Opinion ID: 1884591
Heading Depth: 2
Heading Rank: 3

Heading: Adoption of COMAR 10.24.17

Text: The State Health Plan consists of a series of regulations adopted by the Commission or its predecessors, incorporated by reference, but not in fact, in the appropriate title, subtitle and chapters of The Code of Maryland Regulations, COMAR, here, title 10, subtitle 24, chapters 07 through 17. At issue in this case is an amendment to the regulations applicable to cardiac surgery, which is incorporated at COMAR 10.24.17, in the chapter entitled Specialized Health Care ServicesCardiac Surgery and therapeutic Catherization Services. The amendment was to COMAR 10.24.17.04E, Methodology for Projecting Need for Cardiac Surgery, specifically, one of the assumptions underlying that methodology, the one addressing system capacity in the planning regions. [5] As amended, the regulation states: (i) The capacity of an existing cardiac surgery program is calculated as follows: (i) For new programs, capacity is defined as the greater of 350 cases or the actual number of cases during the first three years of a program's existence; (ii) For programs older than three years, capacity is defined as the highest actual annual volume attained and reported by that program over the last three years subject to a market based constraint; and (iii) The capacity of any program cannot be greater than the higher of 800 cases or 50 percent of the projected gross need for the planning region. COMAR 10.24.17.04E (4)(i). Before the amendment, the assumption underlying system capacity was premised on there being performed, in each of the operating rooms dedicated to open heart surgery, 500 operations year, a year being defined as 250 days, it being assumed that the operating rooms were used at the rate of 2.0 cases per day, five days a week, fifty weeks per year. [6] Before and after the amendment, the assumption included an estimate of the future number of open heart surgery cases based on an analysis of trends in regional, age-specific use rates and changes in the size and composition of the population. See, Final Report of the Technical Advisory Committee on Cardiovascular Services, December 1999, at 23. The present plan specifically provides, as to projected adult open heart surgery for Maryland residents, that it is estimated by trending of the most recent three years of open heart surgery use rates to the target year based on the average annual percentage change in historical open heart surgery use rates for each Regional Service Area, except the Western Maryland Regional Service Area. COMAR 10.24.17.04E (4)(b) [State Health Plan at 60]. [7] Both before and after the amendment of the regulation at issue, net need for open heart surgery cases is determined by subtracting the total existing capacity from the total projected number of cases. COMAR 10.24.17.04E (6), Calculation of the Net Need for Adult Cardiac Surgery Programs. [State Health Plan at 63]. Need for an additional cardiac surgery program exists if the net need for open heart surgery cases in a Regional Service Area is at least 200 cases. Id. Initially, we acknowledge that the amendment of the regulation was properly done procedurally. It must be noted that the amendment was adopted only after extensive review and after receiving considerable input from a Technical Advisory Committee, Commission staff and interested parties. In fact, the process was initiated approximately two years before the amendment was adopted, when the Commission, in December 1998, convened a Technical Advisory Committee, as its predecessor had done in connection with the development of the 1997 State Health Plan. In addition to a report from that Committee, it consisted of the development of a 40-page White Paper by Commission Staff, solicitation of public comment on that White Paper and subsequent White Papers analyzing the initial comments and setting forth Staff recommendations, a public hearing, the publication of the Commission's proposed regulation pursuant to the procedure mandated by the Maryland Administrative Procedure Act. Maryland Code (1984, 1999 Replacement Volume, 2000 Suppl.) § 10-112 of the State Government Article, followed by another public hearing. The Technical Advisory Committee questioned the appropriateness of the 1997 State Health Plan's assumption underlying the system capacity calculation for cardiac surgery servicestwo cases per dedicated operating room model, suggesting that it be eliminated, and, that the measurement of available system capacity be re-defined to incorporate other factors such as monitoring of patient outcomes, assessment of future need, staff availability, access, and cost in determining the need for additional open heart programs in Maryland. Technical Advisory Committee Final Report, at 26. Thereafter, in June 2000, following staff review of the Technical Advisory Committee's recommendations, the Commission issued a White Paper: Policy Issues in Planning and Regulating Open Heart Surgery Services in Maryland, which identified issues related to planning for cardiac surgery services and policy options for addressing them. The two options the White Paper identified for determining system capacity for cardiac surgery services were: Option 1, the existing measure, utilized in the 1997 State Health Planthe continued use of the