DENVER – The Colorado Hospital Association says the state budget for the fiscal year that starts this summer could cost state hospitals millions of dollars and have “devastating” effects on rural health care if a proposed fix doesn’t find support in the state Legislature.

The state budget has been the subject of most of the legislative debate at the state Capitol over the past few weeks – much of it centering on transportation and health care costs in trying to find a balanced budget.

But an analysis out Monday from the Colorado Hospital Association shows that the budget could have huge effects on health care across the state.

As the budget currently stands, it would cut $264 million from the Health Provider Fee, which hospitals pay to bring down hospital and health care fees for people on Medicaid and those without insurance.

The fees are redistributed after being matched by the feds through a formula that gives lower-income and Medicaid-receiving populations in Colorado a larger amount of money that providers in higher-income areas of the state.

When adding in matching funds from the federal government, which the state is due under its decision to expand Medicaid, the current budget as it stands would lead to a $528 million reduction to the HPF, according to the Colorado Hospital Association.

“In addition to potential closures, many hospitals in the state will have to consider layoffs, service line closures and delaying facility upgrades or service additions,” CHA said Monday.

The state budget writers say they need to cut money to the HPF this year in order to keep the budget under TABOR limits so they don’t have to issue taxpayer refunds, which they say would lead to cuts in other parts of the budget related to education and transportation.

The CHA’s analysis shows 80 percent of Colorado hospitals would see cuts this year – 13 of which would see reductions of at least $5 million, and six that would see cuts of at least $10 million.

Some of the most outstanding figures are as follows:

• Denver Health Medical Center would see cuts of $52.5 million;
• Children’s Hospital Colorado would see cuts of $17.3 million;
• Memorial Hospital would see cuts of $17.8 million
• University of Colorado Hospital would see cuts of $15.1 million

But CHA says the worst effects would be seen in rural hospitals, such as the Lincoln Community Hospital and Nursing Home, Kit Carson County Memorial Hospital, Montrose Memorial Hospital and San Luis Valley Regional Medical Center, which, among other rural health care facilities, face cuts of between a couple hundred thousand dollars and millions of dollars.

“Lincoln Community Hospital is the only hospital along a 160-mile stretch of I-70 and is the top employer in our 722-person town,” said Kevin Stansbury, the CEO of the Lincoln Community Hospital (Hugo). “The proposed cut to the Hospital Provider Fee would immediately move our hospital from operating in the black to operating in the red.”

“San Luis Valley Health Regional Medical Center is the only hospital that delivers babies in a five-county region in south-central Colorado and is the largest employer with more than 650 employees,” said Konnie Martin, the CEO of San Luis Valley Health, based in Alamosa. “This cut would mean that our hospital would lose more than $3.8 million this year. It will profoundly change the face of a rural community when you make these kinds of cuts, so we are hopeful that legislators will work together to get this deal done in this year’s session.”

The CHA says it is supporting a different bill that would modify state law keep the cuts from happening.

Senate Bill 267, which has bipartisan support from several Democrats and Republicans across the state, aims to make several changes to the state’s General Fund so as to help out rural Colorado.

It includes a provision that would move the HPF funds out of the General Fund so as that it is not subject to TABOR limits, which would be, at least, a temporary fix to the FY 2017-18 problem, according to the CHA.

The bill, if passed, would create a new board of governor appointees that would receive fees from hospitals and redistribute them similarly to how they are distributed under the HPF. It would, however, still be subject to review from federal Medicare and Medicaid programs as to its constitutionality. The current HPF would be eliminated.

“History will judge this legislature with acclaim or with embarrassment based on whether or not they finish the job of saving Colorado hospitals – by coming to consensus on a deal that passes SB 17-267,” said Steven Summer, president and CEO, CHA. “Failure is not an option for Colorado hospitals, communities, and the patients they serve. All legislators have a responsibility to those with so much riding on this issue. It’s time to put aside the antics and partisan speak and get this deal done.”

Senate Bill 267 is set for another hearing Tuesday in the Senate Appropriations Committee. It was amended in the Senate Finance Committee and referred back to appropriations on April 11.

The CHA says if the current budget is not amended, it will “immediately jeopardize the future of as many as a dozen Colorado hospitals.”