# COMAR Title 10 — Maryland Department of Health

## Subtitle 09 — Medical Care Programs

### Chapter 92 — Acute Hospitals

**Authority:** Health-General Article, §§2-104(b), 15-102.8, 15-103, and 15-105, Annotated Code of Maryland

**Administrative History:** Effective date: April 10, 2017 (44:7 Md. R. 354)

**Administrative History:** Regulation .04B amended effective June 24, 2024 (51:12 Md. R. 619)

**Administrative History:** Regulation .05P, Q amended effective June 24, 2024 (51:12 Md. R. 619)

**Administrative History:** Regulation .05 R adopted effective June 24, 2024 (51:12 Md. R. 619)

**Administrative History:** Regulation .07A amended effective November 18, 2019 (46:23 Md. R. 1065)

#### Regulation .01 Definitions.

*COMAR 10.09.92.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Acute hospital” means an institution that provides active, short-term medical diagnosis, treatment, and care.

  (2) “Acute level of care” means care in which a patient is treated:

    (a) For a brief but severe episode of illness, for conditions that are the result of disease or trauma; and

    (b) During recovery from surgery.

  (3) “Acute rehabilitation hospital” means an institution devoted to therapy that is designed to facilitate the process of recovery from illness or injury for patients with various neurological, muscular-skeletal, orthopedic, and other medical conditions following stabilization of acute medical issues.

  (4) “Administrative day” means a day of medical services delivered to a participant who no longer requires an acute level of care.

  (5) “Administrative services organization (ASO)” means an organization with which the Department contracts to assist in the management and operation of the Maryland Public Behavioral Health System.

  (6) “Admission” means the formal acceptance by a hospital of a participant who is to be provided with room, board, and medically necessary services in an area of the hospital where patients stay at least overnight.

  (7) “Ancillary services” means diagnostic and therapeutic services, including but not limited to radiology, laboratory tests, pharmacy, and physical therapy services, provided exclusive of room and board.

  (8) “Concurrent review” means a periodic reauthorization of continued medical eligibility for the level of services provided in an acute hospital which allows for close monitoring of the participant’s progress, treatment goals, and objectives during an inpatient hospitalization.

  (9) “Date of service” means:

    (a) For inpatient hospitalizations, the date of admission into an acute hospital up to, but not including, the date of discharge;

    (b) For outpatient services, the date services are rendered in the outpatient department of the hospital;

    (c) For emergency services, the date or dates the services are rendered in the emergency department of an acute hospital; or

    (d) For observation services, the date or dates the services are rendered in an acute hospital.

  (10) “Department” means the Maryland Department of Health, which is the single State agency designated to administer the Medical Assistance Program under Title XIX of the Social Security Act, 42 U.S.C. §1396 et seq.

  (11) “Designee” means any entity designated to act on behalf of the Department.

  (12) “Diagnosis-related group” means a participant classification system adopted by the U.S. Department of Health and Human Services, in which each hospital discharge case is assigned a category based on the primary diagnosis, secondary diagnoses (if any), procedures performed, age, sex, and discharge status of the participant.

  (13) “Electronic signature” means a secure electronic identification of an individual who authorizes an electronic record or transaction.

  (14) “Emergency department” means the area in a hospital that is designed, staffed, and equipped to provide prompt treatment to individuals requiring immediate medical care for acute illness, trauma, and other medical conditions.

  (15) “Emergency services” means any health care service provided to evaluate and treat any medical condition where immediate, unscheduled medical care is required.

  (16) “Emergent condition” means a disease, illness, or injury characterized by sudden onset and symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson, who possesses an average knowledge of health and medicine, to result in:

    (a) Placing the participant’s health or, with respect to a pregnant woman, the health of the woman or unborn child in serious jeopardy;

    (b) Serious impairment of bodily functions; or

    (c) Serious dysfunction of any bodily organ or part.

  (17) “Freestanding medical facility” means a facility:

    (a) In which medical and health services are provided;

    (b) That is physically separate from a hospital or hospital grounds; and

    (c) That is an administrative part of a hospital or related institution.

  (18) “Health Services Cost Review Commission (HSCRC)” means the independent organization within the Maryland Department of Health which is responsible for reviewing and approving rates for hospitals pursuant to Health-General Article, Title 19, Subtitle 2, Annotated Code of Maryland.

  (19) “Maryland Medical Assistance Program” means the program of comprehensive medical and other health-related care for indigent and medically indigent individuals.

  (20) “Medically necessary” means that the service or benefit is:

    (a) Directly related to diagnostic, preventative, curative, palliative, rehabilitative, or ameliorative treatment of an illness, injury, disability, or health condition;

    (b) Consistent with standards of good medical practice;

    (c) The most cost-efficient service that can be provided without sacrificing effectiveness or access to care; and

    (d) Not primarily for the convenience of the participant, family, or provider.

