Lawmakers target $50 million from hospital fees to fill budget gap

By Katie McCrimmon

Colorado lawmakers are targeting $50 million from the hospital provider fee to fund Medicaid spikes as the state faces a billion-dollar budget shortfall this year.

The themes of this years legislative session will likely be creative budget dances like the dip into the provider fee, and cuts, cuts and more cuts. Lawmakers must balance the budget and are considering slashing everything from the popular school breakfast program for poor children to pet programs for veterans, the unemployed and other interest groups.

During a Joint Budget Committee briefing with both the Senate and House health committees last week, Rep. Cheri Gerou, R-Evergreen, said some of us are not sleeping at night as lawmakers contemplate cuts. She urged fellow lawmakers to hunt for their own methods to trim the budget and ferret out government-funded health programs that dont work.

The biggest health care bill coming in the 2011 session will be the one that establishes Colorados health exchange, the centerpiece of the new federal Affordable Care Act. Colorado is planning a statewide exchange, which will be a health insurance marketplace where individuals and small businesses can shop for insurance options by 2014.

This year, the state legislature will set up the framework for the exchange and appoint an oversight board. Tension is building now in Colorados split legislature; so far, the exchange bill doesnt appear to be controversial. But watch for sharp divisions of opinion down the road as everyone from health companies and insurance brokers to advocates for the poor fights for a piece of the exchange action.

Solutions gives you an introduction to health-related bills on deck so far.

The Hospital Provider Fee: eradicate it or use it as a piggy bank?

The 2011 session opened with newly-elected Rep. Janek Joshi, a Republican former physician from Colorado Springs, firing a shot for budget slashers. Joshi introduced HB-11-1025, a bill to eradicate the hospital provider because he sees it as a tax and is concerned about the ballooning federal deficit.

The provider fee law passed in Colorado in 2009. Under it, hospitals throughout the state pay fees, which the federal government then matches. The money then flows back to the hospitals to fund care for the poor and to boost enrollment in public health programs for poor adults, pregnant women and children.

So far, Colorados Department of Health Care Policy and Financing estimates that the provider fee generated more than $146 million in new federal funds for Fiscal Year 2009-2010. Its expected to result in more than $159 million in federal money for the current fiscal year. When the law is fully implemented, hospitals in Colorado will pay about $600 million annually and the federal government will provide an equal match, bringing $1.2 billion into the program.

For now, the Colorado Hospital Association has signed on to a plan to use $50 million from the provider fees this year and $25 million next year to help counteract hikes in Medicaid costs. The fees would draw the federal match, bringing a total of $100 million this year and $50 million next year.

This plan would require new legislation that has not been introduced yet.

Former Gov. Bill Ritters budget experts hatched the plan. Gov. John Hickenlooper has spoken out in support of the hospital provider fee in general, but hasnt commented on the specific maneuvers being considered now.

Steven Summer, president and CEO of the Colorado Hospital Association, said tapping excess money from the provider fees makes sense.

Our board of trustees and members believe that when you have a billion dollar deficit, everybody has a responsibility in fixing that, Summer said. For a defined period of time and a defined dollar amount, it can help pay for the growth in Medicaid.

Aside from Rep. Joshi, most other lawmakers on both sides of the aisle seem to like the provider fee and are eager to find solutions to budget problems, which are especially severe in the health arena.

Costs for Colorados Medicaid program have risen over $1 billion from 2007 to 2010. The increases stem primarily from a 41 percent spike in the number of people needing Medicaid and a 47 percent increase in the number of clients in the Childrens Basic Health Plan.

Colorados Medicaid program serves low-income elderly people and disabled adults and children. While the majority of the clients in the program are children, the majority of expenditures go towared programs for the elderly and the disabled.

Sen. Betty Boyd, D-Lakewood, chair of the Senates Health and Human Services Committee, supports tapping the $50 million from the provider fee.

The hospitals have come forward and they are willing to do this. With the tight times were in, I dont think we should pass up this opportunity. Lets be good stewards of this money, Boyd said.

