Overview of Maryland Regulatory
System for Hospital Oversight
In Maryland, hospitals are regulated by
- The Maryland Health Care Commission
(MHCC) administers the certificate of need (CON) program.
- The Office of Health Care Quality (OHCQ)
in the Department of Health and Mental Hygiene (DHMH) oversees
- The Health Services Cost Review Commission
(HSCRC) regulates the rates hospitals can charge for care.
Certificate of Need Program
The MHCC Certificate of Need (CON) program
is designed to make sure that new health care services and
facilities are developed only as needed. This decision is
made based on measures that have been developed with public
input. For each proposal, the MHCC considers the following:
- Quality of care
- Geographic access to care
- Financial access to care
The State Health Plan lists policy goals
and service-specific standards that are used for reviewing
proposed projects. The MHCC oversees, monitors, and responds
to the effects of changes in the state health care system
influenced by the marketplace. This public participation
enables the MHCC to determine whether proposed health care
projects address the community's health care priorities and
are in the public interest.
The CON program oversees the following
health care providers:
- Acute-care general hospitals.
- Specified acute-care services including
obstetrics, pediatrics, and acute psychiatry.
- Special hospitals (chronic, psychiatric,
rehabilitation, and pediatric).
A CON approval is required before the following
changes can take place:
- A new health care facility is built,
developed, or established.
- An existing or previously approved,
but unbuilt, health care facility is moved to another site.
- The bed capacity of a health care facility
- The type or scope of any health care
service is changed, if the health care service is offered
by a health care facility.
- Capital expenditures are made by or
on behalf of a health care facility.
Licensing for Health Care Facilities
Within the Department of Health and Mental
Hygiene (DHMH), the Office of Health Care Quality (OHCQ)
licenses or certifies various health care facilities and
services in Maryland. The OHCQ’s Hospital Unit is legally
required to evaluate all hospitals, and to investigate and
respond to all consumer complaints. OHCQ is responsible for
licensing and certifying hospitals that participate in the
The Joint Commission (TJC) approves all acute-care hospitals.
TJC is an independent, not-for-profit group that evaluates
and accredits health care organizations and programs in the
United States. TJC surveys accredited hospitals every three
years. It also evaluates nursing homes and home health agencies.
Once a hospital has received TJC accreditation,
the federal government approves it to be a Medicare provider,
and Maryland renews the hospital’s license. Maryland
does not require the OHCQ to review a hospital that the TJC
has accredited, unless a specific situation, such as a complaint,
creates the need for such a review.
Setting Hospital Rates
The Health Services Cost Review Commission
(HSCRC) was established by the Maryland General Assembly
in 1971. The seven-member commission reviews and approves
rates that hospitals can charge for their services. The HSCRC
also provides financial information about Maryland hospitals
to the public.
Based on a federal waiver from Medicare,
the HSCRC sets rates for all payers: private insurance companies,
HMOs, Medicare, and Medicaid. This system is referred to
as the "all-payer" system because all payers pay
for their fair share of hospital costs.
In establishing the HSCRC, the Maryland
General Assembly wanted to meet the following needs:
- Keep hospital services affordable.
- Expand access to hospital care for those
- Provide accountability for hospital
performance to the public and state government.
Since 1974, the HSCRC has saved Marylanders
about $1.3 billion in hospital costs by keeping the growth
in cost per admission below the national rate. Setting its
own fees for health care services also enables Maryland to
cover reasonable costs to those who cannot pay, known as
uncompensated care. In 2000, $469 million was included in
rates for uncompensated care. As a result, Maryland has no
need for public hospitals.
Maryland is the only State in the country
that has a Medicare Waiver. Under this agreement, Medicare
reimburses Maryland hospitals according to HSCRC rates.