Legislation would provide coverage to more than 100,000 uninsured Coloradans
Gov. Bill Ritter today announced new legislation that would provide health coverage to more than 100,000 uninsured Colorado citizens and families while also addressing cost-shifting that increases expenses on the insured and private businesses.
The Colorado Healthcare Affordability Act, which will be designated as House Bill 1293, would allow Colorado to leverage state funds to draw down additional federal funds to provide coverage to more than 100,000 uninsured Coloradans. The proposal also would help stem the rising cost of health insurance for businesses and families by addressing cost-shifting, one of the key drivers of rising costs, without increasing the burden on taxpayers.
“Roughly 800,000 Coloradans, including 180,000 children, currently lack health insurance,” Gov. Ritter said. “Over the past two years, we’ve launched a Building Blocks to Healthcare Reform strategy. The Colorado Healthcare Affordability Act gives us an opportunity to continue that progress, and to make major strides at a time when more and more families are struggling just to keep food on the table.”
By assessing a provider fee on hospitals, Colorado would generate an additional $600 million a year to provide coverage to the uninsured, and receive $600 million in federal matching funds. The combined $1.2 billion would cover more than 100,000 currently uninsured Coloradans through Medicaid and the Child Health Plan Plus. The funds also would improve hospital reimbursement rates for service provided through Medicaid and the Colorado Indigent Care Program (CICP).
“Annually, Colorado hospitals incur more than $375 million in uncompensated costs by serving Medicaid patients because they receive less than 55 percent of total costs for treating Coloradans in need,” said Colorado Hospital Association (CHA) President and CEO Steven Summer. CHA represents 90 hospitals and health systems throughout Colorado. “We are committed to expanding access to affordable healthcare services for those most at risk.”
The bill will be sponsored by the Joint Budget Committee, the bipartisan group of legislators that is responsible for setting the state budget each year.
Sen. Moe Keller (D-Wheat Ridge), chair of the committee and one of the bill sponsors, said “This proposal will expand coverage to more than 100,000 uninsured Coloradans and create an opportunity for the state to reform and modernize the way payment rates are set for hospitals, creating a more rational and transparent hospital payment structure.”
More than 40 states have implemented this type of strategy for health programs, including more than 20 states that have hospital provider fees. Colorado passed a similar law with nursing home providers in 2008 (House Bill 08-1114, which was co-sponsored by then-Rep. Al White (R-Hayden) and Sen. Jim Isgar (D-Hesperus)).
“Uninsured patients and Medicaid underpayment to hospitals are two of the primary drivers of cost-shifting in healthcare,” said JBC member and bill sponsor Rep. Don Marostica (R-Loveland). “This legislation will allow us to cover a significant portion of the uninsured and reduce the rate of rising healthcare costs all across the state.”
Rep. Jim Riesberg (D-Greeley), one of the lead sponsors, is Chairman of the House Health and Human Services Committee. He said, “With the help of hospitals statewide, Colorado can draw down federal funds at a dollar-for-dollar match to provide coverage to more than 100,000 Coloradans. This is the most vital healthcare expansion we’ve made in years. Especially in this time of economic crisis, to be able to expand coverage for the most vulnerable among us is a crucial and ingenious step to keeping healthcare affordable for everyone.”
The Colorado Hospital Association, the Department of Health Care Policy and Financing and the Governor’s Office have been working together for more than nine months to develop the proposal.
If approved by the legislature, the plan will be submitted to the federal Centers for Medicare and Medicaid Services (CMS) for final approval.
SUPPORT FOR THE COLORADO HEALTHCARE AFFORDABILITY ACT
American Academy of Pediatrics
Business Health Forum
Chronic Care Collaborative
Colorado Academy of Family Physicians
Colorado Association of Commerce and Industry
Colorado Association of Health Plans
Colorado Center on Law and Policy
Colorado Children’s Health Advocates
Colorado Consumer Health Initiative
Colorado Community Health Network
Colorado Health Foundation
Colorado Medical Society
Colorado Nurses Association
Colorado Voices for Coverage Coalition
Downtown Denver Inc.
Grand Junction Chamber
Rocky Mountain Health Plans
San LuisValley HMO
FAST FACTS ABOUT THE COLORADO HEALTHCARE AFFORDABILITY ACT
The Challenge: Nearly 800,000 Coloradans, including 180,000 children, lack healthcare coverage. With the economy in a recession and unemployment rising, the number of uninsured citizens only threatens to increase. This will place a greater demand on taxpayers, private employers, hospitals, emergency rooms and all public health providers, at a time when revenues and resources are declining.
