ChristianaCare and governor reach an agreement that pauses lawsuit

According to an executive summary, the Meyer Administration and ChristianaCare will work to establish a framework for legislation that addresses the issues. If not, litigation can resume if legislation is not enacted by Jan. 31, 2026.

Spotlight Delaware reported that legislators weren't part of the discussions between Meyer and Nevin.

Senate Majority Leader Bryan Townsend (D-Newark) said in a Spotlight Delaware interview  that that there are “questions” about the process used to reach the agreement.

He said when the bill was passed in 2024, it had support from groups including teachers, police officers and state employees who were frustrated with growing health care costs. 

When asked about the request to strip the board’s budget veto powers, Townsend pointed to an attempt by the legislature to remove it earlier this year. He claimed the hospitals opposed the changes, and said he believes it was “because it would have removed their leverage in a lawsuit.” 

Townsend, a corporate lawyer,  told Spotlight Delaware  the reason the legislature added that enforcement tool was because of the “little good faith” from the hospitals during the legislative process. 

The agreement will retain the Diamond State Hospital Cost Review Board but will remove its authority to approve or modify hospital budgets and limit salary information to upper level ChristianaCare officials like  Nevin who makes about $3 million a year as CEO of the hospital system, based on IRS filings.

The board will continue to review budgets, and ChristianaCare will be held to the annual Delaware Spending Benchmark.

 According to the Millbank Memorial Fund, except for 2020, health care spending growth has exceeded Delaware's benchmark every year since the program was established by executive order in 2018. The benchmark program identified hospital prices as the leading cost driver.

That growth led to the enactment of the controversial law, which established the budget review board. Some legislators were reportedly  unhappy at the time over the lack of financial  information on the hospital system's expansion outside of Delaware and whether that was affecting in-state operations.

Hospitals under the agreement  that don't meet the state benchmark must submit a Benchmark Compliance Plan. However, willing participation in proven practices that lower healthcare costs may exempt hospitals from the requirement.

 The agreement also calls for ChristianaCare to work with the state and other stakeholders to explore Delaware healthcare workforce loan forgiveness.

 Highlights

• The Diamond State Hospital Cost Review Board remains with the same membership and powers other than budget approval and modification powers. The governor will work with the Delaware Healthcare Association when sourcing future candidates for appointment to the board.

• Hospitals still must present budgets each year for benchmark review.

• Hospitals must submit detailed budget information, including financial, scope of services, utilization, and other relevant data, subject to a uniform reporting framework.

• Unless an exemption applies, if a hospital fails to meet the benchmark, it must present a plan detailing the efforts it will make to meet the benchmark. The board may require changes to the plan and will determine the following year whether the hospital has satisfied the plan's elements.

• Enforcement: Civil penalties of up to $500,000 for knowingly failing to comply with reporting standards remain in effect.

• The state board will evaluate hospitals based on actual budget information for the most recent year, rather than approving prospective ones.

•  Salary reporting is narrowed to officers, directors, key employees, and highest-compensated employees. Specific categories, such as per-service-line labor costs and three-year capital budgets, are no longer required to be reported on an annual basis.

• Benchmark Compliance Plans will start in 2027. Hospitals participating in qualifying cost-containment arrangements may be exempt.

• ChristianaCare's Delaware hospitals will enter into data use agreements with DHIN to provide claims data for employees, retirees, and dependents. The state will seek similar agreements with other hospitals.