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Senate committee reviews settlement rewrite of HB 350 to preserve hospital transparency, drop budget-approval power
Summary
Senate Bill 2 13 (SB213) was presented as a settlement-driven rewrite of House Bill 350 that keeps annual public reporting, benchmark reviews and penalties (up to $500,000) but removes the board's prospective power to modify or approve hospital budgets; supporters and hospital representatives endorsed the transparency-focused approach, and committee members pressed for clarity on definitions, MCCAs and the backward-looking benchmark.
Senate Bill 2 13, introduced to the Senate Executive Committee, is a settlement-based rewrite that seeks to preserve most of House Bill 350’s transparency and oversight tools while carving out the contested power for the board to prospectively modify or approve hospital budgets.
Andy Lipstone, retained counsel for the governor, told the committee the rewrite was negotiated after the court declined to dismiss certain constitutional claims challenging HB 350 and that the settlement is designed to retain the law’s structure while removing the provisions that raised constitutional concerns. "The governor believes Senate Bill 2 13 achieves that goal and it in fact keeps the overwhelming majority of House Bill 3 50," Lipstone said.
Under SB213 hospitals still must present detailed, annual financial and utilization information to the Diamond State Hospital Cost Review Board in a public process. If a hospital misses the state's spending benchmark, the board may require a benchmark compliance plan that explains the causes of growth and specific corrective steps; hospitals have 45 days to submit the plan. Civil penalties of up to $500,000 remain available for knowing failures to comply with reporting obligations. The bill removes the prospective budget-approval and modification authority that spurred litigation under HB350, replacing that remedy with enhanced reporting, public hearings and written findings of fact.
Committee members sought clarity about how meaningful cost containment arrangements (MCCAs) operate and how the board would evaluate whether an MCCA provides adequate enforcement and would therefore justify exemption from certain triggers. Senator Manzanvinos asked whether settlement talks were initiated by one side or mutual and whether the legislature had been consulted during negotiations; Lipstone said settlement discussions began after the court's decision on a motion to dismiss and that negotiations culminated in a term sheet around Labor Day.
Committee members also questioned whether a backward-looking review (the board evaluates actual expenditures from the most recently completed fiscal year rather than prospective budgets) would be effective at controlling future costs and how that change interacts with insurer rate-setting. Lipstone and other presenters said the bill intentionally mirrors aspects of Massachusetts’ approach — public disclosure, accountability and follow-up rather than direct state control of budgets — and that it retains significant board discretion in evaluating benchmark compliance plans.
Brian Frazee of the Delaware Healthcare Association testified in support, called the bill collaborative and said hospitals were committed to working with state leaders "to move forward together." The transcript does not record a committee vote on SB213 during this meeting.
If enacted, SB213 would continue annual public hearings and require the board to issue written findings of fact each year, while removing the prospective budget-approval mechanism that the court found potentially vulnerable to constitutional challenge.
