Delaware House OKs bill to review hospital budgets

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This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.

Legislation creating a hospital cost review board passed the Delaware House Thursday after a long and contentious debate that frustrated members of both sides of the aisle.

Speaker Valerie Longhurst’s bill passed 21-16 on a near party-line vote, with three Democrats, Reps. Sean Lynn, Stell Parker Selby and Sean Matthews voting in opposition. After more than three hours of debate, Democrats took a short break, came back into session and then used a procedural maneuver to end debate and force a vote on the bill. Some lawmakers said they were disappointed with how the debate on the bill was handled.

“It’s an embarrassing day,” House Minority Leader Michael Ramone said. “It’s a sad day, and I’m very sad to be a part of this legislature.”

The measure aims to rein in increasing health care costs in the First State by requiring hospitals to submit their budgets to ensure they’re in compliance with government spending benchmarks. The hospital cost review board bill is based on a similar board Vermont created to curb health care costs.

Under Longhurst’s proposal, the board would review each hospital’s budget annually. If a hospital fails to meet spending benchmarks, it would be required to develop a performance improvement plan. Once a hospital meets spending targets for three consecutive years, the board would release it from the performance plan oversight. When a hospital successfully meets its budget goals for three consecutive years, it would no longer be required to participate in the budget approval process.

“This legislation is not about punishing hospitals, but rather ensuring our constituents are able to access quality and affordable health care and to put a system into place to slow down the skyrocketing costs that we have experienced in Delaware,” she said.

The board would consist of seven members, six of whom would be appointed by the governor and confirmed by the state Senate. The executive director of the Delaware Healthcare Association would be the seventh “non-voting” member.

Longhurst argued that the only year the benchmark had been met was in 2020 due to COVID, when fewer people were accessing regular medical care.

“Every other year, health care spending has far surpassed the benchmark we set for this date, including years with over 11% growth in health care costs,” she said.

2021 saw an 11% increase as more people resumed health care visits they had put off during the pandemic, according to the Delaware Department of Health and Social Services’ third annual benchmark trend report.

Gov. John Carney set a spending benchmark in 2018, which was an aspirational goal for annual per-capita-rate health care spending growth. The 3.8% benchmark took effect in 2019. It’s since fluctuated to various percentages below 4%.

Opponents of the legislation have said it substitutes political judgment for hospital experts’ expertise and doesn’t focus on cost drivers such as prescription drugs, workforce shortages, and insurance companies. Newark-based ChristianaCare, Dover-based Bayhealth and Lewes-based Beebe Health have recently spoken out in opposition to the board.