AG: hospital fees can be enterprise; money helps hospitals with Medicaid, indigent care

Published: February 29, 2016; Last modified: March 1, 2016 10:34PM
Colorado Attorney General Cynthia Coffman on Monday said that creating an enterprise designation for the hospital provider fee is constitutional. The program, which raised $1 billion in 2014-15, can be exempted from the Taxpayer’s Bill of Rights computations without violating the amendment.
Coffman’s announcement means she believes the program that collects fees from hospitals to draw matching federal dollars would meet the three tests needed to qualify as a “government-owned business” outside TABOR’s spending limits.

“I think it’s the right decision,” said Mike Baxter, Parkview Medical Center’s president and CEO, who has openly worried about cuts in federal funding coming back to Parkview. The money helps pay costs for uncompensated care. Hospitals pay into the fund. Parkview paid $27 million to the fund and received $43 million after the federal boost. St. Mary-Corwin Medical Center paid $14 million and received $27 million back, according to The Denver Post.

“We’re pleased with today’s opinion from the attorney general,” said Brian Moore, president and CEO of St. Mary-Corwin. “We have been in favor of moving the hospital provider fee to enterprise status in an effort to protect our ability to serve our community.”

Several Colorado medical centers, led by Skyridge Medical Center in Lone Tree, get back less than they put in the fund. In the reporting period, that institution put in $18.6 million and received almost $10 million back.

“I am very pleased that the attorney general — our state’s foremost legal authority — took the time to come out with a thoughtful, formal opinion that shows we have a constitutional means to pass a balanced budget that supports issues Coloradans care about, like our classrooms and our bridges and roads,” said state Sen. Leroy Garcia, D-Pueblo.

“The enterprise possibility was originally proposed by former AG (John) Suthers and now upheld by Attorney General Coffman. They are both Republicans,” Garcia said. Senate President Bill Cadman, R-El Paso County, has said he felt the fund was unconstitutional. Some Democrats feared a bill to create an enterprise would not get a fair Senate committee hearing or not make it to the Senate floor.

Cadman said late Monday Coffman’s statement is “another opinion. It says you can enterprise this, it doesn’t say whether you should enterprise this.”

State Sen. Larry Crowder, R-Alamosa, has said that six of the nine hospitals in his district could close without changes to hospital funding.

“We’re looking at 500,000 people in Colorado who are in jeopardy of losing health care when the federal government cuts back on supplemental Medicaid between 2017-2025,” he said. “It’s very different in rural Colorado than in other places. These hospitals need that money.”

Three of those hospitals are in the San Luis Valley. Rio Grande Hospital and Clinics in Del Norte, paid $407,000 into the fund and received $1.5 million; San Luis Valley Health Regional Medical Center in Alamosa paid a little more than $3 million and received $7.3 million; and Conejos County Hospital paid $199,000 and received almost $1.8 million.

Crowder presented a list of enterprise status exemptions, which include the Colorado Lottery, Correctional Industries, the Department of Wildlife, the State Fair Authority and state nursing homes.

“None of these has the relevance of health care,” Crowder said.

Speaker of the House Dickie Lee Hullinghorst, D-Boulder, said she is drafting a bill concerning the fees to introduce into the House.

In her statement, Coffman said, “Today’s formal opinion concerning Colorado’s Hospital Provider Fee is a thoroughly researched legal analysis based on the language of the constitution and informed by Colorado court interpretations of TABOR. It answers a narrow legal question and outlines the minimum requirements under current law to create a ‘government-owned business’ under TABOR.”

“While some may attempt to politicize this legal conclusion, my opinion is based solely on the law and its application to the facts,” she continued. “The debate over whether to create a Hospital Provider Fee enterprise can now shift back to the General Assembly.”

Her opinion differs from non-binding legal memo issued by the nonpartisan Legislative Legal Services, which found such a move may prove unconstitutional.

Republican lawmakers said the memo prevented consideration whether to reclassify the hospital provider fee. Many said it would erode TABOR protections. The constitutional provision requires the state to issue taxpayer refunds when revenue collections exceed the population-plus-inflation growth caps.

The hospital provider fee collected $689 million in the year that ended in September — one factor that pushed the state above the TABOR limits. The program provides health care to thousands of low-income Colorado residents and offers booster payments to hospitals to cover the cost of uncompensated care.

Gov. John Hickenlooper has said making the fees an enterprise was a top budget priority.

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