GOP frets as Dems push provider fee bill

By Richard Haugh
THE COLORADO STATESMAN

A proposal to generate $1.2 billion in additional funding for Colorado’s Medicaid program by assessing a fee on hospitals has passed two committees and is on its way back to the House Appropriations Committee for further consideration.

House Bill 1293, sponsored by Reps. Jim Riesberg, D-Greeley, and Mark Ferrandino, D-Denver, and by Sen. Moe Keller, D-Wheat Ridge, was presented at a March 13 meeting of the House Health and Human Services Committee.

At the meeting, skeptical Republicans grilled the bill’s sponsors, hospital industry executives and state health care leaders. The legislators questioned whether the bill would prevent hospitals from shifting the fee onto insurance companies, whether hospitals serving more affluent areas would be hurt by the fee and whether the bill runs afoul of the Taxpayer Bill of Rights (TABOR).

Under the so-called provider fee bill being proposed, most hospitals in the state will be assessed a fee. The fee has yet to be determined, but has been widely quoted at between 2.7 percent and 3 percent of hospital net revenue.

The money collected from each hospital will be pooled and used to draw down matching funds from the federal Medicaid program. The resulting money — as much as $1.2 billion, by some estimates — would be used to expand health coverage for the uninsured through the state Medicaid and Child Health Plan Plus (CHP-Plus) programs. It also would provide enhanced funding for the current Medicaid system and for the Colorado Indigent Care Program (CICP).

Steven Summer, president and CEO of the Colorado Hospital Association, testified at the hearing that hospitals are forced to shift more than $375 million each year in uncompensated costs, largely because hospitals are paid less than 55 percent of what it costs to treat Medicaid patients and because they treat patients who are uninsured and can’t pay.

Last year, Colorado hospitals treated about 80,000 people covered by Medicaid and CICP. To make up shortfalls, hospitals pass those costs on to insurance companies and individuals.

Rep. Spencer Swalm, R-Centennial, asked Summer whether hospitals will just pass the fee along to insurers, thereby raising costs for everyone. Swalm said a similar bill concerning nursing homes that passed in last year’s legislative session contained similar restrictive provisions, but the fee was passed on anyway.

Summer said provisions in the bill assure that hospitals won’t be allowed to include any amount of the provider fee as a separate line item on bills. Hospitals also will be required to provide a detailed yearly report to the state, and an oversight committee appointed by the governor will keep tabs on the program.

Swalm wasn’t convinced.

“This fee is, in fact, going to be paid by the hospital. I don’t see how it’s not going to be passed on to patients in one way or another,” he said. “I feel like we’re voting on a pig in a poke here.”

Summer said when there’s more money in the pot specifically designated for treating Medicaid patients and the uninsured, providers will have less need to pass on costs.

Swalm also questioned whether some hospitals will fare better under the bill than others. Hospitals in more affluent areas will have to pay the
fee, but may receive much less money in return than hospitals that serve more uninsured and Medicaid patients, he said.

“How can I vote on a bill that might end up costing my constituents, without any opportunity for them to vote on what’s basically going to be a tax increase?” he said.

Summer declined to address Swalm’s question, but said later that all the state’s hospitals are comfortable with the bill’s provisions and are willing to accept them.

Rep. Cheri Gerou, R-Evergreen, asked whether the bill raises TABOR issues. She questioned Ferrandino about provisions of federal law that permit provider fees but call them “permissible health-care related taxes.”

“This is a tricky thing. We’re going from ‘taxes’ to ‘fees,’” she said. “I’m concerned about the use of the word ‘fee’ when it’s actually a tax.”

Ferrandino said the federal government requires that provider fees be used to directly benefit Medicaid clients. He said the Joint Budget Committee and the Colorado Legislative Legal Services office looked at TABOR implications and determined that the fee is permissible because it is mandated specifically for use in Medicaid funding.

“The fact that the (law) says ‘tax,’ I don’t think is relevant,” he said. “Under TABOR, this is seen as a fee — an appropriate fee.”

Gerou was unconvinced.

“I stand on the definition that you’re in fact collecting a tax, and not a fee,” she asserted.

After a hearing that stretched into the evening, the committee voted 5-4 along party lines to move the bill to the House Committee on Finance. On Monday, the House Finance Committee voted to send the bill back to the House Appropriations Committee for further consideration.

Rick@coloradostatesman.com