The controversial Diamond State Hospital Cost Review Board (DSHCRB) holds its first meeting as it awaits potential legislative changes and forthcoming legal decisions.
The DSHCRB was legislatively created last year as an effort by the General Assembly to curb Delaware’s rising healthcare costs.
The politically appointed board is tasked with reviewing hospital budgets and ensuring they adhere closely to a set annual healthcare spending benchmark — a requirement that has drawn fierce opposition from the healthcare community.
Since the healthcare benchmark's inception in 2019, the healthcare industry has only fallen bellow the target spending mark once in 2020 during the COVID-19 pandemic.
Aside from 2020, total healthcare spend for Delaware has almost doubled the benchmark annually, if not tripled it.
While hospital spend makes up roughly 42% of total healthcare expenditures in the First State, opponents of the DSHCRB argue it only holds one piece of the puzzle accountable to a benchmark that is comprised of multiple other factors, such as prescription drug spend.
ChristianaCare is suing the state for “infringing on its fundamental constitutional rights” and argues the act “imposes unlawful and discriminatory price caps for hospital services.”
The state is currently awaiting a decision from the Court of Chancery on whether or not it will dismiss the case, which is expected by May 31.
The board's first meeting was largely spent on member introductions and reviewing the guidelines outlined in the legislation.
Delaware Healthcare Association President and CEO Brian Frazee, who is a non-voting member of the board, continues to attest the board will ultimately cause hospitals to flounder and questions the lack of clarity around the board’s role.
“My reaction to the first meeting is that I think it really showed the lack of stakeholder process in standing something like this up. You know, there were a lot of questions around timelines and other logistics around the legislation and a lot of confusion around some of those things," he said.
ChristianaCare and Frazee call the process "draconian," arguing requiring hospitals to turn over their books of business to the board and having it assess whether the entities adhere close enough to the spending benchmark steps into private governance of one of the state's largest private sector employers.
Under the legislation, — known as HB 350 — if a hospital's annual cost growth surpasses the spending benchmark, the DSHCRB may require the submission of a Performance Improvement Plan within 45 days.
If a hospital successfully meets its budget goals for three consecutive years, it may no longer be required to participate in the budget approval process.
While the board is finding its bearings, the General Assembly has implemented temporary pricing caps, prohibiting hospitals from charging 2% more than the previous year’s rates or greater than the Core Consumer Price Index (CPI) plus 1% over the previous year's rates.
Those caps are in place for 2025 and 2026 — the board is expected to begin the budget review process in 2026.
While Frazee says hospitals have been managing under those caps thus far, he remains concerned about these restraints and future caps under the authority of the board, especially when paired with potential federal funding cuts on the horizon.
“With the looming federal cuts to Medicaid, we are standing together to fight against those because they would have a devastating impact on the people and communities we serve, and those are the issues that we really should be focusing on and really focus on solutions that will ensure that we have affordable, quality, accessible and equitable healthcare here in the First State," Frazee said.
Frazee says he is in talks with the legislature on making some changes to the board’s abilities but says no promises have been made and those potential tweaks have not yet been publicly disclosed.
The board is also still in the process of solidifying its membership.
While former Gov. John Carney's five appointments have been approved by the Senate, Gov. Matt Meyer's appointments underwent their first confirmation hearing March 12.
Nominees Gary Ferguson and Thomas Sweeney are both former ChristianaCare employees — Ferguson a retired executive vice president and chief operating officer and Sweeney a retired emergency physician.
The two nominees received minimal questioning from the Senate Executive Committee. If approved, they will still need to receive a majority vote from the full State Senate.
While Democrats hold a supermajority in the State Senate, Republicans opted to abstain from confirming Gov. Carney's nominees due to the ongoing lawsuit.