  (21) “Medicare” means the medical insurance program administered by the federal government under Title XVIII of the Social Security Act, 42 U.S.C. §1395 et seq.

  (22) “Nonqualified alien” means a foreign-born resident who:

    (a) Is not a naturalized U.S. citizen; and

    (b) Is eligible for federal Medical Assistance coverage of only emergency medical services, as specified under COMAR 10.09.24.05-2A.

  (23) “Observation services” means the medically necessary services used to assess the participant’s outpatient condition to determine the need for possible admission to an inpatient acute care setting.

  (24) “Organ” means a part of an organism that is typically self-contained and has a specific vital function, such as a heart or liver.

  (25) “Out-of-State hospital” means any hospital outside of Maryland, except for hospitals located in the District of Columbia.

  (26) “Outpatient services” means nonemergency services provided to the participant on the hospital campus that do not require hospital admission.

  (27) “Participant” means an individual who is enrolled with the Department to receive Medical Assistance services.

  (28) “Patient” means an individual awaiting or undergoing health care or treatment.

  (29) “Preauthorization” means the approval required from the Department or its designee before a service can be rendered by the provider and reimbursed.

  (30) “Preoperative day” means an inpatient day in an acute hospital before:

    (a) Surgery for a participant who is being admitted for surgery; or

    (b) A surgical procedure when the participant was admitted for a nonsurgical procedure but the need for surgery arose during that stay.

  (31) “Program” means the Maryland Medical Assistance Program.

  (32) “Prospective payment system” means a predetermined amount of reimbursement per day for inpatient hospital services.

  (33) “Provider” means an acute hospital which, through agreement with the Department, has been identified as a Program provider by the issuance of a provider number.

  (34) “Retrospective review” means the process of determining medical necessity of an inpatient admission after the participant has been discharged from the hospital.

  (35) “Specialty behavioral health” means services as defined in COMAR 10.09.70.02D and F.

#### Regulation .02 License Requirements.

*COMAR 10.09.92.02*

A. In order to participate in the Program, a provider shall:

  (1) Be licensed as a hospital by the Department pursuant to Health-General Article, Title 19, Subtitle 3, Annotated Code of Maryland; and

  (2) Obtain other licenses, as set forth in COMAR 10.07.01.

B. The provider shall ensure that Clinical Laboratory Improvement Amendments (CLIA) certification exists for all clinical laboratory services performed, and:

  (1) If located in Maryland, comply with requirements of:

    (a) Health-General Article, Title 17, Subtitles 2 and 3, Annotated Code of Maryland; and

    (b) COMAR 10.10.01; or

  (2) If located out-of-State, comply with:

    (a) All applicable standards established by the state or locality in which the service is provided; and

    (b) The requirements of COMAR 10.09.09.02.

#### Regulation .03 Conditions for Participation.

*COMAR 10.09.92.03*

A. A provider shall meet all conditions for participation as set forth in COMAR 10.09.36.03.

B. To participate in the Program as an acute hospital services provider, the provider shall:

  (1) Meet the requirements of Title XIX of the Social Security Act for participation as a hospital, as issued by the Department of Health and Human Services;

  (2) Directly provide or make available through contractual arrangements or transfer agreements, medically necessary covered services;

  (3) Accept payment by the Program as payment in full for the covered service;

  (4) Make available to the Department or its designee the participant’s medical record for review and certification of medical necessity for admission and continuation of stay;

  (5) Maintain documentation of each contact with the participant as part of the complete medical record, which, at a minimum, includes:

    (a) Date of service;

    (b) The participant’s chief medical complaint or reason for visit;

    (c) A description of the services provided, including:

      (i) Progress notes;

      (ii) Imaging studies;

      (iii) Laboratory results;

      (iv) Medication administration records; and

      (v) Discharge summary; and

    (d) A signature, electronic or handwritten, along with the printed or typed name of the individual providing care, with the appropriate title; and

  (6) If the hospital provider is the only hospital within the county, participate with each participating HealthChoice Managed Care Organization in the county.

C. If an out-of-State or District of Columbia hospital, the hospital shall:

  (1) Unless a waiver has been granted by the Secretary of Health and Human Services, have in effect a utilization review plan applicable to all participants who receive Medical Assistance under Title XVII of the Social Security Act which meets the requirements of §1861(k) of the Social Security Act; and

  (2) Comply with applicable regulations of this chapter and COMAR 10.09.36.

#### Regulation .04 Covered Services.

*COMAR 10.09.92.04*

A. The Program covers the services listed in §B of this regulation according to the conditions and requirements indicated.

