensed pursuant to subsection g. of this section and
meets the requirements of that subsection;

���� (4)�� the entity has filed its
plans, specifications, and required documents with the Health Care Plan Review
Unit of the Department of Community Affairs or the municipality in which the
surgical practice or facility will be located, as applicable, on or before the
180th day following the effective date of this section of P.L.2009, c.24;

���� (5)�� the facility is owned
jointly by a general hospital in this State and one or more other parties;

���� (6)�� the facility is owned by
a hospital or medical school in this State, or the facility is owned by any
hospital approved on or before the effective date of P.L.2015, c.305 to provide
ambulatory surgery services in this State, or the facility is owned by a hospital
which applied on or before the effective date of P.L.2015, c.305 to provide
ambulatory surgery services in this State so long as the hospital is later
approved to provide ambulatory surgery services at the facility, or the
facility is owned by any hospital approved to provide ambulatory surgery
services at another facility in this State; or

���� (7) (a) the facility is a
newly licensed ambulatory surgical facility that was created by combining two
or more registered surgical practices, provided that the number of operating
rooms at the newly licensed facility is not greater than the total number of
operating rooms prior to the establishment of the newly licensed facility;

���� (b)�� the facility is a
licensed ambulatory surgical facility that has expanded by combining with one
or more registered surgical practices, provided that the number of operating
rooms at the newly expanded facility is not greater than the total number of
operating rooms prior to the combination of the practices and facility; or

���� (c)�� the facility is a
licensed ambulatory surgical facility that has expanded through the combination
of two or more licensed ambulatory surgical facilities, provided that the
number of operating rooms at the newly expanded facility is not greater than
the total number of operating rooms prior to the combining of the facilities.

���� Beginning on the effective
date of P.L.2017, c.283, the department shall not issue a new registration to a
surgical practice.� Any surgical practice in operation on the effective date of
P.L.2017, c.283 that proposes to relocate on or after the effective date of
P.L.2017, c.283 shall be required to be licensed by the department as an
ambulatory care facility providing surgical and related services pursuant to
subsection g. of this section.
]

(Deleted by amendment, P.L.��� , c.��� (C.������� ) (pending before the
Legislature as this bill)

���� j.���� (Deleted by amendment,
P.L.2017, c.283)

���� k.��� An ambulatory care
facility licensed to provide surgical and related services and a surgical
practice shall:

���� (1)�� report to the department
any change in ownership of the facility within 30 days of the change in
ownership; and

���� (2)�� annually report to the
department the name of the facility's medical director, physician director, and
physician director of anesthesia, as applicable, and the director of nursing
services.� The facility shall notify the department if there is any change in a
named director within 30 days of the change of the director.

(cf:� P.L.2017, c.283, s.1)

���� 2.� Section 2 of P.L.1989,
c.19 (C.45:9-22.5) is amended to read as follows:

���� 2.� a.� A practitioner shall
not refer a patient or direct an employee of the practitioner to refer a
patient to a health care service in which the practitioner, or the
practitioner's immediate family, or the practitioner in combination with the
practitioner's immediate family has a significant beneficial interest except as
follows:

���� (1)�� in the case of a
practitioner, a practitioner's immediate family, or a practitioner in
combination with the practitioner's immediate family who had the significant
beneficial interest prior to the effective date of P.L.1991, c.187
(C.26:2H-18.24 et al.);

���� (2)�� in the case of a
significant beneficial interest in a health care service that provides
lithotripsy or radiation therapy pursuant to an oncological protocol that was
held prior to the effective date of this section of P.L.2009, c.24; and

���� (3)�� in the case of a
practitioner, a practitioner's immediate family, or a practitioner in
combination with the practitioner's immediate family who has a significant
beneficial interest in a pharmacy that is integrated with an oncology practice,
that only dispenses medications exclusively to patients of that practice, and
that complies with the additional requirements set forth in subsection d. of
this section, the practitioner may continue to refer a patient or direct an
employee to do so if that practitioner discloses the significant beneficial
interest to the patient.

���� b.��� If a practitioner is
permitted to refer a patient to a health care service pursuant to this section,
the practitioner shall provide the patient with a written disclosure form,
prepared pursuant to section 3 of P.L.1989, c.19 (C.45:9-22.6), and post a copy
of this disclosure form in a conspicuous public place in the practitioner's
office.

���� c.���� The restrictions on
referral of patients established in this section shall not apply to:

���� (1)�� medical treatment or a
procedure that is provided at the practitioner's medical office and for which a
bill is issued directly in the name of the practitioner or the practitioner's
medical office;

���� (2)�� renal dialysis;

���� (3)�� ambulatory surgery or
procedures involving the use of any anesthesia performed at a surgical practice

[
licensed
by
]

registered
with
the Department of Health pursuant to subsection g. of section 12 of
P.L.1971, c.136 (C.26:2H-12) or at an ambulatory care facility licensed by the
Department of Health to perform surgical and related services or lithotripsy
services, if the following conditions are met:

���� (a)�� the practitioner who
provided the referral personally performs the procedure;

���� (b)�� the practitioner's
remuneration as an owner of or investor in the practice or facility is directly
proportional to the practitioner's ownership interest and not to the volume of
patients the practitioner refers to the practice or facility;

���� (c)�� all clinically-related
decisions at a facility owned in part by non-practitioners are made by
practitioners and are in the best interests of the patient; and

���� (d)�� disclosure of the
referring practitioner's significant beneficial interest in the practice or
facility is made to the patient in writing, at or prior to the time that the
referral is made, consistent with the provisions of section 3 of P.L.1989, c.19
(C.45:9-22.6);

���� (4)�� medically-necessary
intraoperative monitoring services rendered during a neurosurgical,
neurological, or neuro-radiological surgical procedure that is performed in a
hospital;

