Why Should Delaware Care?
For more than a year, Delaware’s largest hospital has sought in court to upend a law regulating hospital spending. A breakthrough in the fall led to a proposed legal settlement compelling Delaware lawmakers to amend that law.
The State Senate unanimously passed a bill Tuesday that would weaken Delaware’s hospital oversight board, and consequently move the state a step closer to solidifying a legal settlement between Gov. Matt Meyer and Delaware’s largest health care system.
Introduced last month, Senate Bill 213, would remove the Diamond State Hospital Cost Review Board’s ability to veto budgeted spending by private hospitals.
Lawmakers passed the original legislation creating the cost review board in 2024 amid ballooning hospital spending. ChristianaCare sued the state shortly after its passage, arguing that it was an unconstitutional overreach on its corporate charter.
In October, the state and ChristianaCare agreed to pause the lawsuit on the condition that lawmakers introduce and pass a bill that removes the key oversight mechanism that allowed the board to modify hospital budgets it deemed excessive.
With its passage in the Senate, the House of Representatives is set to consider the bill weakening the board. Should it pass there, it would be sent to Meyer’s desk, where he will almost certainly sign it.
During Tuesday’s hearing, Senate Majority Leader Bryan Townsend (D-Newark/Glasgow) said while SB 213 may remove the board’s ability to modify budgets, transparency is still at the forefront.
“At the heart of this effort all along was transparency,” he said on the Senate floor.
State Sen. Spiros Mantzavinos (D-Elsmere) said he supported SB 213, but he took issue with the process of its drafting. He said while legislators were not involved in settlement discussions, they have been tasked with finding legislative solutions to the litigation.
With the bill now likely to pass, Mantzavinos said he will have “very little appetite” for pushback from the state’s hospitals surrounding the review board’s work to address rising medical costs.
“This is something that’s hurting everyday Delawareans, and we can’t wait any longer,” he said.
What’s in the bill?
Before SB 213, the hospital cost review board would have followed a four-step process.
Hospitals would submit detailed financial documents to the board. Board members would review them and decide whether to put a hospital on a “performance improvement plan,” if it deemed a hospital’s spending too large. If a hospital failed to correct its overspending, the board could then modify or veto its budget.
If SB 213 passes, the board will no longer have the power to modify or veto hospital budgets found out of compliance. ChristianaCare had challenged the constitutionality of those powers in court, and a judge was set to examine that constitutional question, should the lawsuit have continued.
The new bill also makes technical adjustments to language in the law, including renaming the performance improvement plan, a “benchmark compliance plan.”
At the center of those plans are whether hospitals keep their spending below a state projection for how much they believe health care should cost Delawareans.
If a hospital’s spending exceeds the state’s projected benchmark, the cost review board would now require it to send in a compliance plan outlining how it intends to bring it down.
The law also introduces “meaningful cost containment arrangement” plans, which are described as “contracts between hospitals and payers” meant to hold the hospitals responsible for controlling health care spending in a specific area.
Hospitals can enter these agreements and be exempt from the benchmark plans for one year, the law said. But it does not exempt them from the financial reporting requirements outlined in the law like sharing budget information and labor costs.
The amendments are primarily technical, but the one with the most substance would require hospital CEOs to attest to whether their companies are in compliance with their meaningful cost containment arrangement plans.
Townsend said that since some of these agreements may take place with non-state entities, such as insurance companies, the provision allows the state to ensure that contracts aren’t being renegotiated and that the agreements are positively impacting Delawareans.
He also said in an interview following the vote that lawmakers will consider future bills this session surrounding the approvals insurance companies give before paying for procedures, as well as primary care reform.
“There’s a sickness in our health care system, where it’s not going to push itself toward wellness as much as we need it to as quickly as we need it to,” Townsend said.
