Panel weighs changes to hospital budget review, debates treatment of primary-care revenue

A legislative committee on Jan. 26 reviewed proposed changes to the hospital budget review statute that would require the board to consider a statewide health care delivery plan, the health resource allocation plan (HRAP) and the financial operations of hospital networks, and debated whether to exclude revenue from primary care, mental-health and substance-use disorder treatment when calculating a hospital’s net patient revenue and any total cost-of-care targets.

The discussion matters because the board’s budget review and the state’s total cost-of-care framework guide how hospitals set prices and invest in services. Proponents of excluding those revenues said exclusion could encourage hospitals to expand primary care, mental-health and substance-use treatment without being penalized by revenue caps. Opponents said excluding that revenue would omit an important part of hospitals’ finances and could hide consolidation or other effects of hospitals acquiring primary-care practices.

Jen Carvey, legislative counsel from the Office of the Legislative Council, opened the committee’s review by summarizing where the draft adds a requirement that “the board must consider the statewide health care delivery plan once…