B. The Program covers the following hospital services:

  (1) Medically necessary emergency services as defined in COMAR 10.09.36.01, including triage, related ancillary services, and when necessary, observation stays of a participant who presents to a hospital emergency department;

  (2) Medically necessary services performed in an outpatient department of a hospital;

  (3) Medically necessary services performed at a freestanding medical facility;

  (4) Medically necessary inpatient hospital services meeting the following criteria:

    (a) Inpatient days, including preoperative days, determined to be medically necessary by the Department or its designee;

    (b) Admissions from an emergency department resulting in a medically necessary inpatient stay; and

    (c) Elective admissions that the Department or its designee determines to be medically necessary;

  (5) Inpatient stays determined to be medically necessary due to an emergent condition by the Department or its designee for a nonqualified alien;

  (6) Administrative days, which may include select ancillary services, determined to be necessary by the Department or its designee; and

  (7) Medically necessary services performed in an acute rehabilitation hospital when the participant meets the following criteria at the time of admission:

    (a) Requires active and ongoing therapeutic intervention of multiple therapy disciplines, one of which shall be physical or occupational therapy;

    (b) Requires and can reasonably be expected to actively participate in, and benefit from, the therapy, which generally consists of:

      (i) At least 3 hours of therapy a day, at least 5 days a week; or

      (ii) In well-documented cases, at least 15 hours of intensive rehabilitation therapy within a 7 day consecutive period;

    (c) Is sufficiently stable to be able to actively participate in the therapy program; and

    (d) Requires supervision by a licensed physician, who has specialized training and experience in inpatient rehabilitation, which includes:

      (i) Conducting face-to-face visits with the patient at least 3 days a week to assess the patient both medically and functionally; and

      (ii) Modifying the course of treatment as needed to maximize the participant's capacity to benefit from the rehabilitation process.

C. The coverage of ancillary services during administrative days as described under §B(6) of this regulation applies to special pediatric hospitals under COMAR 10.09.94.

#### Regulation .05 Limitations.

*COMAR 10.09.92.05*

The Program does not cover:

A. Hospital services, procedures, drugs, or hospital admissions that are investigational or experimental;

B. Hospital services denied by Medicare as not medically necessary;

C. Inpatient admissions or outpatient visits solely for the administration of injections, unless medical necessity and the participant's inability to take appropriate oral medications is documented in the participant's medical record;

D. Elective inpatient admissions without preauthorization;

E. Elective inpatient admissions from the emergency department for dialysis services that are the result of problems occurring with placement in a freestanding dialysis facility;

F. Outpatient visits for one or more of the following:

  (1) Prescription drug or food supplement pick up;

  (2) Collection of specimens for laboratory procedures;

  (3) Recording of an electrocardiogram;

  (4) Ascertaining the participant's weight; and

  (5) Administration of vaccines;

G. Interpretation of laboratory tests or panels;

H. Autopsies;

I. Weight control medications;

J. Care provided to a well newborn beyond the:

  (1) Length of the mother's stay for a normal obstetrical or uncomplicated caesarean section delivery; or

  (2) First 4 days of the newborn's life when the mother remains in the hospital due to other circumstances;

K. Telephones, televisions, or personal comfort items or services;

L. Duplicate care or services;

M. Elective admissions to hospitals outside of Maryland, except the District of Columbia, unless the Department or its designee determines that comparable services are not available in Maryland;

N. Inpatient and outpatient diagnostic and laboratory services not ordered by the attending physician or other practitioner;

O. Inpatient days provided in excess of the days approved by the Department or its designee;

P. Hospital laboratory tests which are coverable under COMAR 10.09.09, unless the specimen is obtained in the hospital for a participant receiving inpatient, outpatient, emergency department, or observation services;

Q. Hospital services provided outside of the United States; and

R. Ancillary services that are part of an observation stay beyond the initial 24 hours.

#### Regulation .06 Utilization Review.

*COMAR 10.09.92.06*

A. Elective Inpatient Preauthorization Reviews.

  (1) The hospital shall only request preauthorization for inpatient stays when such services:

    (a) Cannot be provided on an outpatient basis; or

    (b) Can only be provided in a facility that is licensed as an acute hospital.

  (2) The hospital shall obtain preauthorization for elective inpatient admissions from the Department or its designee, before the participant is admitted, by providing the following information including, but not limited to:

    (a) Participant’s medical history and physical; and

    (b) Sufficient clinical information or documentation that supports the medical necessity of the acute inpatient admission.

B. Concurrent Reviews.

  (1) As long as the participant remains hospitalized, the Department or its designee shall perform concurrent reviews based on the participant’s diagnosis and medical condition.

  (2) For emergency inpatient admissions that exceed more than 24 hours, the concurrent review process shall be initiated by the hospital within the first 48 hours of the admission, or by the next business day.

