AN ACT TO AMEND TITLE 16 OF THE DELAWARE CODE RELATING TO HOSPITAL COSTS.

This Act creates the Diamond State Hospital Cost Review Board, which will be responsible for an annual review of hospital budgets and related financial information. The Board will have 7 members: 6 appointed by the Governor and confirmed by the Senate, and the Executive Director of the Delaware Healthcare Association. This Act creates a requirement that hospitals submit yearly budgets, audited financial statements, and related financial information to the Board for review. Where a hospital fails to meet the state’s budget benchmark for increases in hospital costs it is required to engage with the Board on a performance improvement plan. If the Board and the hospital cannot agree on an improvement plan or where the hospital fails to successfully implement a performance plan, the Board may require the hospital to have its future budget approved by the Board. The submission of hospital budget and financial information will begin in 2025 for calendar year 2026. In reviewing performance improvement plans or proposed budgets, the Board will consider adherence as closely to the spending benchmark as is reasonable given the hospital’s financial position and associated economic factors, the promotion of efficient and economic operations of the hospital, and maintenance of the hospital’s ability to meet its financial obligations and provide quality health care. As a temporary measure until the Board begins operations, hospitals are required to charge no more than 250% of Medicare costs to any payer for hospital services in calendar year 2025. This Substitute Bill incorporates all of the following changes which were incorporated into House Substitute No. 1 for House Bill No. 350: It provides additional detail regarding the operation of the Board, budget modifications, and provides an appeal right to the Superior Court. It changes the application of the definition of hospital to exclude psychiatric facilities. Because hospitals may have different fiscal years, the deadline for the Board to issue a final decision on a budget is changed to 90 days before the start of a hospital’s fiscal year rather than a fixed date. The confidentiality provisions for hospital records have been updated. Technical corrections have been made. In addition, House Substitute No. 2 contains the following changes: It adds a performance improvement plan process as an interim step prior to requiring a hospital to submit a proposed budget for approval or modification by the Board. With this change, the Board will only accept and review budget information in its first year of operation in 2025. In 2026, it may direct hospitals to submit a performance improvement plan. It exempts hospitals that are exclusively rehabilitative hospitals. It changes the composition of the Board as set forth above. It exempts hospitals who derive 45% or more of their revenue or whose patient population has 5% or less Medicare patients from the 2025 reference pricing provision. It extends the interim reference pricing period to include 2026 and prohibits balance billing in reference pricing period.