DELAWARE -The General Assembly is considering changes to the state’s hospital budget oversight law that would remove a key enforcement power while keeping most reporting and cost-control requirements in place.
Senate Bill 213 would amend the Hospital Budget Review Act, passed in 2024, which created the Diamond State Hospital Cost Review Board to increase transparency and accountability in hospital spending. Under the original law, hospitals are required to submit detailed budget and financial information to the board each year and meet the state’s healthcare spending benchmark.
The 2024 law also gave the board authority to approve or modify hospital budgets in advance if hospitals failed to meet spending targets — a provision that quickly drew legal challenge.
ChristianaCare, the state’s largest health system, filed a lawsuit in the Delaware Court of Chancery arguing that allowing a state board to approve or change hospital budgets violated the Delaware Constitution. The case raised broader questions about how far the state can go in regulating the finances of private, nonprofit hospitals.
On Sept. 30, 2025, the state and ChristianaCare reached an agreement to pause the lawsuit and outlined changes that would resolve the dispute without the state admitting wrongdoing. The bill now before lawmakers incorporates the terms of that agreement.
Under the revised law, the hospital cost review board would no longer have the power to prospectively approve or modify hospital budgets. Instead, the board would evaluate hospitals based on their actual spending and revenues from the most recent year.
Hospitals would still be required to submit extensive financial and operational information annually, including operating costs, revenues, assets, liabilities, service volumes and other data the board considers relevant. Hospitals would also have to explain year-over-year financial changes and describe steps they plan to take to meet the state’s spending benchmark.
The bill also requires the board to adopt a uniform reporting manual to ensure hospitals submit consistent information. Some reporting requirements would be narrowed, including salary disclosures, which would be limited to top executives and highest-paid employees. Other requirements, such as payer contract details and three-year capital budgets, would be eliminated.
The board would continue to determine each year whether hospitals meet the state’s healthcare spending benchmark. Under the new law, however, the board must issue written findings explaining whether a hospital met the benchmark, complied with any required corrective plan and participated in approved cost-control arrangements.
Starting in 2027, hospitals that exceed the benchmark would be required to submit a Benchmark Compliance Plan, outlining how they will reduce costs. The board would review and approve those plans and evaluate the following year whether hospitals met their commitments.
Hospitals that participate in certain cost-containment contracts with insurers or government payers — known as Meaningful Cost Containment Arrangements — could avoid submitting a compliance plan for that year. Those arrangements place hospitals at financial risk if they fail to control healthcare spending. Even so, hospitals would still have to report detailed financial information annually and remain subject to benchmark reviews.
Civil penalties of up to $500,000 for knowingly failing to comply with reporting requirements would remain in effect.
The bill is currently under review in the Senate’s Executive Committee.