The Opportunity: With the help of hospitals statewide, Colorado can leverage state funds to draw down federal funds at a dollar-for-dollar match to provide coverage to more than 100,000 Coloradans. More than 40 states utilize this financing strategy, including 20 states that assess a provider fee on hospitals. Colorado enacted this strategy with nursing homes in 2008 through House Bill 1114.
The Proposal: Use revenue from a new hospital provider fee, plus the increased federal matching funds, to:
o Cover more than 100,000 uninsured Coloradans through Medicaid and CHP+
o Increase hospital reimbursement rates under Medicaid and the Colorado Indigent Care Program (CICP)
o Pay the administrative costs of implementing the program
Increasing coverage and reimbursement will reduce uncompensated care and address one of the key drivers of cost-shifting to the private sector and the insured. It will help stem rising costs for everyone, and do it in a way that doesn’t increase costs to taxpayers or consumers. This proposal will also create an opportunity for the state to reform and modernize the way payment rates are set for hospitals, creating a more rational and transparent hospital payment structure.
The Numbers: The fee assessed on Colorado hospitals will generate approximately $600 million a year for the state. That new revenue will be used to drawn down an equal amount in federal funds, for total new revenue of approximately $1.2 billion annually.
The Benefits: This is a tremendous opportunity to provide coverage for the uninsured, address cost- shifting and make substantive progress towards healthcare reform.
People of Colorado – More than 100,000 additional Coloradans will be eligible for coverage through Medicaid and CHP+. Privately insured and self-pay Coloradans, as well as private employers, benefit from reductions in uncompensated care that contributes to cost shifting.
Colorado Hospitals – Benefit from increased Medicaid and CICP rates, which allows them to continue providing care to Medicaid and CHP+ clients. In the last year, Colorado hospitals treated nearly 80,000 individuals covered by Medicaid and CICP.
All Healthcare Providers – Benefit from the 100,000 additional Coloradans who will now be able to access the healthcare system with Medicaid coverage.
The State of Colorado – Benefits from the approximately $600 million of new federal revenue gained without spending any general funds.
QUESTIONS AND ANSWERS ABOUT THE COLORADO HEALTHCARE AFFORDABILITY ACT
How will the money be used?
This new revenue can be used for only three purposes: (1) providing coverage to the uninsured by expanding eligibility for Medicaid and CHP+; (2) increasing hospital reimbursement rates under Medicaid and CICP; and (3) covering administrative costs of HCPF for implementing the program.
Proposed public insurance program expansions
· Medicaid expansions for parents and childless adults up to 100% FPL
· CHP+ expansions for kids and pregnant women up to 250% FPL
· Buy-in program for disabled adults and kids up to 400% FPL
· Continuous eligibility for Medicaid children
Proposed hospital payment increases
· Reimbursement for Medicaid inpatient and outpatient care will be increased to the upper payment limit (UPL), which is the maximum allowable reimbursement under Medicaid. This rate is still below what it costs a hospital to treat a Medicaid patient.
· CICP reimbursement will be increased up to 100% of cost.
Won’t the hospitals just shift the fee onto insurers and consumers?
No. Today, care for uninsured patients and Medicaid underpayment to hospitals are two of the primary drivers of cost-shifting in healthcare. This proposal will increase hospital reimbursement rates, cover a significant portion of the uninsured and thereby reduce the cost shift.
Provisions are included in the legislation to ensure that the provider fee is not shifted onto patients or insurers. Line item billing of the hospital provider fee will be prohibited. There are also transparency requirement that include an annual accounting of provider fees paid by each hospital and projected revenue to each hospital in the form of new Medicaid and CICP payments.
If we do nothing, the cost-shift will continue to grow. This is our best hope to increase coverage for the uninsured, address Medicaid underpayment and cost-shifting.
Why is a hospital rate increase needed under Medicaid and CICP?
Annually, Colorado hospitals incur more than $375 million in uncompensated costs by serving Medicaid patients because hospitals receive less than 55% of total costs for treating Medicaid patients. By increasing hospital reimbursement rates and covering the uninsured, we will reduce the rate of rising healthcare costs.