HEALTH
LAW REPORT
A Newsletter from the Health Care Law Practice Group
www.flastergreenberg.com
Office Procedures In New Jersey
Will Soon Require Special Privileges
ate last year, the
L
New Jersey
Board of Medical
Examiners (“BME”)
adopted regulations
that may drastically
impact physicians
who perform surgery
or medical procedures
Alma L. Saravia
in their offices. These
regulations affect both the physician
performing the procedure itself and the
provision of accompanying anesthesia
services in the office setting.
Credentials for Performing
Office Procedures
Beginning on December 16, 2003,
any physician performing medical pro-
cedures or surgery in a private office in
In This Issue…
Office Procedures In New Jersey
Will Soon Require Special
Privileges..................................1
HIPAA’s October 16 Electronic
Transactions and Code Set
Standards May Cause Cash Flow
Disruption................................3
Updated EMTALA Regulations
Ease and Clarify Some
Restrictions ..............................4
Recent Federal Tax Law Changes
Potentially Applicable to
Physicians ................................5
Copyright © 2003
By Alma L. Saravia
the following specialties must have hos-
pital privileges to perform these servic-
es or must have applied to the BME for
so-called “alternative privileges:”
◆ Anesthesiology
◆ Colon and Rectal Surgery
◆ Dermatology
◆ General Surgery
◆ Medical/Pediatric Subspecialty
Services Requiring Anesthesia
◆ Obstetrics and Gynecology
◆ Ophthalmology
◆ Orthopedics
◆ Otolaryngology-Head & Neck and
Facial; Plastic Surgery
◆ Plastic and Reconstructive Surgery
◆ Psychiatry
◆ Radiological Procedures Requiring
Anesthesia Services
Editor’s
Note. . .
This issue of
Health Law Report
focuses on the con-
Stephen M. Greenberg tinuing proliferation
of legislation and regulations affecting
physicians. New regulations deal with
alternative privilege requirements for
physicians doing office procedures and
EMTALA obligations. The October
16, 2003 starting date for using
HIPAA mandated electronic standards
and code set standards threaten to
have a negative impact on practice
cash flow. On the positive side,
Health Law Report • Flaster/Greenberg P.C.
Fall 2003
Thoracic Surgery
◆
◆ Vascular Surgery
◆ Urology
◆ Pediatric Surgery
The application for alternative
privileges is not merely another hoop
through which the physician must
jump. In addition to demonstrating his
or her training and competence in the
particular specialty, the BME has
announced that it will require a physi-
cian to obtain additional training in
most of the listed specialties before it
will grant the physician alternative priv-
ileges. A physician’s failure to comply
with the new regulations will subject
him or her to discipline for professional
misconduct.
(continued on page 2)
however, recent federal income tax
law changes should result in less of a
bite taken out of physicians’ incomes
this year.
We are pleased to note the contin-
ued expansion of our Health Care
Law Practice Group with the addition
of Jay Hafter. Jay comes to us with a
wealth of knowledge and experience in
health care consulting, with particular
expertise in domestic and international
health care and emergency health
services delivery systems.
We would also like to publicly con-
gratulate our colleague Alma Saravia,
for recently being selected by the New
Jersey Law Journal as a Leader Among
Women Lawyers.
 2
Office Procedures In New Jersey Will…
Credentials for Performing
In-Office Anesthesia
As indicated (on page 1), beginning December 16, 2003,
in order to perform in-office anesthesia, a physician must
have anesthesia privileges from a hospital or apply to the
BME for alternative privileges in the particular type of
anesthesia services he or she wants to provide. However, the
BME has mandated the presence of two physicians, if in-