So far, the fee has added about 30,000 previously uninsured people to Colorados Medicaid rolls and it has helped Colorado hospitals bear the burden of caring for the indigent.

In all, Summer said Colorado hospitals covered more than $1.7 billion in uncompensated care in 2009. Before passage of the hospital provider fee program, hospitals had to cover 44 percent of the costs for Medicaid patients. That number has dropped to about 29 percent and many more hospitals are able to operate in the black now they have funds from the federal match.

The fact that the provider fee can bring federal money to the state during an economic crisis means that Joshis bill may never get out of committee. Stay tuned.

Colorados new health exchange

While national politicians continue to debate the new health law, Colorado lawmakers are moving forward to implement it. Democrats in the governors office and the statehouse are working to find a Republican sponsor in the House to build bipartisan support for Colorados new health exchange.

Sen. Boyd, is sponsoring the legislation and said a draft of the measure should be complete by Feb. 10.

Were setting up a framework and the process for putting the board together so they can get started on the creation of the health exchange, Boyd said.

She anticipates that the board will have nine members. The legislature will then authorize the board to map out the details of the health exchange. They will do this under the direction of Joan Henneberry, Hickenloopers architect for the health exchange, who will be based at the Colorado Health Institute as the exchange takes shape.

Boyd said the legislation will prevent people with conflicts of interest from serving on the board. So, for instance, current health insurance executives or insurance brokers would not be allowed on the board, although they could serve on advisory committees.

Perhaps a retiree would be fine, said Boyd But we are being cautious about current conflicts of interest.

Lorez Meinhold, Hickenloopers director of health reform implementation, said there is consensus among stakeholders that Colorado should have one statewide exchange. It will need to gear up to serve about 300,000 people.

While working previously for Ritter, Meinhold released a roadmap on health care implementation and results of community forums on health care called Stakeholder Perspectives.

Dede De Percin, executive director for the Colorado Consumer Health Initiative, said the health exchange will be like an online shopping mall for health insurance. She hopes the exchange will give consumers choice and competitive pricing.

Once you build the exchange, if you know that you have four basic plans, then youll be able to find out about the insurance carriers, service, and value, de Percin said. It should give small insurance companies the chance to be more competitive.

She said Republicans, including President Bush, pioneered the concept of a competitive insurance marketplace, so it shouldnt be difficult to get Colorados GOP lawmakers on board.

I think theres a lot of common ground and that well be able to move forward, de Percin said.

The health exchange will continue to take shape over the next two years, requiring new legislation each year.

We expect that it will be an incremental process, said Ben Price, executive director for the Colorado Association of Health Plans. What we really need in Colorado this year is a bill that enables the state to start working on the exchange. Were lucky we have a few years to work out all the issues.

Curbing concussions and making hospitals safer

Among the other health issues likely to emerge in the legislature:

  • Reducing harm from concussions in youth sports. SB 11-040 would require coaches to attend training sessions on concussions and get immediate medical care for student athletes who have suffered concussions.
  • Increasing physical activity in schools. Lawmakers have introduced HB 11-1069 which would require school boards and charter schools to set minimum minutes for physical activity each week.
  • HB 11-1019 would eliminate copayments at school-based health clinics.
  • SB 11-008 would eliminate the stair step problem for low-income families by increasing Medicaid eligibility for children ages 6 to 19 to match the income eligibility for pregnant women and children ages 5 and under.
  • SB 11-019 allows small businesses with fewer than 50 employees to reimburse employees for health insurance premiums.
  • Not yet introduced: a bill may emerge to thwart violence in hospitals. It may be similar to last years Senate Joint Resolution 10-035.
  • Not yet introduced: a bill to boost patient safety by requiring hospitals to share information about disciplined employees. This issue emerged after a surgical nurse at Rose Medical Center infected patients with Hepatitis C when she replaced clean syringes with dirty ones while stealing Fentanyl.
  • Not yet introduced: Colorado will need to make sure state health laws conform with the new federal health law.