After major pushback, Delaware's hospital cost review board bill to see vote. What changed?

Delaware health care providers have reached a compromise with state lawmakers on a proposed bill that would create a hospital cost review board.

Negotiations among House Speaker Valerie Longhurst, Senate Majority Leader Bryan Townsend and the Delaware Healthcare Association helped reach an agreement Monday that will amend House Bill 350 to incorporate a more flexible price index (as proposed by House Bill 395) and give “greater certainty around the role and operations of the Diamond State Hospital Cost Review Board,” according to a news release Monday.

The changes to the legislation now satisfy hospital operators who have been staunchly opposed to the bill.

“Based on the forthcoming Senate amendments to HB 350, the Delaware Healthcare Association stands neutral on HB 350 and will no longer actively oppose the bill at this time,” association President & CEO Brian Frazee wrote in a letter to the Delaware General Assembly on Monday.

The legislation is supported by four of Delaware’s largest public sector labor unions, including the Delaware State Education Association.

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With a compromise reached among the parties, the bill with amendments will be considered by the Delaware Senate on Wednesday with a final vote in the House of Representatives likely Thursday.

“I want to thank the hospital systems, members of the General Assembly, and the Delaware Department of Health and Social Services for collaborating on a piece of legislation that will combat rising health care costs that are having a significant impact on Delaware families and state taxpayers,” Governor John Carney said in the release. “The revised House Bill 350 will help lower the growth of healthcare costs in our state, while making sure we’re protecting healthcare quality. I look forward to signing it into law.”

What are the changes?

The Diamond State Hospital Cost Review Board will be tasked with ensuring that Delaware’s largest hospitals align their pricing within annual spending benchmarks set by the state. Hospitals will be required to submit detailed budgets to the board each year for review.

“During 2025 and 2026, that benchmark will be set at either 2% growth over the previous year or the Core Consumer Price Index plus 1% over rates from the previous year, whichever is higher,” according to the release.

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In 2027, the review board will compare hospital pricing to the annual Delaware Health Care Benchmark set by a subcommittee of the Delaware Economic and Financial Advisory Council, a panel of state officials and economists who forecast the state’s budget projections.

Senate Amendment 1 to House Bill 350 also directs the spending benchmark subcommittee to review the “methodology used to develop” the benchmark with “an eye on incorporating more macroeconomic trends.”

The subcommittee will submit any final recommended changes to the full advisory council by Dec. 31.

If a hospital exceeds the benchmark, then it would be required to submit a performance improvement plan “that details specific strategies, adjustments and next steps proposed by the hospital to rein in costs, along with a timetable for implementation, allowing hospitals to adjust their own costs without additional state intervention,” according to state lawmakers.

If the improvement plan doesn’t control prices, then the review board could extend the timeline for the improvement plan or require the hospital to modify its budget. These decisions can be appealed to the state Superior Court, lawmakers added.

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The Senate amendment also provides greater geographic parity among members of the cost review board; streamlines potential penalties for hospitals; directs the board to develop regulations around the improvement plan process; and gives clarity around the budget information hospitals must submit and public hearings that must be held, among other changes.

“This agreement is a major breakthrough for small businesses and working families in Delaware who for years have been paying more for health care than people in nearly every other state,” said Townsend, chair of the Senate Labor Committee, in the release. “By bending the curve of spiraling health care costs, we are helping Delawareans make ends meet in their own family budgets while ensuring that the hospital systems they depend on can continue to provide the same level of quality care.”

Continued concerns from health care providers

In the healthcare association letter sent to General Assembly members Monday, Frazee said providers remain “deeply concerned” about the remaining components of the bill, including the fact that the board will be “politically-appointed” and able to modify hospital budgets.

The board will be made up of seven members, six of whom are appointed by the governor and confirmed by the Senate and the executive director of the Delaware Healthcare Association as a non-voting member.

“The members of DHA reserve rights to remedy this legislation if passed," Frazee wrote. "We will continue our work to ensure Delaware hospitals can meet their obligation and commitment to provide access to high quality care to our patients and the communities we serve.”

Got a tip? Contact Amanda Fries at afries@delawareonline.com. Follow her on X at @mandy_fries.

This article originally appeared on Delaware News Journal: Delaware hospitals OK with changes to cost review board bill