���� (5)�� a value-based
arrangement made in accordance with 42 C.F.R. 411.357(aa), a payment model
authorized under a Medicare shared savings program pursuant to 42 U.S.C.
s.1395jjj, or a demonstration operated by the Center for Medicare and Medicaid
Innovation established pursuant to at 42 U.S.C. s.1315a; and

���� (6)�� Referrals that a
practitioner makes, or directs an employee of the practitioner to make, to a
health care service in which the referring practitioner has a significant
beneficial interest, when participants in an alternative payment model
registered with the Department of Health pursuant to section 3 of P.L.2017,
c.111 (C.45:9-22.5c) make a bona fide determination that: the significant
beneficial interest is reasonably related to the alternative payment model
standards filed with the Department of Health, provided that the determination
is documented and retained for a period of 10 years; and the referral is made
in accordance with alternative payment model standards and professional
standards applicable to the health care service in which the referring practitioner
has a significant beneficial interest.

���� d.��� The exemption set forth
in paragraph (3) of subsection a. of this section shall apply to a pharmacy
that is integrated with an oncology practice, provided that the pharmacy:

���� (1)�� has direct access to the
oncology practice's patient records;

���� (2)�� communicates with each
patient in person or via telemedicine to review the prescription instructions
and assesses the patient for interactions with other drugs and food;

���� (3)�� synchronously consults
with the oncology practice's treating physicians as appropriate; and

���� (4)�� complies with the
requirements for timely delivery of medications, hours of operation, and
recordkeeping that are established by rule or regulation by the State Board of
Pharmacy.

(cf: P.L.2024, c.87, s.1)

���� 3.� Section 4 of P.L.2009,
c.24 (C.45:9-22.5a) is amended to read as follows:

���� 4. a. A referral for
ambulatory surgery or a procedure requiring anesthesia made prior to the
effective date of this section of P.L.2009, c.24 by a practitioner to a
surgical practice or ambulatory care facility
registered with or

licensed by the Department of Health to perform surgical and related services
shall be deemed to comply with the provisions of section 2 of P.L.1989, c.19
(C.45:9-22.5) if the practitioner personally performed the procedure that is
the subject of the referral.

���� b.��� As used in this section,
"surgical practice" means a structure or suite of rooms that has the
following characteristics:

���� (1)�� has no more than one
room dedicated for use as an operating room which is specifically equipped to
perform surgery, and is designed and constructed to accommodate invasive
diagnostic and surgical procedures;

���� (2)�� has one or more
post-anesthesia care units or a dedicated recovery area where the patient may
be closely monitored and observed until discharged; and

���� (3)�� is established by a
physician, physician professional association surgical practice, or other
professional practice form specified by the State Board of Medical Examiners
pursuant to N.J.A.C.13:35-6.16(f) solely for the physician's, association's or
other professional entity's private medical practice.

(cf:� P.L.2017, c.283, s.3)

���� 4.� (New section) Notwithstanding
any provisions of the "Administrative Procedure Act," P.L.1968, c.410
(C.52:14B-1 et seq.) to the contrary, the Commissioner of Health shall initiate
a proceeding and adopt rules and regulations as necessary to implement the
provisions of this act.

���� 5.� This act shall take effect
immediately.

STATEMENT

���� This bill removes the
requirements under current law for surgical practices to become licensed by the
Department of Health (department) as ambulatory care facilities licensed to
provide surgical and related services.� Instead, surgical practices will be
required to register with the department, with such registration having a fee
of $1,000 and the registration being effective for 5 years.

���� Current law defines a
�surgical practice� to mean a structure or suite of rooms that has the
following characteristics:� has no more than one room dedicated for use as an
operating room which is specifically equipped to perform surgery, and is
designed and constructed to accommodate invasive diagnostic and surgical
procedures; has one or more post-anesthesia care units or a dedicated recovery
area where the patient may be closely monitored and observed until discharged;
and is established by a physician, physician professional association surgical
practice, or other professional practice form specified by the State Board of
Medical Examiners pursuant to regulation solely for the physician's,
association's, or other professional entity's private medical practice.

���� Pursuant to the enactment of
P.L.2017, c.283, all surgical practices were required to become licensed as
ambulatory care facilities specifically authorized to provide surgical and
related services.� This bill removes those requirements and instead only
requires surgical practices to register with the department.

���� This bill further defines the
accreditation entities for surgical practices, and makes clear the relief from
certain regulatory obligations based upon such accreditation.

���� The bill removes the various
restrictions and limited circumstances surrounding new licensing of ambulatory
care facilities.

���� The bill retains the exemption
from the ambulatory care facility assessment for any registered surgical
practice.

���� The bill removes the current
moratorium that prohibits the department from issuing a new registration to any
surgical practice.

���� It is the sponsor's intent
that this bill will promote the development of new surgical practices and
ambulatory care facilities licensed and registered to provide surgical and
related services in the State.� Hospital operating rooms in the State are working
at capacity, which often times results in understaffing, employee burnout,
delays in critical surgeries, and scheduling challenges for elective and
non-emergent surgeries.� It is the sponsor's belief that loosening the
restrictions for the establishment of new surgical practices and ambulatory
care facilities licensed and registered to provide surgical services will help
lower healthcare costs, increase patient options for surgical procedures, and
increase efficiency and quality of care within the State's healthcare system.�
The restrictions established under the current law originated out of a concern
of physician "self-dealing" or referring patients to a practice, in
which the physician had a financial interest.� Today, these concerns are less
significant as many physicians are required to regularly disclose ownership
interests in other health care practices and the increased access to different
surgical options for patients would provide a greater benefit in terms of
patient access, timeliness, and healthcare cost savings.