Ohio Hospital Licensure Status Update

As many of you are already aware, the 134th Ohio General Assembly passed House Bill 110 and enacted Ohio Revised Code Chapter 3722, which outlines the license requirements for Ohio hospitals. In that same Bill, the Ohio legislature also instructed the Ohio Department of Health (“ODH”) to assume the burden of licensing hospitals and to promulgate regulations that would govern the licensure process, requirements, and penalties by September 30, 2022.[i] Although that deadline has passed without finalized regulations, ODH has continued its work by proposing draft rules, engaging industry stakeholders through webinars and other forms of outreach, soliciting public comments, and taking the initial steps in developing the licensure process. This has, however, left many health systems and hospitals confused as to where the regulations currently stand, what they need to do to prepare, and what their obligations will be on October 1, 2024. In an effort to address that anxiety, this article will explain ODH’s rulemaking process, the current status of the hospital licensure rules, and review the most recent version of ODH’s proposed draft rules.

Rule Making Process and Current Status

In addition to the traditional promulgation process for regulations in Ohio, the ODH has an internal department process it utilizes. This process, for the most part, is required by Ohio law. Upon drafting proposed rules, ODH will post the rules for public comment. The comment period can vary, but anyone can submit comments. Once posted, the draft rules are also submitted to the Ohio Public Health Advisory Board (“OPHAB”) for a 60-day review period and to the Office of the Lieutenant Governor’s Common Sense Initiative (“CSI”). ODH will review the publicly-submitted comments and OPHAB’s recommendation. If ODH is satisfied with the draft rule and it has been reviewed by OPHAB and CSI, then the draft rule may be formally proposed and approved in accordance with Ohio Revised Code Chapter 119.[ii] If not, ODH can start this internal draft process again to incorporate public comments or recommendations from OPHAB.

As of September 1, 2023, the hospital licensure rules are still draft rules within this internal ODH rulemaking process and have not yet been formally proposed. The draft rules for OAC 3701-22 (Hospital Licensing) were posted for public comment on July 25, 2023 and the public comment period closed on August 24, 2023. ODH is likely currently reviewing the comments received during the comment period while awaiting the recommendation from OPHAB, which ends on September 23, 2023. Currently, the draft rules are not showing on the public agenda for the OPHAB’s next meeting on September 15, 2023.[iii] As of now, there is no other generally applicable  timeline for proposing and/or adopting the draft rules since the General Assembly’s deadline has already passed and the rules have not been formally proposed triggering ORC Chapter 119.

Regardless of whether formal rules are proposed and adopted by ODH, Ohio hospitals will need to submit an application and obtain a hospital license before the October 1, 2024 deadline. That deadline was imposed by the General Assembly in House Bill 110 and ORC 3722.02(A). Despite the delays in the rulemaking process, and to their credit, ODH has already published a form hospital license application to be used leading up to the deadline.[iv] The form (HEA 1925) is similar in many respects to the hospital registration form that was required prior to House Bill 110. This, of course, may change along with the draft rules leading into October 2024, so industry stakeholders should continue monitoring this process and prepare to submit an application.

Proposed Draft Rules

The most recent draft version of OAC 3701-22, which was posted for public comment on July 25, 2023, is available on ODH’s website and includes an ODH-prepared summary of the rules.[v]  Under the current proposed draft rules, ODH will issue hospitals, defined as any “institution or facility that provides inpatient medical or surgical services for a continuous period longer than twenty-four hours,” including children’s hospitals, a 3-year license after receiving an application fee, approving the application, and possible inspection. The license would cover the main hospital location and each “department of a provider,” “remote location of a hospital,” or “satellite facility”[vi] of the hospital, but only to the extent those off-campus locations provide basic hospital services, outpatient surgical services, or emergency services and exclusive of office-based outpatient surgical services.[vii] If ODH discovers any violations of OAC Chapter 3701-22, it may require a plan of correction, impose a civil monetary penalty, and/or summarily suspend or revoke a hospital’s license in instances where there is clear and convincing evidence that the continued operation of the hospital, maternity unit, newborn care nursery, or health care service presents a danger of immediate and serious harm to patients.[viii]

ODH has largely incorporated the Centers for Medicare and Medicaid Services’ Conditions of Participation for hospitals in the Medicare program (“Hospital CoP(s)”) as the standard for ensuring the effective administration of hospitals and the provision of basic hospital functions. For the most part, hospitals that currently meet the Hospital CoPs will also meet Ohio’s state requirements for licensure. This includes rules governing the hospital’s governing body, patient rights, and emergency preparedness[ix] as well as the medical staff, medical records, and nursing, pharmaceutical, radiological, laboratory, and food and dietetic services.[x] In addition to those standards, ODH has also called for the establishment of “regional hospital zones” to respond to future public health events and will require hospitals to establish a tuberculosis control plan, infectious disease surveillance plan, and water management plan.[xi] Additional optional hospital functions are also largely tied to the corresponding Hospital CoP, such as surgical services, outpatient services, and rehabilitation services.[xii] Critical access hospital and rural emergency hospital requirements are also largely tied to the corresponding Hospital CoPs, and include the infection control and water management requirements that are generally applicable to hospital licensees.

Under ODH’s draft rules, hospital reporting and notice requirements will likely increase. Licensees will be required to notify ODH within 7 days of any change in administrator, primary agent, or name of the hospital.[xiii] Licensees will be required to notify ODH at least 30 days prior to any construction, modernization, major acquisition, or significant alteration that:

(i) adds a department of a provider, remote location, or satellite facility that provides basic hospital services;

(ii) adds or alters a hospital building or patient care area;

(iii) changes the layout of a patient care area; or

(iv) that converts a non-patient care area to a patient care area.[xiv]

Further, if a licensee is assigned, sold, or transferred to a new operator, the new operator will be required to apply for a new hospital license.[xv] ODH will still require hospitals to submit an annual report, but it will revise the reporting requirements in the future, and may require hospitals to submit additional performance, quality, and other information.[xvi]

For the most part, ODH’s current draft rules mirror what stakeholders generally expected following the passage of House Bill 110. There are, however, some major outstanding concerns. Namely, the rules do not align with the Hospital CoPs as closely as they should in a number of ways. The Ohio Hospital Association and Ohio Children’s Hospitals Association submitted comments to the July 25, 2023 draft rules that do a good job of outlining the start of this problem.[xvii] The draft rules authorize potential disciplinary actions that could be catastrophic for hospitals and communities alike. Under the current draft rules, ODH could summarily revoke a hospital’s license if one of its health care services presents a danger of immediate and serious harm. There is no dispute that addressing the conditions creating an immediate danger of serious harm for patients is paramount and that all remedial steps should be taken to address that danger, up to and including shutting down that health care service. However, ODH’s only ability to address those conditions creating an immediate danger of serious harm is to shut down, or threaten to shut down, an entire hospital. An act that, if taken, could create an immediate danger of serious harm for local residents. Perhaps addressing the issues raised in OHA’s comments, those expressed here, and others that have been raised by stakeholders are the reason ODH has not officially proposed a rule package as it continues to engage and solicit feedback from our community. Only time will tell.