Code of Maryland Regulations › Title 10 - MARYLAND DEPARTMENT OF HEALTH › Part 5 › Subtitle 37 - HEALTH SERVICES COST REVIEW COMMISSION › Chapter 10.37.10 - Rate Application and Approval Procedures › Section 10.37.10.04-1 - Rate Efficiency Methodology

Current through Register Vol. 51, No. 14, July 12, 2024
A. In evaluating the reasonableness of a
				  hospital's permanent rate structure, the Commission shall use an Inter-hospital
				  Cost Comparison (ICC) methodology Thus, the results of an ICC analysis do not
				  constitute an absolute rule, and the Commission shall consider the individual
				  circumstances of the subject hospital in determining the appropriate rate
				  structure. The ICC methodology begins by establishing costs for the target
				  hospital and its peer group. Under the methodology, costs are determined by
				  calculating the hospitals' charges and then removing markup and profits. The
				  methodology then compares the subject hospital's costs to the average costs of
				  its peer group after adjusting for factors for which the hospital is not held
				  accountable. These factors include, but need not be limited to, case mix, labor
				  market cost differences, reasonable medical education costs, and special grants
				  awarded by the Commission, which compares the costs of the hospital to those
				  costs, including adjustments for reasonableness and efficiency, of its peer
				  hospitals, with appropriate adjustments to reflect changes in the hospital's
				  volume since the beginning of the new All-Payer Model Agreement and the
				  inception of the hospital's revenue agreement, as the foundation of its review
				  of the full rate application. The staff shall make modifications to the ICC
				  which are needed to properly reflect any additional factors that are relevant
				  to the determination of a reasonable cost level that should be reflected in the
				  hospital's approved regulated revenue. The ICC analysis does not constitute a
				  strict, unalterable or absolute methodology. It shall be modified as needed to
				  give proper attention to the particular circumstances of the hospital, and the
				  staff shall give due consideration to information provided by the hospital in
				  determining the appropriate rate levels and rate structure for the hospital.
				  The ICC shall take into account, in the establishment of appropriate rate
				  levels, those factors for which the hospital will not be held accountable such
				  as special grants from the Commission, assessments, uncompensated care levels,
				  and characteristics of the population in the hospital's primary service area.
B. Factors considered in the ICC
				  methodology may evolve during the course of full rate reviews. The Commission
				  shall take into account the specific circumstances of the applicant hospital,
				  and staff shall make the key contents, analytic steps, and findings of such
				  reviews available to all hospitals and the public.
C. When reviewing a full rate application
				  filed by a hospital that is owned or controlled by a hospital system that also
				  owns other hospitals located in Maryland, the Commission may take into account
				  the financial situation of the other hospitals in the system including their
				  profitability and any shifts of services, volume, revenues or assets between
				  the hospital and the other hospitals or related organizations of the
				  system.
D. The final rates that are
				  approved by the Commission for a nonprofit hospital's permanent rate structure
				  shall allow the hospital to charge reasonable rates that will permit it to
				  provide, on a solvent basis, effective and efficient service that is in the
				  public interest.
E. The final rates
				  that are approved by the Commission for a proprietary profit-making hospital's
				  permanent rate structure shall allow the hospital to charge reasonable rates
				  that will permit it to provide effective and efficient service that is in the
				  public interest and include enough allowance for and provide a fair return to
				  the owner of the hospital.
F. The
				  Commission shall set rates for the applicant hospital consistent with the
				  All-Payer Model approved by the federal Center for Medicare and Medicaid
				  Innovation.