office surgery or a procedure is to be done using either gen-
eral or regional anesthesia, because the physician performing
the surgery or procedure may not also administer and moni-
tor the anesthesia. On the other hand, if the surgery or pro-
cedure is to be done using conscious sedation, the physician
performing the surgery or procedure may also administer
and monitor the conscious sedation, as long as he or she has
hospital or alternative privileges in conscious sedation.
Observation: Most in-office procedures requiring anes-
thesia do utilize conscious sedation and frequently employ
the services of a Certified Registered Nurse Anesthetist
(“CRNA”) to administer the anesthesia. This will no longer
be possible unless the physician performing the procedure
also has hospital or alternative privileges in conscious seda-
tion. If he or she does not, then the physician will have to
engage the services of a privileged anesthesiologist (rather
than a CRNA) to render the anesthesia services.
The BME’s Alternative Privilege
Application
The application for alternative privileges in each specialty is
on the BME’s website, www.alternativeprivileges@lps.state.nj.us,
and is rigorous. For example, the application for privileges
in conscious sedation requires the applicant to provide
the following:
1. A statement under oath as to the number of procedures
for which he or she has provided conscious sedation in
Health Care Practice Group Services
◆ Sales and Acquisitions of Practices
◆ Starting a Practice or Business
◆ Employment Agreements
◆ Shareholder Agreements
◆ Admitting and Terminating Partners
◆ Lobbying
◆ Litigation and Dispute Resolution
◆ Fraud and Abuse and Other Regulatory Advice
Health Law Report • Flaster/Greenberg P.C.
(continued from page 1)
the past two years. The attestation form states that
patients must have had “acceptable results.”
2. Proof of one of the following:
— current board certification in anesthesiology;
— current board certification in critical care medicine or
emergency medicine; or
— Advanced Cardiac Life Support training and either
proof of a home study program or of a course in
conscious sedation.
3. Three names of physicians who will directly submit letters
of reference addressing his “current competence” to
administer conscious sedation based on their “personal
knowledge” obtained either during a residency training
completed within the past two years or through “personal
observation” during the two years preceding the date of
the application.
4. A log of patients who have experienced complications
related to the provision of conscious sedation in an office
setting and the resulting outcomes of the complications.
In addition, the application requires the applicant to
delineate which of the six listed agents he or she wishes to
administer in the office setting. An applicant who wishes to
administer other agents must provide separate documenta-
tion concerning his or her ability to administer those agents
(i.e., training and clinical experience).
Recommendation: The BME’s alternative privilege
requirements are typically more onerous than those utilized
by a hospital when a physician applies for privileges in his or
her specialty. Therefore, a physician who, as of December 16,
2003, will need either hospital or alternative privileges to
continue performing surgery or procedures in a private office
may find it easier to seek privileges from a hospital.
If you have any questions about whether the BME’s new
alternative privileging regulations apply to you, call us. We
can also help you with the application process.
◆ Licensing Board Representation
◆ Buying or Leasing Real Estate
◆ Ambulatory Surgical Centers and
Ambulatory Care Centers
◆ Medical Management Companies
◆ Internet-Based Healthcare Businesses
◆ Emergency Health Systems Development
◆ HIPAA Compliance
 3