dedicated operating room approach, White Paper at 20,and, Option 2, capacity based on actual service utilization, id. at 22, a measurement based on actual service utilization. Under Option 2, which was employed in the 1990 State Health Plan, the Commission's White Paper noted, the capacity of existing cardiac OHS programs was defined as follows: the greater of 350 cases per hospital or the highest actual annual volume ever attained by the hospital in the most recent years of accurate available data; or if the hospital had not performed, for the past three consecutive years, at least 200 cases per year, the capacity of that program was measured by the actual volume of cases performed in that hospital during the base year. Commission White Paper at 22. The advantage of using Option 2 as the underlying assumption of system capacity, the White Paper argued, was that actual performance of a program would be more indicative of what volumes are likely to be handled by the program. Id. The Commission then solicited comment on the White Paper. Of the responses from organizations and individuals, several took advantage of the debate on system capacity to lobby for increased competition in the Metropolitan Washington planning area. In all, ten individuals or organizations submitting comments on the White Paper did so in support of defining system capacity for cardiac surgery services using either Option 1 or Option 2. The remaining five organizations that submitted comments relating to system capacity suggested using a dedicated operating room approach in conjunction with other factors to measure system capacity. As Anne Arundel Medical Center, one of the organizations advocating an approach other than Options 1 or 2 identified in the White Paper, stated, the combined effect of the CON process and the past, present and proposed methodologies resulted in open heart surgery services being treated as a franchise, an economic bonanza so valuable that both the `haves' and those that desire it spent enormous and obscene amounts of time and money in the few CON proceedings the Commission's predecessor held to grant new franchises. Further, it characterized the CON process as focus[ed] on number-driven `need' analysis, limiting the number of hospitals with Open Heart CONs (the `haves'), disagreed with the concept that CON reviewthe before-the-fact comparison of competing applicantsis the appropriate method to design an effective system of combating heart disease, and accused that methodology of insulating those hospitals with the cardiac surgery franchise from competition. Greater Baltimore Medical Center took a similar tack. Acknowledging the intent of the White Paper, it observed, nonetheless, that from a practical standpoint, the policy alternatives are limited by remaining within the confines of the existing CON framework of analysis. The Commission should replace the rationing of health care represented by the existing plan in favor of adopting a patient centered, quality of care driven plan that would judge each individual hospital's ability and need to provide cardiac care. While offering that the Commission's policies regarding O[pen] H[eart] S[urgery] [OHS] should reflect a balance between the advantages of size and the advantages of choice, Holy Cross Hospital stressed that [t]here is massive evidence that significant competition leads to lower cost and, when the market rewards quality, significant competition can lead to higher quality as well. Additional providers, especially independent providers, almost by definition, increase access. Thus, by balancing the advantages of size and choice, [the Commission] will balance the interests of quality, cost containment and access. It also made clear that it did not believe that such a balanced framework currently exists and, in fact, stated that it does not, as the current situation effectively prohibits new programs in any area which has OHS. Holy Cross noted, furthermore, its sympathy to many of the arguments for opening the OHS market to new entrants and then judging after the fact whether they are successful and should be retained (the so-called licensure model). This approach maximizes the opportunity for choice while retaining a state review role, generally, after the fact. While praising the five `right-sized' competitive programs in Baltimore, Suburban Hospital decried the dysfunctional Washington market, with its dominant single large provider, the Washington Hospital Center. [8] Suburban advocated a capacity measure that would permit development of a new OHS program in the D.C. region but not in Baltimore. It also lamented the assignment to the four low production programs in the region, Georgetown, George Washington, Howard and Prince George's Hospital Center, of capacity for 3000 cases when, together, during all of 1999, they performed but 395 cardiac surgeries. Suburban Hospital submitted: if just 200 cardiac surgeries and 200 angioplasties were performed at either Suburban or Holy Cross instead of at the Hospital Center, savings to the Medicare program (and the American people) would be $4 million each year. These savings ... result from the rate offers that an existing Maryland-based program must make in connection with the CON approval process. This phenomenon, and price reductions in response to the new, lower-priced