Overview of Maryland Regulatory
System for Hospital Oversight
In Maryland, hospitals are regulated by several agencies:
- 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 licensing
- 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
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,
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 is changed.
- The type or scope of any health care service is changed,
if the health care service is offered by a health care
- Capital expenditures are made by or on behalf of a health
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 Medicare program.
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
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.
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 without insurance.
- Provide accountability for hospital performance to the public and state government.
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.
Hospital rate setting also enables Maryland to cover reasonable costs to those who cannot pay for health care services known as uncompensated care. In FY 2008, $1 billion was included in hospital rates for uncompensated care. As a result, Maryland has no need for public hospitals.
In 2008 alone, the HSCRC has saved Marylanders $2.9 billion in hospital costs by keeping the growth in cost per admission below the national rate.
Maryland is the only State in the country that has a Medicare Waiver. Under this agreement, Medicare reimburses Maryland hospitals according to HSCRC rates. To learn more about the Maryland rate setting system and the HSCRC, visit the HSCRC website.