10.24.01.03

.03 Non-Coverage by Certificate of Need Review Requirements.

A. Acquisition of an Existing Health Care Facility.

(1) At least 30 days before closing on a contractual arrangement to acquire a health care facility that exists pursuant to a Certificate of Need or other authority recognized by the Commission, the person acquiring the facility shall notify the Commission in writing, with a copy to the local health officer in each affected jurisdiction, of the intent to acquire the facility, and include the following information:

(a) The health care services provided by the facility;

(b) The bed capacity, or jurisdiction served, if a community-based service;

(c) Complete data on admissions for the prior calendar year;

(d) Gross operating revenue generated during the last fiscal year; and

(e) Any other information, as required in the applicable chapter of the State Health Plan.

(2) In an acquisition of a home health agency, the purchaser may only acquire the authority to offer home health agency services in jurisdictions in which Commission records show that the facility being acquired either provided that service during fiscal year 2001, or was granted a Certificate of Need after that date.

(3) If the person acquiring the health care facility files timely and complete notice with the Commission under §A(1) of this regulation, and the Commission does not find within 30 days of receiving notice that the health care services, bed capacity, or jurisdictions served, if a community-based service, of the facility being acquired will change as a result of the acquisition, the Commission shall issue a written notice to the person, with a copy to the local health officer in each affected jurisdiction and to appropriate State and federal agencies, that Certificate of Need review is not required.

(4) The notice of determination from the Commission that Certificate of Need review is not required is valid for 180 days.

(5) If the acquisition is completed, both buyer and seller shall sign a notice of completion of acquisition and file it with the Commission within 15 days of the completion of the acquisition.

(6) Within 90 days of the completion of the acquisition, the buyer shall seek licensure or certification from the Office of Health Care Quality, as appropriate, or file a letter of intent under Regulation .02 of this chapter to relocate the health care facility.

(7) If the notice of the acquisition is not filed as required in §A of this regulation, or the Commission finds that acquisition of the facility will result in a change in health care services, bed capacity, or jurisdictions served, if a community-based service, the Commission shall issue written notice to the person seeking the acquisition that Certificate of Need review is required.

B. Closure of an Acute General Hospital.

(1) A Certificate of Need is not required to close an acute general hospital or part of an acute general hospital in a jurisdiction with three or more acute general hospitals, or a State hospital in any jurisdiction, if the hospital provides notice to the Commission at least 45 days prior to the closing or partial closing and complies with the provisions of §B(4) of this regulation, if applicable.

(2) A Certificate of Need is not required to close an acute general hospital or part of an acute general hospital in a jurisdiction with fewer than three acute general hospitals, if:

(a) At least 45 days before the closing or partial closing of an acute general hospital, a notice of the proposed closing or partial closing is filed with the Commission; and

(b) Within 30 days after the Commission receives notice of the hospital's intent to close, the hospital holds a public informational hearing in the jurisdiction where the acute general hospital is located, after consultation with the Commission to ensure that:

(i) Within 5 days of notifying the Commission of its intent to close, the hospital has provided public notice of the proposed closure and of the time and location of the required public informational hearing, including publication in at least one newspaper of daily circulation in the affected area, and

(ii) Information will be presented at the public hearing regarding continued access to acute care services in the affected area, and plans of the hospital, or the merged asset system that owns or controls the hospital, for retraining and placement of displaced employees and reuse of the physical plant.

(3) Notice by the Commission to the Public, Elected Officials, and Other State Agencies.

(a) Within 5 days after it receives notice under this section that an acute general hospital intends to close, the Commission shall publish notice of its receipt in:

(i) At least one newspaper of daily circulation in the affected area, and

(ii) The next available issue of the Maryland Register.

(b) The Commission shall mail the same notice to elected public officials in whose district or county the hospital is located.

(4) If an acute general hospital that intends to close pursuant to this section has outstanding public body obligations issued on its behalf, written notification shall be given to the Maryland Health and Higher Educational Facilities Authority and the Health Services Cost Review Commission by the:

(a) Commission, within 5 days after receiving a written notification by the hospital of its intended closure;

(b) Hospital, within 10 days of filing with the Commission its written notification of its intended closure, along with a written statement of all public body obligations issued on behalf of the hospital that provides the information required by Article 43C, §16A(g), Annotated Code of Maryland; and

(c) Commission, that a hospital in a jurisdiction with fewer than three acute general hospitals, held a public information hearing in consultation with the Commission in the jurisdiction where the hospital is located.