competition, both generate savings to payers. This is precisely what occurred in the Baltimore market as a result of development of the two new, competitive programs at Sinai and Union Memorial during the last several years. Given this experience and the current situation in the D.C. area, it is difficult to understand why the Commission should continue a policy that: (i) protects a non-Maryland hospital from effective price competition; (ii) denies Maryland consumers meaningful choice; and (iii) causes the Medicare program to pay millions of additional dollars to a non-Maryland hospital for cardiac surgery provided to Maryland residents. (Emphasis in original). St. Agnes Hospital, having in the past supported legislation that would have replaced CON control of cardiac surgery services with a licensure approach, was clear in advocating for an approach that was more open, more competitive. It commented: St. Agnes in its oral and written comments urges the Commission to replace the existing regional plan with a patient and quality focused plan that promotes a continuum of cardiac care including coronary angiosplasty and open heart surgery in any large community hospital with the patient volumes and size to safely provide the service. The regional plan under review is based on the explicit premise that open heart surgery is an expensive tertiary level service which exhibits a high correlation between volumes and outcomes and is best served by forcing all procedures into a very small number of hospitals. On those rare occasions when new programs have been granted a CON, they have been parceled out one program at a time following protracted and expensive consolidated reviews that have pitted existing providers against all applicants, and all applicants against each other. Despite the enormous time, money, effort and goodwill expended in these past proceedings held by the Commission's predecessor, one of the only three programs ever CON approved and running has never met even the minimum volume standards adopted by the plan. A 33% failure rate is unacceptable in the allocation of such a critical resource. We believe it is fair to say that the existing open-heart CON process has lived [past] its usefulness. Competition, and the need for it, was the theme of the Health Services Cost Review Commission's comments to the Commission, albeit with a caution. That was true of the comments of Johns Hopkins Hospital, as well, who attributed the more than 70 percent market share enjoyed by the Washington Hospital Center and the failure of four of the Washington Region programs to meet minimum surgical volumes to the lack of competition. Thus, Johns Hopkins advocated eliminating what it termed the flawed dedicated operating room methodology, as a measurement of program capacity because of a hospital's ability to simply add operating rooms and thus unilaterally increase system capacity. Anne Arundel Medical Center, Greater Baltimore Medical Center, Holy Cross Hospital, Suburban Hospital and St. Agnes Hospital all supported a capacity measure which was likely to result in competition. The one that they all favored was a cap on capacity. The group favored a cap on capacity because they objected to the assignment of more than 3000 cardiac procedures, as projected capacity in the Metropolitan Washington planning region, when in actuality, on average, more than 2500 of the procedures were performed solely by Washington Hospital Center, with the balance of the region's capacity divided among four sub-performing hospitals and one hospital performing adequately. The written comments were augmented by oral testimony at a public hearing conducted by the Commission on July 21, 2000. At that hearing, Dr. Robert Lowery, a cardiac surgeon, employed by Washington Hospital Center, which is owned by the appellant, testified that there was adequate capacity in the Washington Metropolitan region, and no need for additional OHS programs existed in the region. Dr. Eugene Passamani, director of cardiology at Suburban Hospital, testified, consistent with Suburban's written comments, that the assignment of 3000 cases as a capacity measure did not represent real capacity because at least 2500 cases were attributable solely to Washington Hospital Center. On September 15, 2000, the Commission issued its second White Paper, analyzing the public comments and recommendations it had previously solicited on the first White Paper. Noting that both options for measuring system capacity that it had presented in its previous White Paper had significant limitations, the White Paper concluded that the chapter of the State Health Plan dealing with Open Heart Surgery should include a cap on the number of cardiac surgery procedures conducted by any one hospital in a planning region and that future capacity in that planning region be determined and computed by reference to that cap. The cap, as we have seen, supra at 7-8, provides that the capacity of any program cannot be greater than the higher of 800 cases or 50% of the projected gross need for the planning region. Upon release of the second White Paper, the Commission sought additional public comment, whereupon a third White Paper was issued on October 25, 2000. The staff maintained its support of the amended capacity measurement, i.e., the cap, opining that the measurement was