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A huge state health care expansion

ColoradoBiz Staff //April 15, 2010//

A huge state health care expansion

ColoradoBiz Staff //April 15, 2010//

A new fee charged at most hospitals across Colorado will pay for a massive expansion of health insurance for people with low incomes.

The fee, approved by the Centers for Medicare and Medicaid Services, represents one of the biggest improvements in recent history to access to affordable health care for all Coloradans. It will enable the state to extend Medicaid eligibility, starting May 1, to more than 100,000 additional Colorado citizens and lawful residents, and simultaneously give hospitals a financial boost by decreasing substantially the amount of uncompensated care they provide.

Assessing hospitals the “provider fee” will yield an estimated $600 million statewide. The federal government will match that money, giving Colorado $1.2 billion to expand health access to people with low incomes and cut hospitals’ uncompensated care.

The amount of the fee is set by a formula that accounts for variables at each hospital such as the number of in-patient and out-patient days. Hospitals will remit fees to the state, which will use the revenue to draw down funds from the federal government and then redistribute the money to hospitals and state agencies.

By design, some hospitals with relatively low levels of uncompensated care will see a net decrease in revenue as a result of the fee, while hospitals with high rates of uncompensated care will see a net increase. One way the fee will give hospitals incentives to see more uncompensated patients is by increasing hospital reimbursement under the Colorado Indigent Care Program from an average payment of 33 cents on the dollar to close to the cost of providing care.

State lawmakers established the hospital provider fee last year with House Bill 09-1293. Gov. Bill Ritter signed the bill on April 21, 2009. The Colorado Center on Law and Policy, which advocates on behalf of low- and moderate-income Coloradans, has been monitoring implementation closely.

Starting May 1, the fee will allow Colorado to expand eligibility for parents, children and pregnant women in Medicaid and CHP+. These expansions are expected to cover about 20,000 additional people this year, according to projections made when the bill passed.

Additional expansions, to be accomplished by 2012, include for the first time making low-income, childless adults eligible for Medicaid, implementing a program that allows disabled adults at higher income levels to buy in to Medicaid, and streamlining Medicaid enrollment so it is easier for eligible people to receive continuous care.

“This couldn’t be more timely”, said Elisabeth Arenales, health care program director at the Colorado Center on Law and Policy. “Not only will people in desperate need of health care get services, but Colorado is now well positioned to implement federal health care reform as a result of these expansions.”

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