C. Temporary Delicensure of Bed Capacity or a Health Care Facility.

(1) A temporary delicensure of licensed bed capacity or a licensed and operating health care facility does not require Certificate of Need review, and the Commission will retain the bed capacity or health care facility on its inventory for up to 1 year, if the owner or licensed operator:

(a) Provides written notice to the Commission at least 30 days before the proposed temporary delicensure;

(b) Identifies good cause for the proposed temporary delicensure;

(c) States the intention either to bring the bed capacity back onto the facility's license or relicense the health care facility at the end of the 1-year period, or to notify the Commission that it intends to take another of the actions permitted under this subsection; and

(d) Has received authorization from the Executive Director for the temporary delicensure.

(2) Bed capacity or a facility that has been authorized by the Commission to be temporarily delicensed is not subject to the provisions of this section:

(a) During the pendency at the Commission of a letter of intent to apply or an application for Certificate of Need approval involving the temporarily delicensed bed capacity or facility;

(b) If the Commission has issued a Certificate of Need to reimplement the facility's temporarily delicensed bed capacity, and that Certificate of Need remains in good standing;

(c) If the Commission has received and approved a request pursuant to Regulation .03 or .04 of this chapter to reimplement the bed capacity or facility, and has determined that the bed capacity or facility may be reimplemented without Certificate of Need approval or other finding by the Commission, including but not limited to actions that may be undertaken by a merged asset system of which the facility is a member;

(d) If the Commission receives a notice of acquisition of the temporarily delicensed bed capacity or facility and the buyer and seller timely complete the acquisition, in accordance with Regulation .03A of this chapter; or

(e) If the Commission receives written notification that the owner or operator of the temporarily delicensed bed capacity or facility has applied for relicensure.

(3) The requirements and procedures in this subsection do not apply to a proposal to close, on either a temporary or a permanent basis:

(a) An acute general hospital or part of a hospital, including a medical service, in a jurisdiction with fewer than three acute general hospitals; or

(b) A health care facility that provides any medical service approved by the Commission as a regional or Statewide health resource.

(4) A health care facility may not request authorization by the Commission to temporarily delicense bed capacity or the entire health care facility more than one time in a 12- month period.

(5) No fewer than 30 days before the end of the 1-year or other applicable period, a health care facility that has temporarily delicensed bed capacity or its entire facility shall notify the Commission that, before the end of the 1-year or other applicable period, it will:

(a) Apply to relicense the bed capacity or the entire facility temporarily delicensed pursuant to this subsection;

(b) Submit and receive the Executive Director's approval of a specific plan for the relicensure of the bed capacity or facility, that:

(i) Imposes stated time frames by which steps toward the relicensure of the bed capacity or facility will be accomplished, or the bed capacity or facility will be deemed abandoned, and

(ii) May be revised upon a proposal by the owner or operator, with the approval of the Executive Director;

(c) File a letter of intent, followed within 60 days by a Certificate of Need application, or request the applicable level of Commission action pursuant to Regulations .03 and .04 of this chapter, for the relocation of the bed capacity or facility, or for a capital expenditure deemed necessary to relicense the temporarily delicensed beds or facility;

(d) Execute a binding contract to transfer ownership of the health care facility, if the requirements of §A of this regulation are met;

(e) Execute a binding contract to transfer ownership of the previously licensed bed capacity, contingent on the filing within 30 days of a letter of intent to apply for Certificate of Need approval, or other applicable level of Commission action pursuant to Regulations .03 and .04 of this chapter if required, to relocate the bed capacity; or

(f) Relinquish the bed capacity, or seek the appropriate Commission approval to delicense and permanently close the health care facility.

(6) For extraordinary cause shown, the Executive Director may extend the period of a temporary delicensure under this subsection beyond 1 year, or the applicable time period.

(7) If bed capacity or a health care facility has been previously approved for temporary delicensure by the Commission:

(a) The time period provided under this subsection shall be deemed to expire 1 year from the date of the temporary delicensure, or 6 months from the effective date of these regulations, whichever is later; and

(b) The affected health care facility shall comply with the provisions of §C(5) of this regulation before the expiration of the applicable time period.