reasonable and appropriately balances public policy concerns, such as access, cost and equality. Final Staff Analysis at 6. On November 21, 2000, the Commission considered the proposed amendment of the chapter and voted to publish the regulation for public comment. In compliance with § 10-110(b) of the State Government Article, the proposed regulation was required to be submitted to the General Assembly's Joint Committee on Administrative, Executive and Legislative Review (AELR) at least 15 days before being submitted to the Maryland Register for publication. Thus, on December 13, 2000, the proposed OHS chapter, with its amendment to the definition of system capacity was submitted to the AELR. Thereafter, on January 4, 2001, the proposed chapter was submitted for review to the Governor, as required by § 19-117(c) of the Health-General Article. Prior to publication, the presiding Chairman of the AELR Committee sent a letter to the Governor stating the Committee's intent to conduct a more detailed study of [the] proposed regulation. The Committee also requested that the Commission delay final adoption of the proposed regulation until the Committee completed its review. As stated by the Committee, the purpose of the delay was to provide the Committee with an opportunity to more closely examine a number of issues, including whether the statute under which the regulation is adopted authorized the adoption and whether the regulation conforms to the legislative intent of the statute. The AELR Committee held a hearing and received testimony on the proposed regulation on January 16, 2001. Because no further action was taken by the Committee, the proposed regulation was published in the Maryland Register on January 26, 2001. 28 Md. Reg. 126-27 (January 26, 2001). The publication of the proposed regulation commenced the 31-day period for the submission of public comments. The proposed regulation, as had been the case with regard to the White Papers, generated considerable interest and resulted in 47 organizations and individuals submitting written comments. Additionally, the Commission held yet more public hearings. The appellant used the opportunity, again, to provide testimony and to submit written comments. During the period for public comment, the Commission received a letter, dated March 21, 2001, from the Co-Chairs of the AELR Committee. The letter requested that the Commission modify the proposed regulation. [9] Shortly thereafter, the Commission received a follow-up letter from the Honorable Thomas V. Mike Miller, President of the Maryland Senate, which informed it that the March 21st letter did not represent the consensus of the members and was advisory only, in light of the fact that the AELR Committee had not met. Two additional letters, dated April 4 and April 5, signed by the members of the House and Senate delegations to the AELR Committee, were received by the Commission. The letters confirmed Senator Miller's earlier letter indicating that the March 21st letter did not represent the views of the AELR Committee. More important, the letters requested that the Commission withdraw the entire regulation and develop new comprehensive regulations consistent with the counsel of the ... [Technical Advisory Committee], especially related to the issue of measuring capacity at existing [OHS] surgery programs. On April 19, 2001, the Commission, by an 8-1 vote, adopted COMAR 10.24.17 as a final regulation. The Notice of Final Action was published in the May 4, 2001 Maryland Register. See 28 Md. Reg. 885 (May 4, 2001). Subsequently, on May 14, 2001, the regulation became effective. The regulation, adopted over the objection of the appellant, had the effect of reducing the Washington Metropolitan Planning Region's cardiac surgery capacity by 824 cases, the number of cases that Washington Hospital Center performed, but, because of the cap on capacity, was not allowed to count for that purpose. In 1999, that hospital performed 2950 open heart surgeries. Without the amended regulation, all of those surgeries would have been considered in determining the capacity of the Region. When the surgeries performed by the other hospitals in the Region, totaling 1212 in 1999 or, using 1997-1999 data, as the Commission did, 1482, were counted, the Region's capacity would have been 4162 or 4432 cases, respectively. The need in the Region was projected to be 4251. Under the amended regulation, because the number of surgeries performed by Washington Hospital center exceeded 50 percent of projected need for the Region, its existing and CON approved capacity was determined to be 2126, half of the projected number of cases, and 824 cases less than its actual production. Consequently, rather than an excess of capacity over need (using 1997-99 performance figures, as the Commission did, the capacity would exceed demand by 181 cases) or need less than the threshold for consideration of a new program (using 1999 performance figures, need would exceed capacity, but only by 89 cases), see COMAR 10.24.17.04E (6), [10] application of the amended regulation resulted in a deficit of 643 cases, or the need for at least one new program in the Region. Id. The appellant acted without delay in challenging the newly effective regulation, filing its action for declaratory judgment on the date the regulation took effect.