Hospices have complained they will be disadvantaged by the Healthcare Commission's decision to remove their special status and make them pay the full cost of regulation fees.

Under a new regulatory fee structure introduced this financial year, hospices with charitable status will have to pay the same amount as NHS or private sector providers, although this increase will be phased in over several years.

But Help the Hospices, the UK body representing hospices, has said the decision was unfair because hospices cannot recover the full costs of regulatory fees, while the NHS and private providers can. On average, two-thirds of hospice funding comes from charity.

'We would like hospices to be treated in the same way as NHS providers,' said Help the Hospices director of public policy and parliamentary affairs Jonathan Ellis.

Peter Holliday, chief executive of St Giles Hospice in Lichfield, Staffordshire, said: 'Hospices are squeezed in the middle. NHS organisations don't have to pay regulation fees out of their budgets and private providers can invoice for full cost recovery. Hospices are being treated in the same way as other providers, but in practice they have the means of recouping fees when we don't.'

The Healthcare Commission, in its consultation, said it had been unable to identify a practical way to charge voluntary organisations other than by matching fees directly to costs.