(8) Notwithstanding the provisions of §C(7) of this regulation, an application for a Certificate of Need to reimplement at another location any previously operating bed capacity that has remained delicensed under this subsection for 2 or more years from the effective date of its removal from the facility's license, or from the closure of the entire facility, shall demonstrate that the bed capacity continues to be needed in the jurisdiction.

(9) If, at the end of the 1-year period or other time period permitted under this section, the requirements of §C(5) or (7) of this regulation have not been met, and no request for an extension of time has been granted pursuant to §C(6) of this regulation, the bed capacity or health care facility is deemed abandoned by its owner or operator. The Commission shall issue a written notice to the owner of the affected facility, and to its licensed operator if the facility is not operated by its owner, of the opportunity to respond within 30 days before the abandonment is considered final, in order to demonstrate that the previously delicensed bed capacity or facility has been relicensed.

D. A Certificate of Need is not required to relocate an existing health care facility owned or controlled by a merged asset system, if:

(1) The proposed relocation is to a site in the primary service area of the health care facility to be relocated, as defined in the State Health Plan, and the relocation is not across jurisdictional boundaries;

(2) At least 45 days before the proposed relocation, notice is filed with the Commission, which will publish notice of the proposed relocation in the Maryland Register and a newspaper of daily circulation in the affected area; and

(3) The relocation of the existing health care facility does not:

(a) Change the type or scope of health care services offered; and

(b) Require a capital expenditure for its construction that exceeds the capital review threshold, adjusted for inflation, except as provided in I of this regulation.

E. Change in Bed Capacity.

(1) A Certificate of Need is not required to change the bed capacity of a health care facility under the circumstances set forth in this section.

(2) For a health care facility that is not an acute general hospital, 2 years after its initial licensure or after its last change in licensed bed capacity, an existing health care facility may request that the Commission authorize an increase or decrease in bed capacity in the following medical services for which a health care facility shall obtain Commission approval and seek licensure or certification from the Office of Health Care Quality, if the increase or decrease in the total bed capacity of the facility does not exceed ten beds or 10 percent, whichever is less:

(a) A health care facility, including an acute general hospital, may add ten beds or 40 percent of the current bed capacity, whichever is less, in any of the following medical services for which it must obtain separate licensure:

(i) Special rehabilitation hospital;

(ii) Special care units, as defined in COMAR 10.07.02.14-1 and .14-2;

(iii) Intermediate care; or

(iv) A residential treatment center, as defined in Health-General Article, §19-301(p), Annotated Code of Maryland; and

(b) A hospital classified as a general hospital pursuant to Health-General Article, §19-307, Annotated Code of Maryland, may not seek to increase its acute care bed capacity under this subsection.

(3) A Certificate of Need is not required before an acute general hospital located in a jurisdiction with three or more acute general hospitals increases or decreases its bed capacity, if the change:

(a) Occurs on or after July 1, 2000;

(b) Is between hospitals in a merged asset system located within the same health planning region;

(c) Does not involve comprehensive care or extended care beds;

(d) Does not occur earlier than 45 days after a notice of intent to reallocate bed capacity is filed with the Commission; and

(e) Does not create a new health care service through the relocation of beds from one jurisdiction to another jurisdiction pursuant to this subsection.

(4) A Certificate of Need is not required if the increase or decrease in bed capacity is the result of the annual recalculation of licensed bed capacity in acute general hospitals provided under Health-General Article, §19-307.2, Annotated Code of Maryland.

(5) A Certificate of Need is not required to increase or decrease the bed capacity of an existing medical service at an acute general hospital, if:

(a) The total bed capacity of the hospital does not increase;

(b) The change is maintained for at least 1 year, unless modified pursuant to a Certificate of Need or exemption from Certificate of Need approved by the Commission, or the annual recalculation of hospital licensed bed capacity required by Health-General Article, §19-307.2, Annotated Code of Maryland; and

(c) The hospital notifies the Commission at least 45 days before the proposed change in bed capacity of its medical services.

F. A health maintenance organization is not required to obtain a Certificate of Need for a health care project that is planned for and will be used exclusively by the subscribers of that health maintenance organization, other than those set forth in Regulation .02 of this chapter, although notice to the Commission is required. This notice shall consist of the type of the project, location of the project (including street address), a brief description of services to be offered, and an initial estimate of the number of members to be served by the project.

