A new fiscal note on House Bill 350, which would create a hospital review board, says it will cost about $1 million a year.
A new version of the bill that would create a board to oversee state hospital budgets would pay the chairman $40,000 a year and the six members at $35,000 a year. a total of $234,694 a year.
“For this analysis, average salary costs are assumed to be similar to those of other existing state boards and commissions,” the fiscal impact note says.
House Substitute No. 2 for House Bill No. 350 says the annual cost of the proposed Diamond State Hospital Cost Review Board would be about $1 million a year.
The bill, sponsored by House Speaker Valerie Longhurst, D-Bear, is set to come up today on the House floor, despite vehement opposition from hospitals.
They say one clause in it could threaten their agreement to be taxed at 3.58% on net revenues so that Delaware will qualify for about $100 million more in Medicaid money.
Hospital review board
Brian Frazee
The proposed board would be responsible for the review and approval of annual budgets of six statewide hospital systems.
It would include seven members, six appointed by the governor and confirmed by the Senate, and the executive director of the Delaware Healthcare Association.
The annual costs of the board are estimated at $890,127 for 2025, assuming nine months of operations, $942,228 for 2026 and $946,333 for 2027.
The state doesn’t estimate costs beyond three years in the fiscal notes accompanying legislation.
The board is expected to have an annual ongoing cost of $500,000 for contractual support to help review the budges, as well as two analysts whose salary and health insurance will be $201,210.
RELATED STORY: Hospital board bill could hurt $100 million Medicaid deal
Beyond the idea of having the government control the budgets of a nonprofit business, hospitals have warned that requirement in the bill to immediately limit hospitals to charging no more than 250% cuts into the revenues they agreed to fork over to get more federal Medicaid money.
Enacting that restriction would cause state hospitals to lose $360 million in revenues, said Brian Frazee, executive director of the Delaware Healthcare Association.
If HB 350 passes, it would cause hospital to overspend their deal by $80 million, he said.
Dropping the 250% requirement would solve the hospital’s problem in the Medicaid deal, he said.
As of Thursday afternoon, the requirement remains in the bill.
House Bill 350 would create the Diamond State board under the Department of Health and Social Services.
It will try to keep hospital budgets at or below increases of a state spending benchmark. Established in 2018, it was 3% to 3.8%, the amount tied to the state’s gross domestic product.
The state move comes at a time when healthcare costs are chewing through Delaware’s budget.
About $2 billion of its budget is allocated to healthcare costs, and the state’s health insurance premiums will rise by 27% this year, requiring an injection of an additional $39.5 million into its budget just to pay its share of those premium increases.
Longhurst has said she went after hospital because:
- Hospitals represent 42% of all healthcare costs in Delaware;
- Hospitals never met that benchmark, except for that first year of the pandemic;
- Inpatient and outpatient costs at Delaware hospitals totaled $3.5 billion in 2021, although hospitals tie that to patients seeking care they put off because of the pandemic;
- Delaware hospitals profit $2,006 per patient, a full 40.5% higher than the national average of $1,331.
Her bill is based on Vermont’s Green Mountain Care Board, which controls hospital budgets as well as insurance rate requests, budgets, accountable care organization budget and certification, capital projects requiring certificates of need and two major data sets.
For all that work, its chairman is paid $182,499, and board members are paid $121,680.
Betsy Price is a Wilmington freelance writer who has 40 years of experience, including 15 at The News Journal in Delaware.
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