Lawmakers considered defanging controversial Delaware hospital cost review board

• Delaware lawmakers considered removing the Diamond State Hospital Cost Review Board’s power to veto hospital budgets.
• The proposal was ultimately rejected, and the board’s previously frozen funding is expected to be reinstated.
• This decision follows ongoing debate and lobbying surrounding the board’s authority to control healthcare costs.

This story was produced by Spotlight Delaware as part of a partnership with Delaware Online/The News Journal. For more about Spotlight Delaware, visit www.spotlightdelaware.org.

In the weeks since Delaware’s powerful legislative budget committee froze funding to a health care cost-cutting board, lawmakers circulated a proposal to strip the board of its chief enforcement tool, according to a copy of the proposal obtained by Spotlight Delaware. 

The proposal to remove the board’s ability to veto hospital budgets struck at the heart of its central mission of forcing financial austerity onto the state’s health care systems – including Delaware’s largest and most politically influential one, ChristianaCare. 

It also came after a Delaware judge ruled late last month that ChristianaCare’s legal challenge to the board’s authority over its budgets could continue. 

In the end, lawmakers on the budget-setting Joint Finance Committee decided not to move forward with the proposal. 

Instead, on Tuesday, June 17, they are expected to simply reinstate the frozen funds to the health care board, called the Diamond State Hospital Cost Review Board.  

Senate Democratic Caucus Chief of Staff Jesse Chadderdon told Spotlight Delaware that lawmakers had discussed the proposal to strip the board of its authority over hospital budgets, but failed to gain a consensus on the matter among the members who sit on the Joint Finance Committee.

The measure to reinstate $1 million that had been frozen from the board two weeks ago was a more palatable proposal, Chadderdon said.

Still, cuts to another $1.5 million in reserve funds, which had been in place for the board’s litigation and other costs, will remain. 

The fact that legislators, especially those in the State Senate, even considered such a proposal is notable, as statehouse Democrats have defended the merits and need of the board over the objections of Republicans and hospital leaders for more than a year.

READ THE ONGOING BATTLE: Amid ongoing lawsuit, fight over Delaware hospital cost review board funding continues

It is not immediately clear why lawmakers on the Joint Finance Committee want to undo the funding freeze that they approved just two weeks ago. Chadderdon asserted that the original freeze was unconstitutional. 

When asked about Tuesday’s meeting and about the proposal that had been considered, Rep. Kim Williams (D-Stanton), who chairs the Joint Finance Committee, said simply that the committee is meeting to discuss language in the state’s budget that pertains to the hospital cost review board.

What would the proposal have done?

According to the draft copy of the legislation, which was to be inserted as epilogue language to the annual state operating budget, lawmakers had considered stripping the board of the ability to punish hospital systems that are not compliant with its efforts to rein in costs, including making changes to their budget.

It would leave a board that was largely tasked with obtaining currently private revenue and expenditure information that would better inform the public of the operation of its hospital systems and writing performance improvement plans for those found to be exceeding cost-containment goals set by the state.

If a hospital system failed to execute an improvement plan though, the board would only be able to extend or amend such a plan, but have no way of enforcing it.

It would also push back implementation of the law to next year.

Fight has drawn on

In all, the developments mark the latest chapter in more than a year of lobbying surrounding the board tasked with bringing down hospital costs in Delaware, which are among the highest in the country. 

It began last spring when hospital board members and administrators flooded Dover wearing white coats in efforts to oppose the bill that created the Diamond State Hospital Cost Review Board.

It continued late last year when two opposing local lobbying forces – the Delaware Hospital Association and a coalition of public sector unions – each pressured then-Gov. John Carney over whether to nominate members to the newly created state board. 

Carney, who at the time was in his final months as governor, was seen as more supportive of the hospital cost review board than his successor Gov. Matt Meyer. 

Delaware Hospital Association President Brian Frazee told Spotlight Delaware then that Meyer had shown a willingness to make changes to the law that created the board. 

Frazee also said then that his group’s primary complaint was with the review board’s legal authority to modify hospital budgets that its members deem excessive. His comments followed assertions from ChristianaCare that the board threatens the hospital’s ability “to care for the community.” 

But, public sector unions countering Frazee’s lobbying pointed to high health costs in Delaware, and argued in a letter to the governor last year that large portions of the state government’s budget “are being devoured by unchecked health care costs that continue to rise faster than the rate of inflation.”

Ultimately, Carney did appoint five members of the board in the waning days of his term and Meyer has added two more. They have met a handful of times but have not advanced the mission of the board in significant ways to date.

Lobbying has since sustained through this year’s legislative session, including last month when Delaware Healthcare Association and other nonprofits sent a joint letter to lawmakers urging them to postpone the implementation of the cost review board for one year.  

In response, the coalition of state worker unions again sent a competing letter, calling on the legislature to “reject the Delaware Healthcare Association’s latest request to delay the Board’s work.”

What followed was the Joint Finance Committee decision to freeze funding to the hospital cost review board. 

Williams, the committee chair, told Spotlight Delaware then that her decision to pause the funding wasn’t influenced by lobbying. 

Instead, she said the state should not continue to pay to implement a board “whose future is so uncertain.”

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