A unified Senate unanimously approved a bill May 19 to reduce healthcare costs and improve primary care in the state.

“I just want to emphasize how deeply important it is to Delawareans that we take these steps to try and make our primary healthcare system one that actually keeps people well,” said bill sponsor and Senate Majority Leader Bryan Townsend, D-Newark. “So we can avoid illnesses that can be avoided, we can avoid costs that can be avoided.”

Senate Bill 1 has two goals, with the first to control hospital and outpatient costs to 250% of the Medicare rate by 2033 through incremental percentage caps starting in 2028.

The bill allows for inflationary adjustments to be made by the Department of Insurance and the State Employee Benefits Office in consultation with Delaware hospitals.

The Department of Insurance is also empowered to promulgate healthcare models for providers to sign up to use.

More primary care is a second goal of the legislation.

By 2026, the bill would require insurance carriers to spend at least 11.5% of total medical costs on primary care often provided by doctors in small practices.

“Too often they were trying to provide care and wellness but they wouldn’t know if they would get reimbursed,” he said. “So what this legislation does is guarantee more of the primary care investment that we so desperately need will come in the form of prospective payment. So they’re going to get paid on the front end … to embark on the investments they need to keep people well.”

Given their relative size and patient populations within Delaware's healthcare market, the state's two smallest hospitals and lone freestanding children's hospital are exempt from that extension, which includes TidalHealth. Beebe Healthcare is excluded because of its high Medicare population.

“Beebe is in a very high-growth area, and they have a higher percentage of Medicare population than other hospitals. Those two dynamics make for a particularly challenging context to do this work,” Townsend said.

However, he said, Beebe is exempt only as long as it is making progress on value-based care, which the Department of Insurance would determine.

“We’ve been talking to [Beebe leadership] and they certainly have talked about their commitment to navigating the challenges that they face … in their high-growth zone with the high number of Medicare patients,” he said.

Brian Frazee, president and CEO of the Delaware Healthcare Association, which represents Delaware’s hospitals, said in a statement that the group supports the bill.

“We appreciate Sen. Bryan Townsend's collaborative leadership and partnership on our shared priorities of supporting primary care and improving healthcare affordability. This amended legislation moves the needle on healthcare costs while also recognizing the headwinds facing hospitals and Delaware’s unique care needs as a growing and aging state,” Frazee said.