G. A home health agency is not required to obtain a Certificate of Need to open a branch office (previously called a satellite office), as defined by Centers for Medicare and Medicaid Services at 42 CFR §484.2, although notice to the Commission is required.

H. Religious Orders.

(1) A Certificate of Need is not required before a religious order seeks licensure to operate a comprehensive care facility for the exclusive use of members of that religious order.

(2) For the purpose of this section, "religious order" means an incorporated, not-for-profit organization:

(a) That is, or is wholly operated by, an entity founded and operating for the sole purpose of carrying out religious precepts; and

(b) Whose members have taken the vows required by the order and have devoted their lives to religious service, to the exclusion of lay life and activities.

(3) At least 45 days before a religious order submits to the Department a request for licensure for a comprehensive care facility, the religious order shall submit a written request for determination of non-coverage by Certificate of Need review requirements, as described in Regulation .14B of this chapter. The request shall provide the following information:

(a) The name and address of the facility;

(b) The number of beds in the facility;

(c) The name of the religious order that will own and operate the facility;

(d) Assurance that the comprehensive care facility will be owned and operated by the religious order for the exclusive use of its members; and

(e) Agreement to participate in the Maryland Long-Term Care Survey, as authorized by COMAR 10.24.03.

(4) The Commission shall issue a determination under H(3) of this regulation within 15 working days of receipt of the information required in that subsection.

I. Capital Expenditure.

(1) A Certificate of Need is not required before a health care facility makes a capital expenditure that exceeds the Certificate of Need review threshold for capital expenditures as adjusted for inflation, under the circumstances described in this section.

(2) A Certificate of Need is not required before a health care facility makes a capital expenditure for:

(a) Site acquisitions;

(b) The acquisition of a health care facility, if the provisions of §A of this regulation are met;

(c) Business or office equipment not directly related to patient care, including health care clinical information systems; or

(d) The acquisition and installation of major medical equipment.

(3) A Certificate of Need is not required by a hospital or a nursing home before a capital expenditure for equipment, construction, or renovation that is not directly related to:

(a) Patient care; and

(b) Any change in patient charges or other rates.

J. Hospital Capital Expenditures in Excess of Threshold.

(1) A Certificate of Need is not required by a hospital before it obligates an amount exceeding the review threshold for capital expenditure for physical plant construction or renovation, or before it receives a donated physical plant whose appraised value exceeds the review threshold, under the following circumstances:

(a) The capital expenditure may be related to patient care;

(b) The capital expenditure does not require, over the entire period or schedule of debt service associated with the project or plant, a total cumulative increase in patient charges or hospital rates of more than $1,500,000 for the capital costs associated with the project;

(c) At least 45 days before an obligation is made or the physical plant is donated, the hospital provides notice to the Commission and to the Health Services Cost Review Commission, in the form of a written request for determination of coverage, as provided in Regulation .14B of this chapter, which shall contain the following relevant financial information:

(i) A description of the proposed capital project, including whether it involves new construction, renovation of or additions to the existing physical plant, or the donation of a physical plant, with any necessary adaptations;

(ii) The total capital costs associated with the project;

(iii) The sources and uses of funds to be applied to the project, including hospital equity contributions, if applicable, as documented by audited financial statements of the hospital and relevant subsidiary corporations, if any, from which funds are to be taken;

(iv) A description of the financing arrangement, if applicable, for the proposed project, including the debt service schedule; and

(v) A statement by one or more persons authorized to represent the hospital that the hospital does not require a total cumulative increase in patient charges or hospital rates of more than $1,500,000 for the capital costs associated with the project.

(2) After consultation with the Health Services Cost Review Commission, the Commission shall issue a determination that Certificate of Need review is not required within 45 days after it receives the information specified in this section.

(3) If the Commission has not made the financial determination within 60 days of receipt of the relevant financial information by the Commission and by the Health Services Cost Review Commission, the Commission is considered to have issued a determination of noncoverage.

K. Continuation of Specific Exclusion from Certificate of Need for Continuing Care Retirement Communities.

(1) The number of comprehensive care beds excluded from Certificate of Need requirements and located on the campus of a continuing care retirement community may not exceed:

(a) 20 percent of the number of independent living units at a continuing care retirement community that has 300 or more independent living units;

(b) 24 percent of the number of independent living units at a continuing care retirement community that has fewer than 300 independent living units.

