Why health care groups continue to oppose a Delaware hospital cost review board

Health care providers and Delaware lawmakers remain divided over a proposal to create a hospital cost review board to help rein in service costs.

Dozens of doctors, hospital CEOs and business leaders spoke in opposition to House Bill 350 Tuesday during the state Senate Executive Committee meeting, warning lawmakers that its passage would negatively affect Delaware and its health care services.

Nearly 70 community leaders and organizations across Delaware also submitted a letter to lawmakers Tuesday ahead of the committee meeting where the bill would be discussed, warning that the bill’s passage would have “disastrous ramifications” on hospital systems as well as the “business and nonprofit communities.”

“It is our hope that we can bring all parties together inclusive of the business community, nonprofit leaders, health care systems, providers, payors, pharmaceutical companies, pharmacy benefit managers, state unions, community advocates and patients to determine a strong path forward for our state,” the letter reads. “That is the Delaware way.”

Signatories of the letter included several hospitals like ChristianaCare, Beebe Healthcare and Nemours Children’s Health, state and local chambers of commerce, construction companies and their leaders, doctors and nurses, and advocacy groups like the Delaware Coalition Against Domestic Violence.

The calls for opposition to the legislation come as the Senate now considers the bill, which passed the state House of Representatives in April with several changes.

Brian Frazee, president and CEO of the Delaware Healthcare Association that spearheaded the letter and has spoken on behalf of dozens of hospitals throughout the state, said the “governance piece” of the legislation remains a sticking point.

“When you have a board of six paid political appointees that, even at the end of a very long process, have the authority to modify and approve, and really step into the governance of our hospitals, their budgets – that’s key,” Frazee said during committee testimony Tuesday evening. “There’s no other private sector employer in the state that has that type of oversight or authority.”

Senate Majority Leader Bryan Townsend, who is a cosponsor of the bill, stressed throughout the nearly three-hour meeting that there are additional measures − and possible amendments − coming that will address some of the biggest concerns of hospitals.

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House Bill 395, introduced Tuesday by House Majority Whip Kerri Evelyn Harris, would replace the initial limit on price increases based on the 250% of Medicare prices with a more flexible consumer price index.

“My hope is that people will realize there has been a lot of collaboration going into this,” Townsend said before the committee meeting adjourned. “It’s not that the sky is falling.”

The bill will be moved out of the Senate Executive Committee Wednesday and the full legislative body is likely to take it up later this month.

What would House Bill 350 do?

The Diamond State Hospital Cost Review Board would be responsible for reviewing hospital budgets and related financial information annually.

Under the proposal, hospitals would be expected to meet the state’s budget benchmark for cost increases.

If a hospital failed to meet the benchmark, then it would be required to come up with a performance improvement plan. Should things still not improve, then the board could request hospitals submit proposed budgets.

READ THE LATEST VERSION OF THE BILL

The latest benchmark trend report from the state Department of Health and Social Services shows that per capita health care spending in Delaware increased 6.3% in 2022, outpacing the 3% growth rate benchmark.

State health officials said in a news release Tuesday announcing the latest report that reports dating back to 2019 show “continued per-capita growth in health care spending beyond established benchmarks.” That year, spending grew 5.8% − exceeding the benchmark of 3.8%, according to the health department.

Despite changes to the original House Bill 350 – which included adding the executive director of the Delaware Healthcare Association as an "ex-officio" member to the board and an “interim step” before requiring hospitals to submit budgets – health care advocates say the changes do not go far enough for stakeholders to support the measure.

The latest arguments in opposition

Health care organizations and other stakeholders in opposition have warned that the bill would negatively impact the quality of patient-centered care given at Delaware’s health care institutions.

Opponents have also called into question the model Delaware wants to use, which is similar to Vermont’s approach. The Green Mountain Care Board has received mixed reviews on its benefit to Vermont’s health care systems and costs, but Delaware hospital CEOs and health care advocates say that the state’s system isn’t keeping costs down.

WHY PROVIDERS OPPOSE: Delaware hospitals say cost review board proposal a 'non-starter' for providers

Several health care professionals, including one who has worked in Vermont, criticized review board models in Vermont and Massachusetts, pointing to hospitals that have closed or are operating in the red in those states.

The Delaware Healthcare Association and medical providers said it’s also critical that they have reserve funds to protect bond ratings and be prepared in the event of disaster or emergencies.

Frazee, from the association, also said in a news release that the bill would negatively impact the state’s “entire economy” with the loss of jobs, nonprofit investment and damage to Delaware’s business-friendly reputation.

“DHA has put forward amendments that address health care affordability, enhance transparency, and hold hospitals accountable to Delaware’s healthcare benchmark,” he said in the release. “We stand ready to continue working with the bill sponsors to achieve our shared goals in a way that meets our state’s unique needs.”

This article originally appeared on Delaware News Journal: Proposed hospital review board in Delaware sees continued pushback