The federal government has proposed a rule change that could eliminate Colorado’s ability to draw the federal Medicaid funds that support care for the uninsured at Denver Health, University of Colorado Hospital and 22 other safety-net hospitals in the state.
This proposal would be devastating to the state of Colorado. It would put at risk thousands of medically indigent patients in our state, cripple our safety-net system and create ripple effects on the entire Colorado hospital system, which is an $8 billion industry with 55,000 employees and payroll and benefits of more than $3 billion.
Our two public safety-net hospitals provided $439 million in charity care last year alone. For us, it was a substantial expense, representing a significant percentage of our operating budgets. In addition, we cared for the largest group of Medicaid patients, providing $420 million in services for which we received $192 million in Medicaid reimbursement.
The rule change, if it goes into effect on Sept. 1, would eliminate $75 million from Denver Health revenues and $35 million from University of Colorado Hospital revenues. Another $140 million in federal payments for hospitals throughout the state would disappear. In many of Colorado’s smaller towns, the hospital is the largest employer, so not only patients but employees and many local economies would be affected.
How would this happen?
Specifically, the Centers for Medicare and Medicaid Services (CMS) wants to change the definition of public hospitals and thus their ability to draw down “disproportionate share hospital” (DSH) funds and other Medicaid payments. DSH funds are available to public hospitals that serve a disproportionately high volume of uninsured patients.
The new definition would require that public hospitals have to have independent taxing authority. Even though Denver Health and University of Colorado Hospital are political subdivisions of the state of Colorado that operate as public entities, under the new rule the federal government would no longer consider them “public.” They could no longer access federal dollars as they have done for many years. Nor would many other Medicaid-dependent Colorado hospitals.
The burden would fall on states to make up the shortfall. Given Colorado’s budget constraints, it would be difficult, if not impossible, for the legislature to find ways to replace these federal funds with Colorado tax dollars.
Nationwide, this proposed rule would drain about $3.87 billion away from the health care system over the next five years but not provide any alternatives to caring for the nation’s 46 million uninsured, 770,000 of whom are in Colorado.
Many in health care throughout the U.S. are alarmed about what this ruinous proposal will do to the millions of uninsured patients who rely on safety-net institutions like ours. The safety nets must have these payments to remain financially viable.
Daniel Sisto of the Healthcare Association of New York called the rule a “remarkable leap backward to the stone age of health care.” The University of Colorado Hospital and Denver Health are jointly submitting a formal objection to CMS before March 19, when the agency will begin final deliberations about whether to implement the rule change on Sept. 1.
Our worry is that CMS, determined to help reduce the federal deficit, will opt to implement the change. After that, only Congress can stop it.
On recent visits to Washington, D.C., to express our alarm, we found that most of our state’s congressional delegation opposes the implementation of this CMS rule. To date, 226 congressional representatives and 43 senators have sent letters expressing concern, and a bill to place a moratorium on the process has been introduced. Tthe National Governors Association and the National Association of Counties also are opposing the rule.
Certainly, we all understand the need to improve our health systems and our current mechanisms of funding health care for the many working families who find themselves uninsured or underinsured. But changes in funding should improve, not hamper, our ability to provide high quality, efficient health care to all. We hope Coloradans will join us in opposing this rule and supporting a moratorium.
Bruce Schroffel is president and CEO of University of Colorado Hospital. Patty Gabow is CEO and medical director of Denver Health and Hospitals.
