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ASCs in the news: California agency stops licensing physician-owned ASCs

Ambulatory Surgery Reimbursement Update, June 10, 2008

California ASCs are waiting for the state’s next move, and pondering their own, as the California Department of Public Health (DPH) issues denials for license renewal applications by physician-owned facilities.

A May 15 DPH memorandum from Kathleen Billingsley, RN, deputy director of DPH, is posted on the Web site of the California Ambulatory Surgery Association (CASA). The memorandum explains that a 2007 state appeals court decision (Capen v. Shewry) takes away DPH authority to license physician-owned ASCs. However, the decision leaves DPH with licensing authority over ASCs not owned by physicians.

According to a letter from Astrid Meghrigian, JD, counsel for the California Medical Association (CMA), also posted on the CASA Web site, the CMA strongly objects to the DPH interpretation of the decision. Although the Capen decision was based on the question of DPH’s authority to issue licenses to physician-owned ASCs, and although licensure had been a voluntary process, the letter says the wording of a recent DPH denial indicates physician-owned ASCs are ineligible for licensure. The CMA letter also states some denials advise ASCs that they are ineligible to treat patients in the California Medicaid program, Medi-Cal, if they do not have a license. CMA believes this is contrary to California law.

The letter states that “by reading the Capen decision in such an incorrect manner, the Department [DPH] is voluntarily abdicating its responsibility to license clinics that want to be subject to the Department’s health and safety oversight standards.”

According to the DPH memorandum, ASCs can operate “until this issue is resolved by legislation.”

To view the CASA Web site, click here.

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