State bill could prevent $528 million funding loss, closing of rural hospitals
May 8, 2017
The proposed law to dodge major budget cuts to Colorado's rural hospitals continues to briskly make its way through the state assembly ahead of the legislative session's Wednesday close, passing through the Senate Monday by a vote of 25-10.
Titled "Sustainability of Rural Colorado," Senate Bill 17-267 includes a number of complex provisions. Among them are redefining the origin of funds spent on roads and highways over the next few years, designating a specific amount for rural infrastructural projects, in addition to providing more money for smaller school districts like Summit through a marijuana tax hike, and also requiring state departments to roll budgets back next year by at least 2 percent from the current fiscal year.
However, and perhaps of greatest consequence, the bipartisan piece of legislation would also basically reimagine a vital funding stream for medical centers known as the hospital provider fee. Under the current system, the state imposes a charge on these providers based on the revenues they generate to help offset the cost of care for both uninsured and Medicaid patients throughout the state.
The collected fees are first used to obtain a financial match from the federal government. That total pot is then redistributed to Colorado's medical centers according to each provider's percentage of low-income patients who are covered through Medicaid because those reimbursements are smaller than from private insurers.
This plan to assist hospitals with growing expenses was adopted in 2009 and took effect the following spring. The problem, though, is these proceeds are counted toward the state's annual revenues, and as the economy has stabilized following those recession years, much of it today is required for refund back to citizens because of the existing cap per the Taxpayer Bill of Rights, otherwise known as TABOR.
If this structure were to persist as first designed, it would result in the state's hospitals losing an estimated $264 million next year. Once the federal match is added in, it's closer to $528 million. A dozen hospitals in some of Colorado's more sparsely populated communities warned they might be forced to close.
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"The most vulnerable are the small, rural hospitals across the state," said Paul Chodkowski, CEO of Centura Health's St. Anthony Summit Medical Center in Frisco. "It would require dramatic changes that would be incredibly significant to those hospitals, because of the higher percentage of Medicaid there, and they're reliant on that revenue."
Without a revamp, Summit's St. Anthony anticipates upwards of $1 million in missed revenues. Kremmling Memorial Hospital and St. Vincent General, in neighboring Grand and Lake counties and also managed by Centura, would expect losses of about $1 million and $550,000, respectively.
A Centura representative previously told the Summit Daily the vanishing of that income could impact its level of services, from emergency and trauma care to resources for childbirth. Meanwhile, Chodkowski — who specifically oversees operations at the three regional hospitals — said he didn't have a set game plan, given he's instead focused efforts on helping find a legislative solution before the cuts become necessary.
To avoid future state repayment protocols, the bill includes language that creates an exemption from TABOR revenues, which some opponents said is unconstitutional. As part of the compromise to gain additional bipartisan support, bill authors agreed to reduce that prior TABOR cap by $200 million, in turn creating a lower threshold for returning monies to state taxpayers.
Just to get to the Senate floor, the bill called for some legislative maneuvering that pitted conservative against conservative. Bill sponsors, Sens. Jerry Sonnenberg, R-Sterling, and minority leader Lucia Guzman, D-Denver, had to build enough Republican support to get it past outspoken critic — and appropriations committee chair — Sen. Kevin Lundberg, R-Berthoud. After doing so successfully, it forced a committee hearing Lundberg did not intend to hold and the eventual floor vote.
Bill co-sponsors, Reps. Jon Becker, R-Sterling, and majority leader KC Becker, D-Boulder, (no relation) now shepherd it into the House. Others on that side of the state house say they are happy to see the proposed law arrive for their inspection.
"I'm very pleased that compromises were reached," said Rep. Millie Hamner, D-Summit/Pitkin. "It looks very optimistic that this bill will pass. Many of my colleagues were not excited to vote for hospital cuts, and I think that this bill is coming at exactly the right time."
The bill starts with review by both the House finance and appropriations committees and then initial readings on the floor late into Monday night as lawmakers race the clock for passage by Wednesday's deadline. With all boxes checked, it could receive a full House vote as early as Tuesday morning, and — barring any changes that would require it be sent back to the Senate — if passed, from there the bill would go to Gov. John Hickenlooper for signing.
For now, supporters are just focused on the next step, not the end game.
"We'll see tomorrow," said Chodkowski. "The session is ending, so we've got to get it through."