Democrats announce deal on hospital bill

Carney vows to sign legislation expected to clear General Assembly this week
May 13, 2024

Democratic leadership says it expects a bill aimed to rein in hospital costs will move through the General Assembly this week, and Gov. John Carney says he will sign it after announcing a deal May 13 that prompted the hospital association to drop its opposition.

“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,” Carney said in a press release.

While dropping its opposition, the Delaware Healthcare Association, representing Bayhealth, Beebe and other hospitals across the state, did not endorse House Bill 350 to create a Diamond State Hospital Cost Review Board to approve hospital budgets. So far, one amendment has been announced, which would remove the penalty provision for hospitals that fail to adhere to a budget approved by the state-paid and state-appointed board.

HB 350, which passed the House in April and moved through Senate committee last week, also had set spending limits for hospital procedures, but HB 395, introduced May 7, would allow benchmark spending for 2025 and 2026 to be either 2% growth over the previous year or the Core Consumer Price Index plus 1% over rates from the previous year, whichever is higher. The bill moved through committee May 8 and awaits action by the full House.

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

In his letter, Frazee thanked Carney’s administration, Speaker of the House Rep. Valerie Longhurst, D-Bear, and Senate Majority leader Brian Townsend, D-Newark, for the amendment to the bill they sponsored.

"From the beginning, our shared goal has been to alleviate the overwhelming burden of healthcare expenses on Delaware families while ensuring their access to quality care," said Longhurst in a press release. "Whether it's residents forced to make impossible decisions between paying for needed medical care or paying their rent, or small businesses forced to raise their prices because of spiraling costs of healthcare, this is an issue that touches every Delawarean." 

In that latest version of the bill, by 2027, the Diamond State Hospital Cost Review Board will begin comparing hospital pricing to the annual Delaware Health Care Benchmark set by a subcommittee of the Delaware Economic and Financial Advisory Council, a panel that projects state revenue and suggests spending limits.

Under the bill, a hospital that exceeds the benchmark will 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.

If the improvement plan fails to control prices, officials said, the Diamond State Hospital Cost Review Board could extend the timeline of a hospital’s performance improvement plan or require a hospital to modify its budget – decisions that are appealable to the Delaware Superior Court.

In addition to incorporating the initial CPI benchmark into HB 350, the amendment directs DEFAC’s Health Care Spending Benchmark Subcommittee to review the council’s methodology and use macroeconomic trends to develop its benchmark. The subcommittee will submit any final recommended changes to the full council by Dec. 31, 2024.

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


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