  (3) For elective inpatient admissions, the hospital shall initiate the concurrent review process before the termination of days previously certified by the Department or its designee.

  (4) The hospital shall forward sufficient clinical documentation to the Department or its designee that supports the need for continuing acute care. Documentation submitted shall include, but is not limited to:

    (a) Current medical health status;

    (b) Treatment received to date; and

    (c) A proposed treatment plan for the continued stay.

C. Retrospective Reviews.

  (1) The hospital shall request that the Department or its designee perform a retrospective review of an inpatient admission after the participant is discharged, to determine the medical necessity of the admission and stay.

  (2) The hospital shall provide the following to the Department or its designee when requesting a retrospective review following discharge from an acute hospital. Documentation submitted shall include, but is not limited to:

    (a) The participant’s complete medical record;

    (b) The principal, secondary, and tertiary diagnoses; and

    (c) All surgical procedure codes.

D. Reviews for Nonqualified Aliens. The Department or its designee reviews the admission and discharge summary of an emergency inpatient admission for a nonqualified alien to determine whether the inpatient hospital stay meets the emergent condition criteria as defined in COMAR 10.09.24.05-2A.

E. Reviews for Behavioral Health. The hospital shall contact the behavioral health ASO to request an authorization for all inpatient admissions that are described in COMAR 10.09.70.02D and F.

#### Regulation .07 Payment Procedures.

*COMAR 10.09.92.07*

A. Reimbursement Principles for Acute Hospitals Located in Maryland.

  (1) The Department will make no direct reimbursement to any State-operated hospital. The Department will claim federal fund recoveries from the U.S. Department of Health and Human Services for services to participants in State-operated hospitals.

  (2) Except for administrative days, acute hospitals shall be reimbursed at the rate set for the Program by the HSCRC pursuant to COMAR 10.37.10 or allowed under COMAR 10.37.03.

  (3) If the Program discontinues using rates which have been approved by HSCRC, the Program shall reimburse providers:

    (a) According to Medicare standards and principles for retrospective cost reimbursement described in 42 CFR §413; or

    (b) On the basis of charges if less than reasonable cost.

  (4) The Department may not reimburse for the services of a hospital’s salaried or contractual clinical staff as a separate line item. Charges for these services should be included in the room and board rate or the appropriate ancillary service only, when HSCRC has included these salaries in the hospital’s costs.

  (5) The Program shall reimburse room and board charges from the day of admission up to, but not including, the date of discharge from the hospital.

  (6) The provider shall submit a request for payment according to procedures established by the Department.

  (7) The Program reserves the right to return to the provider any invoice that is not properly completed.

  (8) Payments on Medicare claims are authorized if:

    (a) The provider accepts Medicare assignment;

    (b) Medicare makes a direct payment to the provider;

    (c) Medicare determined that services are medically necessary;

    (d) The services are covered by the Program; and

    (e) Initial billing is made directly to Medicare according to Medicare guidelines.

  (9) The Department shall make a supplemental payment on Medicare claims as follows:

    (a) Deductible and co-insurance shall be paid in accordance with the limits of this regulation; and

    (b) Hospitals shall be paid subject to the HSCRC discounts, except in the case of a participant receiving hospital services in an out-of-State facility, in which case the deductible and co-insurance shall be paid in full.

  (10) The provider shall not bill the Department or participant for:

    (a) Completion of forms and reports;

    (b) Broken or missed appointments;

    (c) Services rendered by mail, telephone, or otherwise not in person, with the exception of telehealth services in accordance with COMAR 10.09.49; and

    (d) Providing a copy of a participant’s medical record, when requested by another licensed provider on behalf of the participant.

  (11) Billing time limitations are set forth in COMAR 10.09.36.06.

  (12) Freestanding medical facilities are reimbursed by the Department at the rate set for the freestanding facility by HSCRC.

B. Reimbursement Principles for Out-of-State Hospitals.

  (1) For hospitals outside of Maryland, excluding the District of Columbia, claims reflecting dates of service on or after October 1, 2009, shall be reimbursed at a rate that is 100 percent of the amount reimbursable by the host state’s Title XIX agency or the amount of the hospital’s actual charges in total, whichever is less.

  (2) Out-of-State providers are responsible for reimbursing the Department or its designee for overpayments, in accordance with COMAR 10.09.36.07.

C. Reimbursement Principles for Administrative Days.

  (1) The hospital shall be paid for administrative days that are requested at the time of retrospective review and that are authorized by the Department or its designee after review of the:

    (a) Clinical documentation;

    (b) Discharge plan indicating that the hospital was seeking placement for the participant on the administrative days requested; and

    (c) Documentation that was submitted to the Department on the authorized form that shows placement activity occurred on each day claimed as an administrative day.

