AN ACT TO AMEND TITLE 16, TITLE 18, TITLE 29, AND TITLE 31 OF THE DELAWARE CODE, AND CHAPTER 237, VOLUME 83 OF THE LAWS OF DELAWARE, RELATING TO PRIMARY CARE SERVICES.

Section 1 of the Act amends § 9903 of Title 16 of the Delaware Code to provide that the Health Care Commission, in coordination with the Primary Care Reform Collaborative, will monitor compliance of primary care providers with value-based care delivery models established under the Office of Value-Based Health Care Delivery (OVBHCD).

Section 2 of the Act amends § 9904A of Title 16 to remove a time frame limitation for the period during which the Health Care Commission is authorized to request written reports by health insurers regarding progress in adopting and implementing value-based payment models. Under the Act, the PCRC may continue to request such reporting going forward.

Section 3 of the Act amends § 329 of Title 18 to provide that administrative penalties for violations of §2503(a)(12), §2503(a)(15), § 3342B, and § 3556A of Title 18 may be equivalent to the amount of the violation, and that penalties imposed for such violations are to be deposited into a Primary Care Fund, which will be used by the Statewide Benefits Office and the Division of Medicaid and Medical Assistance.

Section 4 of the Act amends § 334 of Title 18 to clarify that the OVBHCD has the ability to promulgate regulations necessary to accomplish the stated goals of reducing health-care costs by increasing the availability of high quality, cost-efficient health insurance products that have stable, predictable, and affordable rates.

Section 5 of the Act amends § 2503 of Title 18 to extend current cost containment calculations to rate filing year 2027. Given their relative size and patient populations within Delaware's health care market, Delaware's two smallest hospitals and lone free-standing children's hospital are exempt from that extension. In rate filing year 2028 and thereafter, the Act specifies that costs per service for health benefit plans may not exceed certain Medicare Reference-Based Pricing Targets, which are based on the “Full Medicare rate,” meaning the applicable wage-adjusted base Medicare rate for different services, the Free-Standing Children’s Hospital Medicare outpatient payment rate, or the TEFRA Rate, meaning the target amount under the federal Tax Equity and Fiscal Responsibility Act (TEFRA) Waiver Program applicable to Free-Standing Children's Hospitals, unless certain exemptions apply. Those exemptions are for Delaware's two smallest hospitals and, if making progress with value-based care, for a Delaware hospital in a high-growth, high-Medicare population region. Carriers issuing plans in the commercial market for 2 consecutive years and that cover more than 5,000 members must meet minimum percentages of alternative payment model contracting, as specified.

Section 6 of the Act amends § 3342B of Title 18 concerning primary care coverage offered by individual insurance plans. Under the Act, starting in 2026, carriers must spend at least 11.5% of their total cost of medical care on primary care, at least 5% of which must be via prospective primary care management payments. Carriers must offer value-based care programs and may not deny contracted providers the opportunity to participate in an offered value-based care program. In addition, the Commissioner is required to issue regulations regarding the calculation of total cost of care.

Section 7 of the Act applies the same changes as Section 6 of the Act to § 3556A of Title 18, concerning primary care coverage offered by group insurance plans.

Section 8 of the Act deletes a sunsetting clause contained in Section 14, Chapter 237, Volume 83 of the Laws of Delaware, which would have repealed § 2503(a)(12)a., § 3442B(b)(3), and § 3556A(b)(3) of title 18, effective January 1, 2027.

Section 9 of the Act amends § 5204 of Title 29 to provide that health-insurance coverage for public officers and employees shall be provided by a carrier whose cost per service may not exceed certain Medicare Reference-Based Pricing Targets, which are based on the Full Medicare rate, the Free-Standing Children's Hospital Medicare outpatient payment rate, or the TEFRA Rate, unless certain exemptions apply. Those exemptions are for Delaware's two smallest hospitals and, if making progress with value-based care, for a Delaware hospital in a high-growth, high-Medicare population region. In addition, Section 9 of the Act specifies that coverage shall be provided by a carrier offering value-based care programs equivalent to the commercial market requirements.

Section 10 of the Act amends §5224 of Title 29 concerning primary care coverage of insurance coverage for public officers and employees, to require plans to report data to the OVBHCD on the percentage of primary care spending as a percentage of total medical costs for plan years 2027 and 2028 and to increase spending on primary care by 1% per year thereafter until primary care spending reaches 11.5% of total medical costs.

Section 11 of the Act creates §539 of Title 31, concerning state public assistance, to require entities providing health insurance under § 505(3) to report data on the percentage of primary care spending as a percentage of total medical costs for 2 plan years and, in subsequent years, increase primary care spending by 1% until primary care spending reaches 11.5% of total medical costs.

Section 12 of the Act provides that the Department of Insurance shall promulgate regulations pursuant to the Act within 18 months of enactment, but shall promulgate regulations on or before January 1, 2027 establishing a methodology to determine any appropriate annual inflationary or other applicable adjustments to a hospital's Full Medicare Rate.

Like Senate Substitute No. 1 for Senate Bill No. 1, this Act differs from Senate Bill No. 1 in that it bases the limits for costs per service for health benefit plans on Medicare Reference-Based Pricing Targets, which may differ based on whether the services are outpatient services, inpatient hospital services, or emergency department services, and on whether the services are being provided by a Free-Standing Children's Hospital; under Senate Bill No. 1, the limits for cost-per-service were based on a percentage of Medicare reimbursement for comparable services. In addition, this Act provides more guidance regarding the application of exemptions from those limits.

In addition, Senate Substitute No. 2 for Senate Bill No. 1 differs from Senate Bill No. 1 in that it makes technical edits to definitions and it provides that the Department of Insurance and the State Employee Benefits Office shall lead a process, in consultation with Delaware hospitals, to recommend an appropriate methodology to determine and apply any inflationary or other applicable adjustments to a hospital's Full Medicare Rate not otherwise captured in a hospital's annual Medicare rate update by January 1, 2027. Senate Substitute No. 2 for Senate Bill No. 1 also adds an exemption from the aggregate unit price growth limits in § 2503(a)(12)a.3. of Title 18 for a hospital that is a Free-Standing Children's Hospital, a hospital that qualifies as a Medicare-Dependent Rural Hospital on the grounds that it meets the definition of a Medicare-dependent hospital under 42 C.F.R. § 412.108 for at least 3 of the 5 years immediately preceding the applicable rate filing year, or an Urban Medicaid DSH Hospital.