HIPAA’s October 16th Electronic Transactions and

Code Set Standards May Cause Cash Flow Disruption
By Stephen M. Greenberg and Jacob L. Hafter

he Healthcare Insurance exceptions, should you be a covered 23 Senate hearing, the possibility of

T Portability and Accountability Act

of 1996 (“HIPAA”) has altered
the practice of medicine for health care
entity, failure to comply with these
standards will result in your claim
being returned to you unpaid.
CMS employing a contingency plan
was confirmed by CMS officials. Under
this plan, CMS will continue to accept
providers to a far greater extent than Most health care providers who are non-compliant claims. However, the
anyone would have ever imagined. covered entities have addressed this duration of this extension was not
Initially intended to rid the issue by relying on their billing specified. It would be imprudent to
health care industry of companies and software rely on CMS to come to the rescue of
the imbalanced pre- vendors to make sure that those not complying with the law,
existing condition their claim submissions because while CMS will accept non-
limitation set forth are HIPAA compli- compliant claims past the regulatory
by most health ant. In fact, HIPAA deadline, other payers have not publi-
insurance compa- technically required cized the adoption of such a contin-
nies, the enact- that testing of such gency plan and often use any excuse to
ment of HIPAA submissions begin in delay or deny claims.
not only altered April of this year. Our concern, like others, is two-
what health insurance The reality, however, fold. First, a system may simply not be
companies cover, but is that very little testing compliant despite vendor or third party
also has most recently was actually done, and assurances to the contrary. Second, in
sent the health care indus- the significance of this the rush to ensure compliance by
try into a frenzy over the pro- latest October 16th deadline may October 16th, systems thought to be
tection of private health information. have been understated. Failure to sub- compliant may fail due to programming
However, the wide-sweeping effects of mit HIPAA compliant claims could errors, technical misconfigurations or
HIPAA may reach new heights with result in a dramatic and devastating system overloads. Should such a failure
the implementation of the electronic drop in your cash flow. occur, are you prepared to deal with
submissions deadline on October 16, the temporary drop in your cash flow
On September 11, 2003, Leslie V.
2003. that may result? At the very least, it
Norwalk, acting deputy administrator
Effective October 16, 2003, all of the Centers for Medicare & would be appropriate to have a line of
“covered entities,” including health Medicaid Services (“CMS”), issued a credit in place in order to handle any
plans, health statement disruptions in cash flow that may arise.
care clearing- addressing In addition, you should continue to
houses and Medicare’s work with your software vendors and
health care
It would be imprudent billing companies to make sure that
concerns with
providers the October everything possible is being done to
that transmit to rely on CMS to come to the 16th dead- assure compliance.
health infor- line. In this
mation elec- rescue of those not complying statement,
tronically, Ms. Norwalk This report, published as a
must comply with the law... suggested
service to Flaster/Greenberg
with the that CMS
Electronic “may imple- clients and interested readers, is
Health Care ment contin- for general use and information.
Transactions and Code Set Standards, gencies to maintain operations and cash The content should not be inter-
as set forth by the HIPAA flow” should Medicare’s efforts to
Administrative Simplification ensure compliance with the rigors of preted as rendering legal advice
Compliance Act. While there are a few the deadline fail. During a September on any specific matter.

