Hospital cost review board bill passes Senate, heads back to House for final approval

By Joseph Edelen
Posted 5/17/24

DOVER — Just days after health care leaders and Democratic leadership reached a compromise, the proposed hospital cost review board was amended and passed in the Senate on Thursday, sending the …

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Hospital cost review board bill passes Senate, heads back to House for final approval


DOVER — Just days after health care officials and Democratic leadership reached a compromise, the proposed hospital cost review board bill was amended and passed in the Senate on Thursday, sending it back to the House of Representatives for the final step in the legislative process.

The Delaware Healthcare Association, which represents the state’s hospitals and health care systems, took a neutral stance on the twice-substituted version of House Bill 350 after an agreement was struck on a Senate amendment to address some of the biggest concerns.

There was just over an hour of debate on the bill Thursday, with Senate Republicans airing their grievances on the expedited process the legislation has undergone and the idea of the state overseeing hospital budgets.

“The state is saying that they know… how to run and (hospitals) budget operations better than they can, even though the state came to them for help in 2020,” said Senate Minority Leader Brian Pettyjohn, R-Georgetown. “A deal made with a gun to the head of our hospitals is not a real deal. It’s made-up duress, and sometimes ‘not agree to, but just not opposed,’ that’s their only option when there are no other options available.”

Senate Majority Leader Bryan Townsend, D-Newark, who serves as the chamber’s lead sponsor on the bill, said Thursday there have been several studies that show hospitals make up for a large portion of health care spending, which is attributable to cost increases.

The purpose of the proposed Diamond State Hospital Cost Review Board is to remedy this situation and control ballooning health care costs in the state, though Sen. Townsend noted there are other contributing factors, including prescription drug and insurance costs.

“There is more we have to do,” Sen. Townsend said. “This legislation follows on a variety of efforts over the years, particularly the health care (spending) benchmark that the administration had put in place for several years now; the only year of which was COVID, when costs increases were below the benchmark.”

Delaware’s health care spending benchmark was implemented in 2018 and has fluctuated between 3% and 4% growth every year since.

Hospitals have continued to exceed that growth — with the exception of 2020 during the onset of the COVID-19 pandemic — and the Delaware Healthcare Association had signaled their support for certain spending oversight measures, but remained against the state-appointed cost review board until an agreement was struck.

The Senate amendment that was passed with the bill contains a number of changes, such as replacing Medicare reference pricing with a more flexible provision based on the core consumer price index; requiring the eight-person board to have membership from each county; requiring the Diamond State Hospital Cost Review Board to set regulations regarding performance improvement plans for facilities struggling to manage their spending growth; and removing penalties for hospitals that fail to follow a board-approved budget.

During debate on the bill, Sen. Trey Paradee, D-Dover, vouched for the establishment of the board and praised the amendment for removing the Medicare reference pricing clause, which the Delaware Healthcare Association said could result in over $360 million in losses for facilities.

Republican lawmakers such as Sen. Eric Buckson, of Camden, and Sen. Dave Lawson, of Marydel, took issue with the process the bill took – specifically in the House of Representatives – and the hypocrisy of the state to implement this mechanism when it has exceeded annual budget forecasts in recent years.

“The fact it was passed through the House on some obscure rule where you shut down debate — what’s the rush? We want this thing to be done right and I do. See, here’s the thing, we’re going to vote no. Why? It isn’t because we don’t want affordable health care, we do. But process has to matter, it has to have to be deliberate and measured. We have to get it right,” Sen. Buckson said.

As Republican members continued their pushback, Sen. Pettyjohn referenced the “disastrous consequences” the bill could have, noting that, despite similar structures in Vermont and Massachusetts, those states have many hospitals operating in a deficit and some that have been forced to close.

The minority leader urged his colleagues that, if the proposal is not shown to work in the years ahead, that the General Assembly “come back and fix it.”

“(We should let this) roll out and be implemented in good faith — on the basis of transparency, on the basis of data, on the basis of a framework that very purposely has been crafted to give flexibility for different hospitals in different corners of Delaware for the different needs and forces that they are subject to, the different pressures they undergo, the different problems they face. That’s how this has been crafted,” Sen. Townsend said.

Following debate, the substituted version of House Bill 350, as amended, was passed by a 14-7 vote, with Sen. Russ Huxtable, D-Lewes, the lone Democrat in opposition.

If passed in the House, it will head to Gov. John Carney’s desk for signature. After Monday’s compromise, the governor said the measure would address rising health care costs, and that he looked forward to signing it into law.

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