Office-Based Surgery: New Law Requires Immediate Attention to Avoid Liability

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The enactment of the office-based surgery legislation (A7948) will have profound impact on current and future office-based surgical practices in New York State. The new law, which was signed by Governor Spitzer on July 18, 2007, marks the first necessary step towards reimbursement of facility fees for office-based surgical facilities, and has significant liability implications for office-based surgical facilities.

The new law requires that physicians, physician's assistants and specialist's assistants performing office-based surgery be legally mandated to obtain accreditation. This new legislation becomes effective 6 months after July 18, 2007, and further allows an additional 18 months for compliance with accreditation (therefore, a total of 24 months to comply from July 18, 2007), or the physician will face disciplinary action under the Education Law. Affected medical offices need to be educated about this law as current office-based surgical practices that are not accredited should immediately seek accreditation to be in compliance with the law, or must cease performing procedures in the office.

A run on the national accrediting bodies like The Joint Commission, AAAHC and AAAASF is inevitable, as physicians want to keep providing procedures for their patients in the office, where infection rates may be lower than the hospital setting. An outreach to the accreditation bodies now, in order to continue in practice or form an office-based surgical facility, is certainly recommended by Abrams Fensterman, et al because of the groundswell of expected accreditation activity.

In addition to the accreditation requirement, in order to obtain the potential economic advantages of office-based surgery such as facility fee reimbursement, practices will face a host of corporate structuring, regulatory compliance, and disclosure issues.

While the office-based surgery law does not touch directly upon facility fee reimbursement, it is anticipated that managed care plans and private commercial carriers will begin negotiation of facility fee payments to office-based surgical facilities, and Abram Fensterman, et al has been advised by national billing and coding companies that these discussions are proceeding. Significantly, representatives from the insurance industry have already acknowledged that payment of facility fees to office-based surgical facilities by insurers is legal and proper and merely a contractual negotiation between the parties. Further, it has been recognized by the Department of Health that payment of facility fees should be established via a contractual relationship, and would save managed care plans from excessive hospital costs for facility fees. As such, we are confident that common ground will be reached setting a universal standard for payment for these office-based surgical facilities.

Abrams Fensterman, et al, along with the Medical Society of the State of New York and the New York County Medical Society, has assembled a panel of leading experts to discuss the liability, corporate structure, economic and other legal implications of the office-based surgery law, and is hosting an educational program on September 20, 2007 (see attached agenda). For additional information on this program or about the enacted legislation, please contact Abrams, Fensterman, et al at (212) 279-9200.