www.flastergreenberg.com
 4
Updated EMTALA Regulations Ease and
Clarify Some Restrictions
By Jacob L. Hafter
outinely at the forefront of the minds
R of emergency physicians and hospitals,
the federal Emergency Medical
Treatment and Active Labor Act
(“EMTALA”), once again, will soon have
significance for all health care providers.
EMTALA ensures that all patients who go to
a Medicare participating hospital during a
Jacob L. Hafter
medical emergency or present in active labor
must be provided with both a medical evaluation and the nec-
essary stabilizing treatment that is appropriate for the patient’s
condition. EMTALA’s heightened prominence is due to regu-
latory changes that were published on September 9, 2003, that
will likely have a broad impact on most health care providers.
These new rules, as published by the Centers for Medicare
and Medicaid Services (“CMS”), clarify and modify
the requirements of this 17-year-old regulation.
Subtly, EMTALA always has had an impact on
the non-emergency physician. Indeed, the scope of
EMTALA has been much broader than one might
expect, as EMTALA obligations have been found to
be present not just at the hospital’s emergency
entrance. The following, for example, are scenarios
where EMTALA implications may arise within a
non-emergency practice:
1. A stable patient who goes for a routine dermato-
logical consult at a hospital-owned, free standing derma-
tology office center suddenly experiences what seems to
be a heart attack while the dermatologist is completing
her routine patient assessment.
2. A physician schedules elective surgeries while she is on-
call for multiple emergency departments.
3. A surgeon, responding to a page from a local emergency
department (“ED”), tells the ED that he is currently at
another hospital’s operating room in the middle of a pro-
cedure, and that it would be more efficient to transfer the
patient to that hospital.
4. Rather than providing specific coverage, a physician
group’s administrator provides the ED with the name and
number of the group’s answering service to be posted on
the on-call physician list.
5. A vascular surgeon who has been on the medical staff for
15 years informs the hospital that he is no longer seeing
pediatric patients, electively or on call.
6. The hospital’s Medical Staff bylaws create a “senior
exemption” for on-call duties, which inadvertently
exempt over three-fourths of the physician specialists in a
particular area.
The analysis as to whether these scenarios may be
EMTALA violations now hinges on when the scenario
occurs. After November 10, 2003, the new EMTALA rules
Health Law Report • Flaster/Greenberg P.C.
alter how the above listed episodes may be interpreted with
respect to EMTALA liability.
The newly published rules touch on multiple EMTALA
subjects, but below are three main issues that may impact
your practice.
The Dedicated Emergency Department
& Emergency Patient
The new rules have addressed the old cases where a stable
patient seeking non-emergency services from a hospital
department received EMTALA protection, despite the lack
of any emergency condition. After November 10, 2003,
EMTALA regulations only apply to those patients who
request emergency services for what they perceive is an emer-
gent medical condition. Thus, patients who present for
routine services and admitted patients are not cov-
ered by EMTALA. Further, the patient must pres-
ent to a location that routinely provides emer-
gency services, not just any location on hospital-
owned property, in order to receive EMTALA
protections.
With respect to Scenario 1 above, prior to
November 10, 2003, failure on the part of the der-
matologist to not only identify the myocardial infarction, but
also stabilize the patient would be an EMTALA infringement,
as the hospital-owned physician’s practice has traditionally
been seen as an extension of the hospital. However, with the
new regulations, so long as the dermatologist does not rou-
tinely provide emergency services, or hold her office out to be
such a locale where emergency services are provided, the
physician has no duty to provide stabilizing treatment before
she calls “9-1-1” or prior to the transfer of the patient to the
emergency department.
Physician On-Call Issues
While the requirement for an on-call list for specialty cov-
erage has not been eliminated, the new EMTALA rules allow
greater flexibility for specialists providing call coverage.
Scenarios 2 and 3 above suggest activities that may have
been considered EMTALA violations in the past, but may be
acceptable under the new regulations. Soon physicians will
be able to schedule elective surgeries while they are provid-
ing on-call coverage. Physicians may even provide on-call
coverage at multiple emergency departments simultaneously.
Further, should it be more efficient for a physician to have a
patient transferred to a different facility where that physician
is already providing medical services, a physician may elect to
have the patient transferred, so long as an appropriate level
of care can be maintained during the transfer. Typically, the
use of a critical care interfacility transportation service would
ensure that the patient has access to the highest level of care
during the transfer.
(continued on page 5)
 5

Updated EMTALA Regulations ... (continued from page 4)

Scenario 4 above addresses an
administrative issue that will affect the
practicalities of taking call. Prior to the
new regulatory changes, the actual
name of the physician taking call need-
ed to be provided to the emergency
department. However, after November
10, 2003, a physician practice may pro-
vide an emergency department with the
contact information of the practice’s
answering service, so long as there is
some assurance that an appropriate spe-
cialist can be reached during an emer-
gency without significant additional
effort on the part of the emergency
department staff. Additionally, in cer-
tain cases, a nurse practitioner or physi-
cian assistant may be an appropriate
health care provider to provide call for
an emergency department.
Scope of Medical Staff
Privileges
The liberalization and easing of the
requirements for specialty coverage
under the new EMTALA rules, while
favorable for most, may cause some
problems for certain specialists if they
are not careful. It is now permissible,
for example, for medical staff bylaws to
exempt senior physicians from certain
on-call responsibilities. The rub lies in
avoiding a compromise in the on-call
availability of required specialties. Risks
can be muted, however, by defining the
scope of privileges provided in the
bylaws. One such area where attention
should be focused is carve-outs, like
senior staff on-call exemptions, that
may leave the community without
access to the services of a particular
specialty. Accordingly, where a physi-
cian whose service on the staff has met
a minimum defined term, such as in
Scenario 5, he may elect to take advan-
tage of specific restrictions on his or
her practice without it being an
EMTALA violation under the new reg-
ulations. On the other hand, the effect
of the bylaws in Scenario 6, above, may
still be an EMTALA violation under
the new regulations if one-fourth of the
specialists in the community cannot
adequately provide coverage continu-
ously for the community’s emergency
department.
One of the most criticized aspects of
the new EMTALA regulations is that
no specific guidance is provided as to
how to implement policies that limit,
or broaden, the scope of privileges or
provide on-call exceptions. The new
rules simply suggest that the hospital
must assure that such practices do not
put a strain on its resources such that
patient care in an emergency situation
may be compromised.
The new EMTALA rules are an
attempt by CMS to clarify ambiguities
in the existing regulations while simul-
taneously providing patients with the
initially intended EMTALA protec-
tions. However, as with all changes in
existing rules, it is vital for the success
of your practice to ensure that you are
compliant with the new rules as they
become implemented.

