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ASCs in the news: California ASCs slowly working through no-license tangle

Ambulatory Surgery Reimbursement Update, September 9, 2008

California ASCs are beginning to find their way out of the legal vacuum in which they have operated since May, says an August 22 story in the East Bay Business Times.

According to the article, in a 2007 action before a state court of appeals (Capen v. Shewry) a physician challenged the California Department of Public Health’s (DPH) contention that it had oversight over his surgery clinic. When the court found for the appellant, the DPH interpreted the decision to mean that it had no authority over ASCs with some physician ownership, and stopped issuing licenses. (See California agency stops licensing physician-owned ASCs in the June 10 issue of ASRU.

The East Bay Business Times reports that new legislation (AB 1574) allows the state pharmacy board to grant limited licenses to clinics and ASCs to purchase medication wholesale, allowing them to make bulk purchases in their own right. Since the DPH withdrew from licensing, ASC medical directors have had to make medication purchases under their own medical licenses. The step is a beneficial one, says the article, but leaves other questions unanswered.

Although many of the ASCs treat Medicare patients and are subject to Federal regulation, the article states that difficulties with other payers remain, due to the absence of state licensing. “Some insurers have taken the position that since the state made the license null and void, they shouldn’t have to pay,” David O’Dell, president of MedBridge Development Co. LLC, told the newspaper.

When their state licenses lapse, the Business Times says that many centers seek accreditation from the Accreditation Association for Ambulatory Health Care (AAAHC) to maintain relations with managed care. According to O’Dell, whose firm hopes to open ASCs in California, the number of centers seeking accreditation exceeds the number of AAAHC inspectors, which is delaying the opening of some of his centers and the entire accreditation process.

“It’s been a process change for a lot of people,” California Ambulatory Surgery Association (CASA) president Deborah Mack told the newspaper. CASA has also lobbied the state to adopt licensing standards for ASCs similar to those of the federal government. “The Department of Public Health, I am assuming, is going to want to develop state licensure requirements,” Bryce Doherty, CASA legislative advocate, said in the article. “If it was good enough for Medicare, then why isn’t it good enough for California?”

To read the East Bay Business Times article, click here.

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