Delaware has some of the highest healthcare costs in the country, and Senate Bill 1 is exactly the kind of reform our state needs.
SB1 strengthens primary care while finally addressing one of the biggest drivers of high insurance premiums: hospital pricing that has been allowed to rise far above national benchmarks.
A key provision would cap certain hospital reimbursements at 250% of Medicare rates for state-regulated plans. That still leaves hospitals well above federal payment levels, but it prevents the extreme price variation that currently drives up costs for patients, employers, and taxpayers.
At the same time, the bill invests more in primary care, which is the part of the healthcare system that actually keeps people healthy and prevents expensive hospitalizations later.
Critics from hospital systems claim the bill threatens access or quality. But the reality is that Delaware’s current system is unsustainable. Prices are already among the highest in the nation, and without reform those costs will continue to climb.
SB 1 does three important things:
• Puts reasonable limits on excessive hospital pricing
• Strengthens primary care so people get treated earlier (and reducing costs!)
• Creates a more level playing field for independent physicians and rural providers
Other states have already implemented similar payment reforms with success. Delaware now needs to do the same.
If hospital systems respond with lawsuits again, that shouldn’t stop lawmakers from doing what’s right for patients. Lower costs, stronger primary care, and a fairer healthcare market are worth fighting for.
Please contact your legislator now and ask them to support SB1. Do it today.
Addendum: Letter to MSD Members asking them to contact legislators to support SB1
TO: Members of the Medical Society of Delaware, Physician Colleagues, and Health Care Partners:
We are asking all physicians and their staff (independent as well as employed by hospitals and other organizations) to support SB1, the bill just introduced to increase access to care by increasing the primary care investment in Delaware.
Most of us know that Delaware is one of the worst states in the country to practice primary care, and few graduating primary care residents want to practice in Delaware due to the very poor reimbursements to physicians in independent practice.
You may remember that in 2021 Delaware passed a law (SB 120) to improve this problem by increasing the investment in primary care. The goal was to gradually increase the percent of total health expenditures spent on primary care to 11.5%, which is widely accepted in the US and across the world as the minimum required for a well-functioning health care system. While this law has been helpful, it has not been sufficient, for two reasons.
First, the law allowed the insurance companies to decide which primary care physicians to pay this extra money to, and who do not pay any extra. They ended up paying extra to hospitals and to some physicians in ACOs, but did not increase payments to most independent physicians, including all independent pediatricians in the state. Their reason was that these physicians were not in their “performance improvement programs.” The reality is that the payers did not offer any such programs to independent physicians.
The second problem is that even for those physicians who received extra payments, these payments were only applied to about 10% of patients, those who were in “fully insured” commercial plans. It did not include Medicaid or any large employers. That is because that law as written applied only to commercial payers and required them to apply the law only to the small percentage of their beneficiaries who were “fully insured.”
Through years of collaboration and discussion, SB1 is designed to address these two problems.
First, it requires all commercial and Medicaid payers to offer “performance improvement programs” to ALL primary care physicians in the state, and to pay the higher payments to all who accept.
Second, while it still does not require all large employers who are self-insured to participate (since no state can require that), it includes the largest employer in Delaware – the state employee group (which the state does have jurisdiction over).
When state employees and Medicaid recipients are added to the fully insured patients already covered, it will increase the percent of a physician’s population to 40-50% instead of 10%. This bill will have a large positive impact on payments to primary care in Delaware and thereby help sustain the primary care workforce in Delaware and, therefore improve access and quality for our patients.
Given the large positive impact of SB1, you may be wondering why many of us have received communications from the hospitals asking us to oppose SB1.
The reason is that in order to pay for the increased investment in primary care, the bill limits the overpayments that hospitals receive from payers. SB 1 limits what hospitals can receive for their services to 250% of Medicare rates. As you know, independent physicians receive on average 100% of Medicare rates, if they’re lucky.
You might think that it is pretty good deal for hospitals to get paid two and a half times what physicians receive for the same services. But remember, these hospitals are used to getting much more than that. That’s why they are unhappy about this bill.
You can decide if reducing hospital payments to two and a half times what physicians get is reasonable in order to increase the primary care workforce in Delaware and improve access to care for our patients.
We hope you support this bill by contacting your legislators.
Dr Bob, Brain Mechanic 