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Delaware Senate Democrats

Legislative leaders, Governor Carney announce agreement with Delaware Healthcare Association on House Bill 350 (S)

May 13, 2024

DOVER – Legislative leaders and Governor John Carney on Monday announced they have reached a deal with Delaware’s largest hospitals on legislation that will help to make healthcare more affordable in the First State.

Weeks of daily negotiations between House Speaker Valerie Longhurst, Senate Majority Leader Bryan Townsend and the Delaware Healthcare Association has culminated in an agreement around an amendment to House Bill 350 (S) that will incorporate the more flexible price index first proposed by House Bill 395 and provide greater certainty around the role and operations of the Diamond State Hospital Cost Review Board.

As a result of the responsible compromises reflected in Senate Amendment 1 to House Bill 350 (S), Delaware’s hospitals and the Delaware Healthcare Association have agreed to withdraw their opposition to the bill.

“I want to thank the hospital systems, members of the General Assembly, and the Delaware Department of Health and Social Services for collaborating on a piece of legislation that will combat rising health care costs that are having a significant impact on Delaware families and state taxpayers,” Governor Carney said. “The revised House Bill 350 will help lower the growth of healthcare costs in our state, while making sure we’re protecting healthcare quality. I look forward to signing it into law.”

Supported by four of Delaware’s largest public sector labor unions, HB 350 (S) with Senate Amendment 1 is now slated to be considered by the Senate on Wednesday with a final vote in the House likely on Thursday.

“This agreement is a major breakthrough for small businesses and working families in Delaware who for years have been paying more for healthcare than people in nearly every other state,” said Sen. Townsend, chair of the Senate Labor Committee. “By bending the curve of spiraling healthcare costs, we are helping Delawareans make ends meet in their own family budgets while ensuring that the hospital systems they depend on can continue to provide the same level of quality care. Speaker Longhurst, David Bentz at DHSS, and the leadership of Delaware’s hospital systems all deserve a ton of credit for working around the clock to make sure our communities are able to get the healthcare they need at prices they can afford.”

Speaker Longhurst also praised the agreement that successfully addresses many of the hospitals’ concerns while achieving the goal of enacting sustainable healthcare cost growth in Delaware.

“From the beginning, our shared goal has been to alleviate the overwhelming burden of healthcare expenses on Delaware families while ensuring their access to quality care,” Speaker Longhurst said.

“Whether it’s residents forced to make impossible decisions between paying for needed medical care or paying their rent, or small businesses, forced to raise their prices because of spiraling costs of healthcare, this is an issue that touches every Delawarean,” she said. “This agreement marks a significant stride toward tackling this challenge, all while protecting healthcare workers and patients and ushering in much-needed transparency to our healthcare system.  I am grateful to Sen. Townsend, David Bentz and his team at the Delaware Department of Health and Social Services, and the leadership of Delaware’s hospital system for the countless hours they have invested in delivering legislation that will provide relief to our constituents.”

Sponsored by Speaker Longhurst and Sen. Townsend in March, HB 350 (S), will require hospitals to submit detailed budgets to the Diamond State Hospital Cost Review Board each year. Created by HB 350, the review board is a group of seven healthcare quality experts – appointed by the Governor and confirmed by the Senate plus the head of the Delaware Healthcare Association – tasked with ensuring that Delaware’s largest hospitals align their pricing within annual benchmarks set by the state.

During 2025 and 2026, that benchmark will be set at either 2% growth over the previous year or the Core Consumer Price Index plus 1% over rates from the previous year, whichever is higher.

In 2027, the Diamond State Hospital Cost Review Board will begin comparing hospital pricing to the annual Delaware Health Care Benchmark set by a subcommittee of the Delaware Economic and Financial Advisory Council (DEFAC), a panel of state officials and economists who forecast the State of Delaware’s budget projections.

A hospital that exceeds the benchmark will be required to submit a performance improvement plan that details specific strategies, adjustments and next steps proposed by the hospital to rein in costs, along with a timetable for implementation, allowing hospitals to adjust their own costs without additional state intervention.

If the improvement plan fails to control prices, the Diamond State Hospital Cost Review Board could extend the timeline of a hospital’s performance improvement plan or  require a hospital to modify its budget – decisions that are appealable to the Delaware Superior Court.

In addition to incorporating the initial CPI benchmark into House Bill 350 (S), Senate Amendment 1 to House Bill 350 (S) directs DEFAC’s Health Care Spending Benchmark Subcommittee to review the methodology used to develop the Delaware Health Care Benchmark with an eye on incorporating more macroeconomic trends. The subcommittee will submit any final recommended changes to the full Council by Dec. 31, 2024.

Senate Amendment 1 also provides greater geographic parity among members of the Diamond State Hospital Cost Review Board, streamlines the potential penalties for hospitals, directs the Board to develop regulations around the improvement plan process, and gives greater clarity around the budget information that hospitals must submit and the public hearings that must be held, among other changes.

“Based on the forthcoming Senate amendments to HB 350, the Delaware Healthcare Association stands neutral on HB 350 and will no longer actively oppose the bill at this time,” DHA President & CEO Brian Frazee wrote in a letter to the Delaware General Assembly on Monday.  “On behalf of our member hospitals, health systems and healthcare-related organizations, DHA appreciates the amendments that improve HB 350 made by Governor Carney’s administration, Speaker Longhurst, and Majority Leader Townsend.”