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Oversight of ambulatory surgical procedures

By Karl A. Thallner, Jr., Esq.

Several factors have contributed to the increasing number of medical procedures being performed on an outpatient basis. Most significantly, new medical techniques and technologies have made it possible safely to provide more care in an ambulatory setting. Third party payors and patients have also favored the lower cost and greater convenience of ambulatory care. But with the growth in the types and numbers of procedures that can be performed without an inpatient admission, so too have arisen a number of questions about the regulatory oversight imposed when such procedures—particularly those that might be classified as surgical procedures—are performed.

ASF Licensure Regulations

In Pennsylvania, the Health Care Facilities Act requires that anyone operating a health care facility must hold a license from the state Department of Health (DOH), and DOH is required to issue regulations relating to licensure of such facilities. Health care facilities requiring licensure include hospitals and ambulatory surgical facilities (ASFs), among others. Private physician offices are specifically excluded from the ASF licensure requirement, unless they have a distinct part used solely for outpatient surgical treatment on a regular and organized basis..

After the state certificate of need (CON) law sunsetted in 1996, DOH undertook a review of its licensure oversight of health care services that had been subject to the CON program. DOH determined that its ASF licensure regulations should be amended, and in July 1997 proposed new ASF licensure regulations. After consideration of comments, DOH published new final ASF licensure regulations, which became effective in November 1999.

The revised licensure regulations classify any facility not located on a hospital’s premises that provides outpatient surgical treatment as an ASF that is subject to the regulations. Rather than establishing a list of procedures that constitute outpatient surgical treatment, DOH defined outpatient surgical treatment as those surgical procedures performed on patients who do not require hospitalization but who do require constant medical supervision for a limited period of time following the performance of the procedure. Thus, a key test in determining whether ASF licensure is required (or sufficient) is the level of post-procedure medical supervision that the facility’s patients need.

In addition, reflecting DOH’s view that “a physician’s office will generally not be considered as an ASF,” the regulations preserve the exception from licensure for physician offices that do not have a distinct part used solely for outpatient surgical treatment on a regular and organized basis. Because of the absence of a list of procedures that must be performed in an ASF and the exception for physician offices, it may be unclear to many physicians whether their medical offices are subject to the ASF regulations, and, if so, what licensure requirements may be imposed.

If a facility is classified as an ASF, it is then designated as either a Class A, B or C facility, depending on the level of anesthesia administered and patient acuity at the facility. Class A facilities, which are offices of practitioners where procedures are limited to the administration of local or topical anesthesia, are required to be accredited by a national accrediting agency and to register with DOH. Class B facilities, at which sedation anesthesia or dissociative drugs that obtund the reflexes are administered generally to patients of Physical Status (PS) I or II, and Class C facilities, where anesthetic agents including general anesthesia may be administered to PS I, II or III patients, require full licensure.

Licensure imposes certain requirements on the facility and its governing body, including the establishment of a variety of policies and procedures, the existence of an organized medical staff that makes recommendations on membership and clinical privilege issues, meeting minimum requirements with respect to anesthesia, nursing, pharmacy, laboratory, radiology, environmental and fire and safety services, and construction of the facility in accordance with specified design and construction standards.

DOH Enforcement Campaign

The new ASF licensure scheme did not receive a great amount of attention outside of the health care community when first established. That, however, changed dramatically when, in May 2001, a teenager died after a liposuction was performed in a Pennsylvania physician’s medical office. That incident received considerable attention in the popular media and prompted DOH to investigate whether the physician’s office should have been licensed as an ASF. Moreover, DOH initiated a campaign to increase compliance with ASF licensure requirements.

In December 2001, DOH kicked-off the campaign by sending a letter to each of the tens of thousands of physicians licensed in Pennsylvania to notify them of the new ASF licensure regulations. The letter provided a glimpse into DOH’s views on what procedures might be characterized as outpatient surgical treatment. According to the letter, DOH “has focused on invasiveness and complexity of the procedure along with the degree of supervision required.” Specifically, the letter stated, “Those surgical procedures that involve the insertion of a medical instrument into the body through some type of incision are considered invasive. The more invasive the procedure, the more likely that the office should be licensed as an ASF.” The letter also acknowledged that licensure is not required for every surgical procedure performed in a physician office, but rather, according to DOH, a physician office must be licensed only if it is “using a physically identifiable room or rooms in the facility for the purpose of regular, planned procedures that meet the definition of outpatient surgical treatment.”

The December 2001 letter instructed physicians to complete and return to DOH by January 1, 2002 a reply post card. The reply card asked each physician to indicate whether the physician’s office does or does not perform surgical procedures that qualify it as an ASF, or whether the physician is “not sure” whether the office so qualifies and therefore needs more information. According to recent media reports, 113 physicians indicated in their responses that their unlicensed medical offices need to be licensed as an ASF. Those physicians have received or can expect a call from DOH asking them to stop performing surgeries at their offices until they obtain a license.

Meanwhile, in January 2002, DOH sent a follow-up letter and survey to each physician who indicated that she is not sure whether her medical office is required to be licensed as an ASF. The survey asked certain questions about the type and number of procedures performed in the physician’s medical office. According to the letter, if the responses to the survey indicate that the physician’s office need not be licensed, DOH will notify the physician immediately, and if DOH believes that there is a possibility that the office should be licensed, DOH will “follow-up by letter and outline the next steps to determine if you need a license and the process to obtain it.”


Despite DOH’s campaign to inform physicians of the ASF licensure requirements and to identify those unlicensed facilities that are required to be licensed, there has been and continues to be uncertainty as to whether some physician offices are required to be licensed as ASFs, and, if so, how the ASF licensure requirements would apply. For example, it may not be clear whether or not certain procedures constitute outpatient surgical treatment, even taking into account DOH’s indication that it will focus on invasiveness and complexity and the degree of supervision required. Further, in some cases it may not be obvious whether any surgical procedures are performed in space “used solely for outpatient surgical treatment on a regular and organized basis” so as to trigger the physician office exception. Finally, if a physician office is determined to require licensure, it is not clear how certain aspects of the licensure regulations would be applied, such as whether and how the various policies, service requirements and construction standards could be limited to the portion of the physician office involving outpatient surgical treatment.

As a result of the increasing enforcement campaign in the face of uncertainty as to how the regulations apply in many situations, physicians may want to consider each of the following recommendations.

Review carefully the licensure regulations to assess whether you are performing outpatient surgical treatment and whether you qualify for the physician office exception. If you have questions whether specific procedures would be treated as outpatient surgical treatment, or whether your medical office falls within the physician office exception, consider consulting with your state medical or specialty societies and/or obtaining advice from your attorney.

If you are performing procedures in your office for which licensure is required, cease performing those procedures. Rather than starting down the licensure path, first conduct an assessment of the cost of licensure (including compliance with the life safely and construction requirements) compared with the benefit you will obtain from continuing to perform those procedures in your office. Consider also whether there are alternate licensed sites (such as hospitals or ASFs) at which you could continue to perform those procedures without your office becoming licensed.

Before responding to surveys and requests for information from DOH, take time and care to review closely the questions being asked and to understand the implications of the answers. The licensure regulations can be quite technical and are not completely clear. A quick answer to a question may prove to be a less-than-obvious admission that a medical office must be licensed, even though a contrary position may be possible.

Karl A. Thallner, Jr., Esq., is a partner with the law firm of Reed Smith LLP, where he heads the health care law practice in the firm’s Philadelphia office.

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