Recent Federal Tax Law Changes Potentially

Applicable to Physicians
By Alan H. Zuckerman
arlier this year, President Bush signed ings to the shareholders at a substantially reduced tax cost.

E into law the “Jobs and Growth Tax

Relief Reconciliation Act of 2003”
(the “Act”), which contains several tax pro-
4. Depreciation. Property purchased for use in a business is
normally depreciated over a certain number of years
specified in the Internal Revenue Code and regulations
visions financially favorable to physicians, there under. The Act allows an additional depreciation
including the following guidelines: deduction in the first year that certain qualified property
is purchased, generally equal to 50% of the basis of such
1. Personal tax rates. Under the prior law,
property. Furthermore, under the prior law, businesses
Alan H. Zuckerman an individual paid tax on “ordinary
were generally permitted to write off, rather than depreci-
income” at rates of 38.6%, 35%, 30%, 27%, 15% and 10%,
ate, up to $25,000 of purchased assets during the year.
depending on income levels. The Act reduces the top
The Act increases this allowance to $100,000 of purchased
four rates to 35%, 33%, 28% and 25%.
assets each year. These provisions will generally allow
2. Capital Gains. Under the prior law, long-term capital physicians to purchase equipment without creating tax-
gains (e.g., gains from the sale of capital assets held more able income in excess of distributable cash.
than a year) were taxed generally at 20%. The Act reduces
the rate to 15%. This article examines several changes included in the Act,
and is not intended to be all inclusive of the complete Act’s
3. Dividends. Under the prior law, individuals were taxed
provisions. It should also be noted that there are different
on dividends at the normal ordinary income rates. Under
effective dates and expiration dates for these provisions,
the Act, individuals are now taxed at the same rate appli-
which necessitate advance planning and discussion. If you
cable to long term capital gains (i.e., generally 15%). This
have questions about how these provisions, or the Act in
provision provides a planning opportunity for corpora-
general, affects your particular practice, please feel free to call us.
tions that have retained earnings to distribute those earn-

www.flastergreenberg.com

1810 Chapel Avenue West
Cherry Hill, NJ 08002-4609
Health Care Law Practice Group
Richard J. Flaster
(856) 661-2260
Rick.Flaster@flastergreenberg.com
Kenneth S. Goodkind
(856) 661-2273
Ken.Goodkind@flastergreenberg.com
Stephen M. Greenberg
(856) 661-2261
Steve.Greenberg@flastergreenberg.com
Jacob L. Hafter
(856) 382-2227
Jacob.Hafter@flastergreenberg.com
Alan H. Zuckerman
(856) 661-2266
Alan.Zuckerman@flastergreenberg.com
Markley S. Roderick
(856) 661-2265
Mark.Roderick@flastergreenberg.com
Steven B. Sacharow
(856) 661-2272
Steve.Sacharow@flastergreenberg.com
Alma L. Saravia
(856) 661-2290
Alma.Saravia@flastergreenberg.com
Laura B. Wallenstein
(856) 661-2263
Laura.Wallenstein@flastergreenberg.com
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