  (2) To be paid for administrative days, for participants who are not ventilator dependent, the reimbursement amount shall be an estimated Statewide average of the Program nursing home payment rate as determined by the Department.

  (3) A hospital is not eligible for administrative day reimbursement if the days have already been billed as acute days.

D. Reimbursement Principles for Freestanding Acute Rehabilitation Hospitals. For freestanding acute rehabilitation hospitals not approved by the Program for reimbursement according to HSCRC rates, the Department shall reimburse these hospitals using a prospective payment system.

#### Regulation .08 District of Columbia Hospital Reimbursement.

*COMAR 10.09.92.08*

A. Inpatient Services Rate Calculation.

  (1) A hospital in the District of Columbia shall:

    (a) Bill its usual and customary charges; and

    (b) Be reimbursed for covered services the lesser of its percentage of charges as calculated in §A(2) of this regulation or its charges.

  (2) The percentage of charges in §A(1) of this regulation is the product of the following:

    (a) The cost-to-charges percentage using only those costs of the hospital reported in the hospital’s most recent cost report as determined by the Program or its designee;

    (b) The lesser of 100 percent or the cost-to-charge projection percentage which is:

      (i) The hospital’s cost-to-charge ratio in its most recent cost report trended by its cost-to-charge ratio in the 2 prior years’ cost reports or, if 3 years of data are not available, the hospital’s cost-to-charge ratio in its most recent cost report divided by its cost-to-charge ratio in the prior year’s cost report; and

      (ii) Applied from the midpoint of the report period used to develop the cost-to-charges percentage in §A(2)(a) of this regulation, to the midpoint of the prospective payment period;

    (c) The percentage of the hospital’s costs which are efficiently and economically incurred as adjusted to reflect labor market differences between District of Columbia hospitals and Maryland hospitals; and

    (d) The uncompensated care factor which is equal to:

      (i) For pediatric hospitals with average lengths of stay less than 18 days, one plus two and a half times the quotient of the hospital’s uncompensated care divided by gross revenue; or

      (ii) For all other hospitals, one plus the quotient of the hospital’s uncompensated care divided by gross revenue.

  (3) Effective for dates of service starting July 1, 2012, and forward, the rate calculated for FY 2012 in accordance with §A(2) of this regulation shall be increased by 9 percent.

  (4) A hospital in the District of Columbia shall be reimbursed for administrative days in accordance with Regulation .07C of this chapter.

  (5) Efficiently and economically incurred District of Columbia hospitals’ costs are those costs which are:

    (a) Less than or equal to the adjusted costs for the same all-participant, refined-diagnosis-related groups in Maryland hospitals;

    (b) For hospitals with average lengths of stay of 18 days or more:

      (i) Less than or equal to the adjusted cost for the same diagnosis-related groups in Maryland hospitals; and

      (ii) Categorized into the following two age groups: younger than 18 years old, and 18 years old or older;

    (c) Exclusive of:

      (i) Maryland case charges greater than $500,000; and

      (ii) District of Columbia hospital case charges greater than $500,000 times the ratio of the average charge of the District of Columbia hospital case divided by the average charge of the Maryland hospital case; and

    (d) Derived from hospital costs as specified in this subsection.

  (6) Maryland hospital costs are the hospitals’ charges reduced by the hospital-specific ratio of operating costs to gross charges as determined by the Program or designee.

  (7) There may not be a year-end cost settlement.

B. Outpatient Services.

  (1) A hospital located in the District of Columbia shall:

    (a) Bill its usual and customary charges; and

    (b) Be reimbursed for covered services the lesser of its percentage of charges as calculated in §B(2) of this regulation or its charges.

  (2) The percentage of charges in §B(1) of this regulation is the product of:

    (a) The cost-to-charges percentage using only those costs of the hospital reported in the hospital’s most recent cost report as determined by the Program or its designee; and

    (b) The lesser of 100 percent or the cost-to-charge projection percentage which is:

      (i) The hospital’s cost-to-charge ratio in its most recent cost report trended by its cost-to-charge ratio in the 2 prior years’ cost reports or, if 3 years of data are not available, the hospital’s cost-to-charge ratio in its most recent cost report divided by its cost-to-charge ratio in the prior year’s cost report; and

      (ii) Applied from the midpoint of the report period used to develop the cost-to-charges percentage in §B(2)(a) of this regulation, to the midpoint of the prospective payment period.

  (3) Effective for dates of service starting July 1, 2012, and forward, the rates calculated for FY 2012 in accordance with §B(2) of this regulation shall be increased by 9 percent.

  (4) The analysis shall be performed by the Program or its designee.

  (5) There may not be a year-end cost settlement.

  (6) Outpatient reimbursement rates are implemented in conjunction with, and are applicable to, the same dates of service as inpatient rates.

