S.4597-B (Hannon)


Director of Government Afairs
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S.4597-B (Hannon)


Requires Health Plans to Pay A Facility Fee for Office-Based Surgery Procedures



The Business Council of New York State, Inc. opposes S.4597-B, which would require health plans to pay a facility fee, in addition to fees for physicians, for procedures performed in office-based surgery facilities.  The legislation establishes a licensure and registration process for office-based surgical facilities to form the justification for requiring the additional "facility fee" for office-based procedures.  This is yet another unfunded -- and unnecessary -- mandate which will drive up overall health insurance premiums to pay for this facility fee. 

The significant advancements in medicine (both in equipment and treatment protocols) have allowed many procedures which were once solely performed in hospitals to now be performed in alternative settings including ambulatory surgery centers and physician's offices.  These advancements have also offered one potential way to help reduce overall costs, as treatment is delivered safely in facilities held to far less rigorous standards than a typical hospital. 

There are numerous reasons for cost differentials among hospitals, ambulatory care facilities and office-based surgery facilities.  Most significant are the more comprehensive regulations required of hospitals on staffing and facilities.  Current law requires "Article 28" facilities (facilities authorized under Article 28 of the Public Health Law) to be approved by the Department of Health after having gone through a rigorous Certificate of Need process. Hospitals and ambulatory surgery facilities must meet higher standards of operation and the Department of Health has full authority over Article 28 facilities.  Physician private practices are not governed by either the Department of Health or the State Education Department -- except through professional misconduct proceedings and requirements of the state's existing office-based surgery law. 

New York law adopted in 2007 requires office-based surgery facilities to be accredited and requires the report of adverse events.  Contrary to statements in the memorandum of support accompanying this bill, a review of publicly available data indicates that a broad array of office-based surgery procedures are being performed and are being reimbursed by health plans.  National research also indicates that in some instances the use of office-based surgical procedures has not reduced health care costs, but has in fact increased costs. 

All businesses incur direct and indirect costs; office-based surgery facilities are no different.  A physician or practice choosing to locate in a facility enters into a business arrangement with the owner for that space.  Mandating a specific and separate facility fee is akin to a municipality imposing an occupancy tax on a hotel room -- it is nothing more than a "tax" paid to offset that physician's cost of doing business. Ultimately this proposed facility fee would be built into insurance premiums where already 82.5 percent of every premium dollar in the small group market must be spent on medical care.   Premiums in the commercial market continue their upward climb as mandates like this continue to layer on while not improving quality or care for New Yorkers. 

No data is provided that would indicate OBS facilities are closing or that New Yorkers face a dearth of locations to access certain treatments in other than hospital-based settings. New Yorkers would benefit from health care mandate relief, rather than the addition of new mandates on health plans -- which ultimately are paid for by employers, employees or individuals accessing coverage in the commercial market. 

For these reasons, The Business Council opposes S.4597-B.