Delaware House approves controversial hospital cost review board

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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.

Brian Frazee, the executive director of the healthcare association, said his group opposes this board partly because of the amount of information the board would expect the hospital systems to provide.

“The act of having to turn over our entire budgets to the board upfront is where we believe that’s a bridge too far because that’s very detailed information,” Frazee said.

Frazee was questioned by House Majority leader Melissa Minor-Brown about an email she said was sent to employees of ChristianaCare employees by the system’s CEO Janice Nevin. In the email, viewed by WHYY News, it appears to say that if the bill were to become law, it would immediately slash $360 million from Delaware hospital budgets, which could make it hard to maintain its current workforce. ChristianaCare alone could experience a $180 million cut in funding, the email said. It also references a recent article by ChristianaCare physician LeRoi Hicks said that could have “horrific consequences” for vulnerable populations, including Black and brown populations.

Frazee said what’s described in the email was not a scare tactic, but rather factual and they don’t want to be put in that situation. He said the provision that hospitals cannot charge more than 250% of Medicare costs for any services in 2025 that is included in the bill would dramatically impact the hospital’s ability to operate.

“Those are the kinds of programs that don’t generate revenue,” he said. “Unfortunately, when the state comes in and says there’s that cut kind of across the board, you have to make really hard decisions about — when you’re operating at a loss right now — what has to go. That’s backwards, I think, to all of our goals of expanding access and investing in those in those communities.”

House Republicans raised concerns throughout the floor debate about the board’s potential for government overreach and if it would restrict hospitals’ ability to do capital improvements or repay bond obligations. They also questioned the legality of Longhurst’s decision to put the legislation in the House Administration Committee instead of the Health and Human Development Committee or the House Appropriations Committee, which Republicans argued could violate House rules.

During the hours of debate, members of both sides called for all parties to exercise decorum during the floor session. After about three hours of debate, acting Speaker of the House Bill Carson, D-Smyrna, called a ten-minute recess. When members returned, Democrats used a procedure known as “calling the previous question” to end debate and vote on the bill.

Several members spoke after the debate to voice their frustration. Lynn, who represents Dover, said he tried several times to speak on behalf of his constituents.

“I was absolutely denied the opportunity to have my voice heard on behalf of my district,” he said. “Dover is significantly affected by this bill. I’m severely disappointed that we were deprived of the right. I’m significantly disappointed in both the tenor of the bill, the way that was handled this evening, and lastly, that we were deprived of a right to have questions asked and to have statements heard.”

State Rep. Danny Short, who is a member of the Delaware Economic and Financial Advisory Council, said the bill would impose benchmarks on private entities that the legislature has not met for years.

“I think we’re moving in the wrong direction when we can’t do what we’re saying we want others to do.”

The legislation now moves to the Senate Executive Committee.