Provider fee, federal health care reform reviewed at capitol

The Colorado Statesman

The hospital provider fee bill passed by the General Assembly two years ago has provided access to health care for 30,000 uninsured Coloradans, and reduced the financial burden on hospitals that cover the medically indigent.

Despite that glowing report from the Colorado Hospital Association Tuesday, a former physician-turned-legislator wants to eliminate the provider fee because “it’s a tax” borne by taxpayers.

Tuesday’s report on the outcomes from House Bill 09-1293 was presented to the House Health and Environment Committee, whose members include Rep. Janak Joshi, R-Colorado Springs. Joshi’s first bill as a legislator is HB 11-1025, which seeks to repeal the 2009 legislation.

HB 1293 was supported by Colorado’s hospitals, according to CHA President Steve Summer. Under the bill, the state assesses a fee to hospitals; that money is matched by the federal government on a dollar-for-dollar basis and then used to increase access to healthcare for uninsured Coloradans, and to reduce uncompensated care provided by the hospitals. Eventually, the revenue should provide money to cover Medicaid and CHP+ access for up to 100,000 uninsured Coloradans, according to a CHA fact sheet. By law, the cost of the provider fee cannot be passed along to the insured, according to the CHA.

Colorado hospitals covered more than $1.7 billion in uncompensated or undercompensated care in 2009, according to Summer. Those costs are shifted to the insured or to the business community, he said. HB 1293 brings in additional dollars for additional access to Medicaid at no cost to the state’s general fund, Summer explained. And all of the Medicaid expansion has been covered by the provider fee, Summer told the committee.

Before the provider fee law was passed, hospitals had to cover about 44 percent of the costs for their Medicaid patients; after the fee, that unreimbursed cost dropped down to 29.5 percent. In addition, almost one-third of the hospitals that operated in the red in 2009 were able to operate in the black in 2010, due to the revenue from the provider fee.

“I don’t know where we would have been without it,” said Peg Burnett, chief financial officer for Denver Health. The hospital would have had to cut staffing without it in 2010, and she called the fee “essential to the survival of the safety net in Colorado.”

The panel acknowledged that not every hospital gets revenue from the provider fee, in response to a question from Joshi. “Who are the winners and losers?” he asked. Tom Nash of CHA said 83 hospitals pay into the program, and 70 get money back. The 13 that didn’t get money lost about $7 million, he said. The biggest winner is Denver Health, but they also serve a “disproportionate share of uninsured and Medicaid patients,” Nash said.

“It’s not a fee, it’s a tax,” Joshi told The Colorado Statesman after the hearing. He explained that the only reason Colorado decided to get into the provider fee business was because of the federal match, which he said eventually will go away. For every dollar Colorado sends to Washington, he said, the state gets less than a dollar back. “It costs more to us,” he said.

As to the 30,000 people now covered because of the Medicaid expansion allowed under the provider fee, Joshi said that some of those people are at 300 percent of the poverty level. And Joshi said the goal of getting 100,000 people into the expansion is the wrong goal. “The state should not be setting goals by numbers, but by need,” he said.

After the hearing, Summer told The Statesman that repealing the provider fee “doesn’t make sense in this economy.” He explained that 30 other states are taking advantage of the federal match, and that Colorado was “late to the game” in getting its legislation passed and the match started.

“There’s much more dire need” for Medicaid services in the wake of the recession, he said, and with the provider fee Colorado has been able to cover 47 percent more people under Medicaid than before the bill was passed. He estimated that 600,000 Coloradans are now covered under Medicaid and CHP+.

The chances that HB 1025 will get the last vote it needs, from Gov. John Hickenlooper, are virtually nil. In his State of the State address last week, Hickenlooper voiced his support for the provider fee, calling it one of the ways the state has improved its health care system while reducing its financial burden for primary care.

The committee also met with Lorez Meinhold, director of implementation for Colorado on federal health care reform. Meinhold discussed the status of setting up the state’s health care exchange and timelines for full implementation of the Affordable Care Act. To date, the state has gotten “10 to 12” federal grants, totaling $100 million, to finance the research and design for the exchange. Rep. Jim Kerr, R-Littleton, asked how the state will handle the employees hired to work on the exchange set-up if the lawsuits challenging the constitutionality of the federal law are successful. Meinhold replied that all the employees working under the grants, including Director Joan Henneberry, are contract employees and only employed through the life of the grants.

Marianne@coloradostatesman.com