Finance Committee approves provider fee bill
The biggest bill of the session, which could free up millions of dollars for rural hospitals, schools and roads, cleared its first and one of its most important hurdles in the past week.
It’s been at least three years in the making. But were it not for the major backing of northeastern Colorado’s two lawmakers, it wouldn’t have happened at all.
Senate Bill 17-267, sponsored in the Senate by its number two legislator, Sen. Jerry Sonnenberg of Sterling, and in the House by Rep. Jon Becker of Fort Morgan, would reclassify the hospital provider fee into an enterprise, also known as a government-owned business. It’s a mechanism allowed under the Taxpayer’s Bill of Rights. Under TABOR, a government-owned business is how the state looks at money that is generated for a specific purpose. It’s already in place for things like college tuition, or hunting and fishing licenses and entrance fees paid at state parks, for example.
Currently, the money generated by the provider fee program counts as state general fund revenue under TABOR, along with personal and corporate income tax and sales tax. But the provider fee, which brings in about $700 million per year, is pushing the state over its spending limits, which is also part of TABOR. When that happens, the money that exceeds the limit is refunded to taxpayers. This year, that’s expected to be about $286 million.
Reclassifying the fee would take it out from under that spending limit.
Why this matters: for the 2016-17 state budget, hospitals were told to cut back on the amount of money they sent in. The fee works like this: hospitals pay a fee to the Department of Health Care Policy and Financing based on the number of overnight patient stays and outpatients services. That money is pooled and then matched with federal dollars on an almost dollar-for-dollar basis. It’s then redistributed to the hospitals, with more going to those that provide health services to low-income Coloradans, primarily to pay for Medicaid for those residents.
In 2016-17, the provider fee revenue was reduced by about $78 million. To the hospitals, especially rural ones that depend on that support, it translated into a cut of $156 million. That was too much for some to absorb. They simply could not have another year like that.
Sonnenberg’s senate district, which stretches from the Wyoming-Colorado border to Cheyenne and Kit Carson counties, has 11 counties and 11 rural hospitals. According to Sonnenberg, last year’s cut put two of those hospitals into so dire a situation that administrators began planning for closure. He won’t say which two.
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