Preparing for Ohio’s hospital license regime: Where are we today and what comes next?
By Eric Plinke, Stacey Borowicz, Timothy Cahill and Joseph Wheeler - Dinsmore & Shohl LLP / October 16, 2023
For years, Ohio had the distinction of being the only state that did not require a license to operate a hospital. That changed in 2021 when Governor Mike DeWine signed House Bill 110. As of September 30, 2024, Ohio hospitals must obtain a general, hospital-wide license.
The new Ohio Revised Code Chapter 3722 establishes a bare-bones structure for the license and directs the Ohio Department of Health (ODH) to create additional regulations detailing the specifics. For an already heavily regulated industry, that seems fair and simple enough. But, with less than a year before the license requirement goes into effect, there is a great deal of uncertainty among health systems and hospitals. This uncertainty seems to stem from two related, but distinct, issues: deadlines and ODH’s procedure for creating rules. We seek to clear the fog below.
Deadlines to obtain a hospital license
The first issue is deadlines. Chapter 3722 required ODH to adopt rules detailing the specific administrative, clinical and technical requirements for hospital licenses before September 30, 2022. That deadline has long since come and gone. ODH has created draft rules and discussed them with key industry stakeholders, but to date, the rules have not been submitted through the formal, state-required Ohio Revised Code Chapter 119 rule-making process. At this point, there is no set timeline for ODH to promulgate these rules, except that ODH will need time to complete the Chapter 119 rulemaking process. Regardless of when ODH does promulgate the rules, the deadline to obtain a license is fixed by statute. Any hospital that continues operating after September 29, 2024 without a license could be subject to fines and likely find themselves in violation of federal law setting forth the conditions of participation for federal health care programs. This quickly approaching deadline and the related uncertainty has resulted in some hand-wringing for stakeholders. Still, others are encouraged by the deliberate and thoughtful process ODH has undertaken to create this license regime. Kimberly Thomas, director of legal and risk management services at Blanchard Valley Health System, said: “We are grateful that ODH has given our organization the opportunity to participate in its rule making process and that it is taking the time to understand the impact these rules will have on our ability to care for our community and patients.”
Misconceptions about the rule-making procedures
The second issue is a general misconception about the rule-making process. ODH uses a two-step method for considering and proposing rules. First, ODH uses its internal process to create rules, consider them and solicit industry input. This process allows ODH to ensure it truly considers the impact its draft rules would have on the industry. However, this process happens before ODH formally proposes the rules under the state’s rulemaking process described in Ohio Revised Code Chapter 119. To date, ODH has only circulated draft rules for public comment within its internal rulemaking process. The confusion arises because there are similar steps in the Ohio Revised Code Chapter 119 process that requires the agency to provide public notices and/or submit the draft rules for public comment. Stakeholders, who are unfamiliar with ODH’s particular rulemaking process, may have combined these steps. As of this article’s publication date, ODH’s public comment period for its draft rules has closed, and ODH is awaiting comments from the Ohio Public Health Advisory Board and the Lieutenant Governor’s Common Sense Initiative. After that, ODH can either formally propose the draft rules or revise them and restart its internal rulemaking process.
So what does that mean for hospitals? For now, hospitals are left to wait and see what rules are formally proposed and provide comments in response. In the interim, some steps can be taken now to prepare for the eventual adoption of the rules. ODH has published what it expects will be the license application (available here) and has, according to its website, started accepting applications. The application is relatively short and resembles Ohio’s former hospital registration. This license application may continue to develop along with the rules, but it should allow hospitals to get a head start on the application process by helping them understand the likely administrative and information gathering requirements associated with applying for a license.