C. Submitting Cost Reports.

  (1) The provider shall submit to the Department or its designee, in the form prescribed, financial and statistical data within 5 months after the end of the provider’s fiscal year unless the Department grants the provider an extension or the provider discontinues participation in the Program.

  (2) When reports are not received within 5 months and an extension has not been granted:

    (a) For hospitals reimbursed in accordance with this regulation, the Program shall reduce the inpatient percentage of payment for that hospital by 5 percentage points, starting the calendar month after the calendar month in which the report is due, which will remain in effect until the report has been submitted, and there will be no refund; or

    (b) For hospitals reimbursed according to Medicare standards and principles for retrospective cost reimbursement as described in 42 CFR §413, the Department shall:

      (i) Withhold from the provider a maximum of 5 percent of the current monthly interim payment starting the calendar month after the calendar month in which the report is due and any subsequent calendar months until the report has been submitted; and

      (ii) Refund withholdings at cost settlement.

  (3) If a provider discontinues participation in the Program, financial and statistical data shall be submitted to the Department within 45 days after the effective date of termination.

  (4) The Program shall grant an extension for submission of cost reports:

    (a) Upon written request by the provider, setting forth the specific reasons for the request, if the Department determines, taking into consideration the totality of the circumstances, that the request is reasonable; or

    (b) Concurrent with any extension granted to the hospital by Medicare, but not to exceed 60 days from the due date of cost reports.

  (5) In addition to a reduction in payment percentage or withholding a percentage of interim payment pursuant to §C(2) of this regulation, when a report is not submitted by the last day of the 6th month after the end of the provider’s fiscal year and the provider has not received an extension, the Department may impose one or more sanctions as provided for in Regulation .12 of this chapter.

  (6) When a report is not submitted by the last day of the 6th month after the end of the provider’s fiscal year or a report is submitted but the provider cannot furnish proper documentation to verify costs, the Department shall, if applicable, make final cost settlement for that fiscal year at a certain percentage of the last final per diem rates for which the Department has verified costs for that facility, provided that the rates established will not exceed the maximum per diem rates in effect when the facility’s costs were last settled.

  (7) For purposes of §C(1)—(6) of this regulation, reports are considered received when the submitted reports are completed according to instructions issued by the Department or its designee.

  (8) When a report is received after imposing a reduction as specified in §C(2)(a) of this regulation, the rate of reimbursement calculated using the latest cost report information shall be implemented starting with the 1st day of the 4th full calendar month after the month in which the report was received by the Program.

#### Regulation .09 Submitting Cost Reports for Freestanding Acute Rehabilitation Hospitals.

*COMAR 10.09.92.09*

A. The provider shall submit to the Department or its designee, in the form prescribed, financial and statistical data within 5 months after the end of the provider’s fiscal year unless the Department grants the provider an extension or the provider discontinues participation in the Program.

B. For hospitals who do not submit reports within 5 months, for whom an extension has not been granted, and who are reimbursed according to Medicare standards and principles for retrospective cost reimbursement as described in 42 CFR §413, the Department shall:

  (1) Withhold from the provider a maximum of 5 percent of the current monthly interim payment starting the calendar month after the calendar month in which the report is due and any subsequent calendar months until the report has been submitted; and

  (2) Refund withholdings at cost settlement.

C. If a provider discontinues participation, financial and statistical data shall be submitted to the Department within 45 days after the effective date of termination.

D. The Program shall grant an extension for submission of cost reports:

  (1) Upon written request by the provider, setting forth the specific reasons for the request, if the Department determines, taking into consideration the totality of the circumstances, that the request is reasonable; or

  (2) Concurrent with any extension granted to the hospital by Medicare, but not to exceed 60 days from the due date of cost reports.

E. In addition to a reduction in payment percentage or withholding a percentage of interim payment pursuant to §B of this regulation, when a report is not submitted by the last day of the 6th month after the end of the provider’s fiscal year and the provider has not received an extension, the Department may impose one or more sanctions as provided for in Regulation .12 of this chapter.

F. When a report is not submitted by the last day of the 6th month after the end of the provider’s fiscal year or a report is submitted but the provider cannot furnish proper documentation to verify costs, the Department shall, if applicable, make final cost settlement for that fiscal year at a certain percentage of the last final per diem rates for which the Department has verified costs for that facility, provided that the rates established will not exceed the maximum per diem rates in effect when the facility’s costs were last settled.

G. For purposes of §§A—F of this regulation, reports are considered received when the submitted reports are completed according to instructions issued by the Department or its designee.

