The bill to create a hospital cost review board in Delaware clears its final legislative hurdle in the General Assembly.
The controversial legislation creating a politically-appointed board to approve hospital budgets clears the Delaware House for a second time after an amendment was added in the Senate.
The Diamond State Hospital Cost Review Board would annually review hospital budgets to ensure their compliance with the state’s healthcare spending benchmark in an effort to curb rising healthcare costs.
Republican lawmakers have expressed their strong opposition to the bill throughout the month-long debate, raising concerns of governmental overreach and the strain it puts on hospitals to comply with the spending benchmark without addressing other healthcare entities like pharmaceutical and insurance companies.
During the bill's final debate on the House Floor Tuesday, Republican lawmakers brought up a new concern, arguing that allowing a state-appointed board to override a board of directors requires a two-thirds vote per the Delaware Constitution.
The General Assembly has only required a simple majority in voting on this bill.
As written, the bill currently amends a section of the Delaware Code related to the Delaware Health Care Commission, which only requires a simple majority of both chambers to become a law.
But Republican representatives brought up that under Delaware General Corporation Law, corporations "shall be managed by or under the direction of a board of directors."
They went on to argue that by allowing the hospital cost review board to "impose" a new budget on hospitals if the fail to repeatedly meet the benchmark, the review board would then become a managing entity of hospitals.
Per the Delaware Constitution, "No general incorporation law, nor any special act of incorporation, shall be enacted without the concurrence of two-thirds of all the members elected to each House of the General Assembly."
Democratic House Attorney Lantz disagreed with the intention of the bill being to vest a state board with managerial authority over the budget of hospital corporations.
"It's a regulatory board performing a regulatory function. There are other boards that manage industries that do something — not exactly the same — but similar, and I would also point out that this is not actually even the last step in this process. There is the opportunity to appeal," Lantz said.
Republican House Attorney Ron Smith disagreed, saying giving power to the hospital cost review board to override a board of directors alters what's written in corporation law.
“Nothing here is requiring a two-thirds vote, you could pass a general law, but if it’s overriding the board of directors – if it is amending anything specific in the charter – it is a two-thirds bill," Smith said.
Director of the Division of Research Mark Cutrona explains the bill would have to be legally challenged to determine if a two-thirds vote is needed.
“Somebody would have to challenge this, would have to argue that it did not receive the required constitutional vote, and then a court of law could determine that the procedure here did not meet the constitutional requirements," Cutrona explained.
A healthcare system would have to file a legal complaint against the bill if they felt it should have received a two-thirds majority.
The bill ultimately passed on a near party-line simple majority vote and now heads to Gov. John Carney, who has pledged to sign it.
