State Regulation
The source of the state’s power to regulate health care institutions is the police power, which is retained by the states in our federal system. Under the police power, the state’s regulation of health care institutions must further health, safety and the general welfare. In reviewing legislation challenged as lying beyond the scope of the state’s police power, courts will uphold the legislation if its contribution to health, safety and general welfare is at least fairly debatable.
Licensure is the primary mechanism chosen by state legislatures to regulate health care facilities, though certification is also sometimes used. In addition to its regulation of health care providers through licensure, the state also regulates health care providers through the enforcement of the requirements of the federal-state Medicaid program. The state’s authority under Medicaid, however, is dependent upon and subject to the federal authority.
Federal Regulation
While the states have authority to regulate health care facilities under their police power, the federal government’s primary authority arises from its financing authority exercised as purchaser of health care. The federal government, as purchaser, regulates through provider certification. In order to receive payments under Medicare or Medicaid, the major current federal health care programs, an institutional provider must be certified and must sign a provider agreement with the Health Care Financing Administration for Medicare and with the state Medicaid agency for Medicaid.