#### Regulation .10 Cost Settlement for Freestanding Acute Rehabilitation Hospitals.

*COMAR 10.09.92.10*

A. Retrospective Cost Reimbursement for Freestanding Acute Rehabilitation Hospitals.

  (1) An acute rehabilitation hospital not approved by the Program for reimbursement according to HSCRC rates shall be reimbursed according to Medicare standards and principles for retrospective cost reimbursement described in 42 CFR §413, or on the basis of charges if less than reasonable cost.

  (2) In calculating retrospective cost reimbursement rates, the Department or its designee will deduct from the designated costs or group of costs those restricted contributions which are designated by the donor for paying certain provider operating costs, or groups of costs, or costs of specific groups of participants.

  (3) When the cost, or group or groups of costs designated, cover services rendered to all participants, including Medical Assistance participants, operating costs applicable to all participants shall be reduced by the amount of the restricted grants, gifts, or income from endowments, thus resulting in a reduction of allowable costs.

  (4) Final settlement for services in the provider’s fiscal year shall be determined based on Medicare retrospective cost principles found in 42 CFR §413, adjusted for Medicaid allowable costs. Allowable costs specific to the Program shall be limited to a base year cost per discharge increased by the applicable federal rate of increase times the number of Program discharges for that fiscal year.

  (5) Base Year. For purposes of determining limits on the increase of cost, in accordance with Medicare regulations, the base year shall be:

    (a) For an existing provider, the first year of entering into the Program or the first year separate rates for the unit or units of service or services are approved; or

    (b) For a new provider, the 12-month period immediately before the provider was initially subject to target rate increases.

  (6) Initial Interim Rates. In order to establish an initial interim rate, the provider shall submit to the Department or its designee, before the beginning of the first billing period, the following:

    (a) A detailed cost build-up, consistent with Medicare principles and cost finding, that supports the requested rate;

    (b) A current, projected, and prior year’s charge rate schedule;

    (c) Finalized prior year’s Medicare cost reports and the most current submission;

    (d) A detailed revenue schedule; and

    (e) Audited financial statements.

  (7) The provider shall supply the Department or its designee the assurances necessary to establish that its customary charges to participants liable for payment on a charge basis exceed the allowable cost for these services.

  (8) Initial Interim Rates for Newly Established Services or Providers.

    (a) The provider shall submit to the Department or its designee, a detailed cost build-up, consistent with Medicare principles and cost finding that supports the requested rate that follows.

    (b) The Department will compare the rate with a compatible facility and determine a reasonable rate that does not exceed the projected charges.

  (9) Revision of Interim Rates.

    (a) The provider may request an interim rate revision if the actual and projected costs exceed the interim rate by 10 percent.

    (b) The provider shall furnish the Department or its designee with appropriate documentation showing the reason for the increase and other necessary comparisons.

    (c) The Department will lower the provider’s interim rate to closely approximate the final allowable reasonable cost based on the results of the prior year’s review.

    (d) The provider may request no more than one interim rate revision during the provider’s fiscal year.

  (10) Cost Settlement. The provider shall submit to the Department or its designee:

    (a) A Medicaid cost report based on actual data using the cost reporting forms used by Medicare for retrospective cost reimbursement;

    (b) A copy of its Maryland Medical Assistance log;

    (c) Cost reports that are sufficient in detail to support a separate cost finding for designated Maryland Medical Assistance unique cost centers; and

    (d) A finalized Medicare cost report for the cost reporting year.

  (11) Final Program costs shall be Maryland Medical Assistance specific.

  (12) Tentative cost settlements may not be performed on a routine basis. However, the Program reserves the right to calculate tentative settlements in limited cases, when appropriate, as determined by the Department.

  (13) The Department will base final settlement on the results of the finalized Medicare cost reports.

B. The Department or its designee shall notify each provider participating in the Program of the results of the final settlement under §A(10)—(13) of this regulation.

C. Within 60 days after the provider receives the notification described in §B of this regulation, the Department shall pay the amount due to the provider regardless of whether the provider files an appeal.

D. The provider may request review of the settlement under §A(10)—(13) of this regulation by filing written notice with the Program’s Appeal Board within 30 days after receipt of the notification of the results of the settlement from the Department or its designee.

E. The Appeal Board shall be composed of the following:

  (1) A representative of the hospital industry who is:

    (a) Knowledgeable in Medicare and Medicaid reimbursement principles; and

    (b) Appointed by the Secretary of the Department;

  (2) An individual who:

    (a) Is employed by the State;

    (b) Is knowledgeable in Medicare and Medicaid reimbursement principles;

    (c) Did not participate in the verification of costs; and

    (d) Is appointed by the Secretary of the Department; and

  (3) A third member selected by the first two members of the Appeal Board.

F. When the Appeal Board reviews an appeal from a provider in which an Appeal Board member is employed or in which the member has a financial or personal interest, the Secretary of the Department shall designate an alternate for the member.

