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Legislature Expands Codey Law Exception for Lithotripsy Referrals

March 24, 2014 | No Comments
Posted by Beth Christian

The New Jersey Legislature recently amended N.J.S.A. 45:9-22.5 (known as the “Codey Law”) to expand the scope of facilities where lithotripsy referrals may be made.  The Codey Law generally prohibits physicians from referring patients to health care services with which the physician or his or her immediate family has a financial interest, but provides for several exceptions.

Previously, there was an exception in the Codey law which allowed physicians to refer patients to an ambulatory surgery facility that provides lithotripsy services even if the physician had a financial interest in the ambulatory surgical facility, under certain conditions.  The physician had to personally perform the procedure; the physician’s remuneration had to be directly proportional to his or her ownership interest and not be based on the volume of their referrals; all clinically related decisions had to be made by the facility’s practitioners and in the patient’s best interests; and the physician had to disclose the financial interest of the patient at or prior to the time the referral was made.  The amendment to the Codey law expanded the locations where lithotripsy referrals can be made if a physician has a financial interest in the facility.  Under the amendment, referrals are permitted to freestanding ambulatory care facilities licensed to provide lithotripsy, in addition to referrals for lithotripsy provided in licensed ambulatory surgical facilities.  Referrals to freestanding ambulatory care facilities licensed to provide lithotripsy will be subject to the same conditions as are currently imposed on referrals to ambulatory surgical facilities.


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