(2) Notwithstanding the provisions of Health-General Article, §19-114(d)(2)(ii), Annotated Code of Maryland, and Regulation .01B(12)(b)(ii) of this chapter, a continuing care retirement community does not lose its exclusion from Certificate of Need when the continuing care community admits an individual directly to a comprehensive care facility within the continuing care community under either of the following circumstances:

(a) Two individuals having a long-term significant relationship are admitted together to a continuing care retirement community and:

(i) The admission occurs after October 1, 1999;

(ii) The admission includes spouses, two relatives, or two individuals having a long-term significant relationship, as defined in Regulation .01B of this chapter and supported by documentary proof in existence for at least 1 year before application to the continuing care retirement community, admitted at the same time, under a joint contract, who are jointly responsible for expenses incurred under the joint contract; and

(iii) One of the individuals admitted under the joint contract will reside in an independent living unit or an assisted living unit; or

(b) An individual is admitted directly into a comprehensive care bed at a continuing care retirement community and:

(i) The individual must have executed a continuing care agreement and have paid entrance fees that are at least equal to the lowest entrance fee charged by the continuing care retirement community for its independent or assisted living units;

(ii) The individual must pay the entrance fee by the same method, terms of payment, and time frame as a person who immediately assumes residence in an independent or assisted living unit at that continuing care retirement community; and

(iii) The individual admitted to the comprehensive care bed must have the potential for eventual transfer to an independent living unit or assisted living unit at that continuing care retirement community, as determined by the subscriber's personal physician, as defined in Regulation .01B of this chapter.

(3) Under §K(2)(b)(iii) of this regulation, an individual is deemed not to have potential for eventual transfer to an independent living unit or assisted living unit if the individual can qualify for hospice services under federal Medicare regulations or if the individual has an irreversible condition that would make it unlikely that the individual could transfer to an independent living unit or assisted living unit at the continuing care retirement community. Irreversible conditions include quadriplegia, ventilator dependence, and any end-stage condition.

(4) The total number of comprehensive care beds occupied by individuals who are directly admitted to comprehensive care beds pursuant to §K(2)(b) of this regulation may not exceed 20 percent of the total number of licensed and available comprehensive care beds at the continuing care retirement community.

(5) The admission of the individual directly into the comprehensive care bed pursuant to §K(2)(b) of this regulation may not cause the occupancy of the comprehensive care facility at the continuing care retirement community to exceed 95 percent of its current licensed capacity.

(6) Before admitting an individual directly into a comprehensive care bed pursuant to §K(2)(b) of this regulation, the nursing home administrator of the comprehensive care facility at the continuing care retirement community shall keep on file a statement, in a format required by the Commission and signed by the individual's personal physician, that the individual has the potential for eventual transfer to an independent living unit or an assisted living unit.

(7) The nursing home administrator of the comprehensive care facility at each continuing care retirement community who admits an individual directly to a comprehensive care bed under this section shall submit information quarterly to the Commission about each admission. The information shall be submitted within 30 days after the end of the reporting period, in the format required by the Commission and encrypted by the continuing care retirement community so that the individual's identity will not be disclosed. Information submitted by the nursing home administrator shall include:

(a) The number and utilization of licensed comprehensive care beds excluded from Certificate of Need requirements at the continuing care retirement community;

(b) The admission source of each individual admitted pursuant to §K(2)(b) of this regulation to a comprehensive care bed excluded from Certificate of Need requirements at the continuing care retirement community;

(c) For an individual admitted pursuant to §K(2)(b) of this regulation, the amount of and terms of payment for the entrance fee;

(d) The dates of admission and discharge of each individual admitted pursuant to §K(2)(b) of this regulation;

(e) The site to which an individual directly admitted pursuant to §K(2)(b) of this regulation is discharged; and

(f) Any other information as required by the Commission.

(8) A continuing care retirement community that admits an individual to a comprehensive care bed pursuant to §K(2)(b) of this regulation shall maintain documentation required by §K(6) of this regulation and documentation underlying the information submitted under §K(7) of this regulation and make the documentation available to the Commission upon request.

(9) Unless the conditions of §K(2)(a) or (b) of this regulation are met, the provisions of Health-General Article, §19-114(d)(2)(ii), Annotated Code of Maryland, apply; that is, a person may not be directly admitted to a CON-excluded nursing home bed of a continuing care retirement community.