G. If the provider elects not to appeal to the Appeal Board:

  (1) The provider shall pay the amount due within 60 days after the notification described in §B of this regulation;

  (2) The provider may request a longer payment schedule within 60 days after the provider receives notification of the amount due the Program, the Department may establish, after consultation with the provider, a longer payment schedule; and

  (3) The Department shall establish a longer payment schedule if, in the Department’s judgment based on sufficient documentation submitted by the provider, failure to grant a longer payment schedule would:

    (a) Result in financial hardship to the provider; or

    (b) Have an adverse effect on the quality of participant care furnished by the facility.

H. If the provider elects to appeal to the Appeal Board, the following provisions apply:

  (1) Within 30 days after a provider’s filing of an appeal of the Department or its designee’s determination that the provider owes money to the Program, the Department or its designee shall:

    (a) Recalculate the amount due to the Program based on the verification, exclusive of the amount in controversy which is subject to the appeal; and

    (b) Notify the provider of that amount;

  (2) In order to enable the Department or its designee to perform this recalculation, the provider shall indicate the specific adjustment and the specific amount being appealed;

  (3) Subject to the provisions of §H(4) of this regulation, payment for the amount due the Program, if any, after the recalculation, shall be made within 60 days after the provider receives notification of the recalculation; and

  (4) If a provider requests a longer payment schedule within 60 days after the provider receives notification of the recalculation, the Department may establish, after consultation with the provider, a longer payment schedule in accordance with §G(3) of this regulation.

I. Appeal Board Findings.

  (1) After the Department receives the findings of the Appeal Board, the Department shall:

    (a) Determine the amount that is due either to the Program or to the provider; and

    (b) Notify the provider of that amount.

  (2) The portion of the amount in controversy that is paid is subject to an award of interest that is:

    (a) Calculated from the date the appeal was filed through the date of payment; and

    (b) Based on the 6-month Treasury Bill rate in effect on the date the appeal was filed.

  (3) Interest paid to a provider under §I(2) of this regulation is not subject to any offset or other reduction against otherwise allowable costs.

  (4) If the provider accepted the determination made under §I(1) of this regulation, within 60 days after the provider receives the notification under §I(1) of this regulation, the Program shall pay the amount the Department determined is due the provider, if any.

  (5) Subject to §I(6) of this regulation, within 60 days after the provider receives the notification, the provider shall pay the amount due the Program, if any.

  (6) If a provider requests a longer payment schedule within 30 days after the provider receives notification of the amount due the Program, the Department may establish, after consultation with the provider, a longer payment schedule in accordance with §G(3) of this regulation.

J. After expiration of the 60-day payment period, or longer payment schedule established by the Department as described in §§G—I of this regulation, and in addition to the sanctions provided in Regulation .12 of this chapter, the Department may recover the unpaid balance by withholding the amount due from the interim payment which would otherwise be payable to the provider.

K. The Department or a provider aggrieved by a reimbursement decision of the Appeal Board may appeal the decision of the Appeal Board as the final decision for judicial review under the Administrative Procedure Act, State Government Article, §10-222, Annotated Code of Maryland.

L. If the provider or the Department appeals the final decision of the Appeal Board, the provider or the Department shall place any money due from the provider or from the Program in an interest-bearing escrow account. The money due shall include the interest, based on the rate in §I(2)(b) of this regulation, calculated from the date of the administrative appeal through the date of opening the escrow account. The money shall remain in escrow until a final decision has been rendered. Upon a final determination of the dispute, the appropriate person administering the escrow account shall distribute the money in that account, including any interest accrued, in conformity with the final determination.

M. The provider may file an appeal of the results of the settlement with the Medicare Appeal Board as a substitute for the Department’s Appeal Board, and the decision rendered by the Medicare Appeal Board will be accepted by the Department as binding.

#### Regulation .11 Recovery and Reimbursement.

*COMAR 10.09.92.11*

A. General policies governing recovery and reimbursement procedures applicable to all providers are set forth in COMAR 10.09.36.07.

B. If refund of a payment as specified in §A of this regulation is not made, the Department shall reduce its current payment to the provider by the amount of the duplicate payment, overpayment, or third-party payment.

#### Regulation .12 Cause for Suspension or Removal and Imposition of Sanctions.

*COMAR 10.09.92.12*

Causes for suspension or removal and imposition of sanctions shall be as set forth in COMAR 10.09.36.08.

#### Regulation .13 Appeal Procedures.

*COMAR 10.09.92.13*

A provider filing an appeal from an administrative decision made in connection with these regulations shall do so according to COMAR 10.09.36.09.

#### Regulation .14 Interpretive Regulation.

*COMAR 10.09.92.14*

General policies governing the interpretive regulations applicable to all providers are set forth in COMAR 10.09.36.10.