DENVER — A bill that has been met with backlash from Colorado hospitals aims to limit how much money can be reimbursed to large, urban hospitals when treating patients who utilize the state employee health insurance plan and for small group health insurance policies.
The money the state saves would funnel into Federally Qualified Health Centers (FQHCs), also known as Community Health Centers. According to those supporting the legislation, 65% of FCHQs are "operating with negative margins."
House Bill 25-1174 was introduced in February. It has passed out of both the House Health and Human Services Committee and the House Appropriations Committee.
State Rep. Kyle Brown, District 12-D, is one of the prime sponsors.
"This bill is about making sure that we are protecting our safety net — our community health centers," Brown said. "We are making sure that they have the resources that they need to take care of the folks in our community that often have no ability to pay for their services, that don't have health insurance, and we're doing that by saving the state money and saving state employees money on their health insurance."
According to Brown, the bill would cap the state reimbursement at 165% of what Medicare pays for the same hospital services.
"The 300% of Medicare that a typical plan pays for hospital services far exceeds what is necessary for the hospital to not only cover their costs, but make a nice margin," Brown said. "The state employees are paying too much for services that we should be getting a better deal on, especially when you consider that there are 60,000 members in our state employee health plan."
Brown explained there are roughly 30,000 to 35,000 state employees, and combined with their dependents, the state health insurance plan accounts for an estimated 60,000 people.
"Right now, we aren't getting a very good deal on the services that hospitals are providing to our employees," Brown said. "We're going to get a better deal, and we're going to take that money and invest it in the places that need it the most, which is the safety net, the community health centers that are providing care for folks who have often lost health insurance coverage."
HB25-1174 exempts rural, smaller, or essential access hospitals, and certain sole community providers. According to Brown, the bill only impacts larger, urban health care systems that are running "good margins."
"We can continue to reimburse hospitals for the great service that they provide to our employees at a very competitive rate, and use the extra money left over to really support our safety net," Brown said. "This is an ounce of prevention that I hope is worth a pound of cure."
Brown explained the reason the bill bases reimbursement caps on a percentage of Medicare is because it is a standard metric of payment that can be used across the entire country and will be consistent from hospital to hospital.
"I think it's important to remember that the hospital industry is a $22 billion industry in Colorado," Brown said. "When we looked at providers in a difficult time — when folks, you know, over the last year, year and a half, many of them have lost their Medicaid coverage because of the end of the public health emergency — our community health centers are struggling most. We've seen closures... Hospitals, on the other hand, are bigger, have other revenue sources, have more commercial market sources of revenue, and so they have been able to weather the storm better."
According to Brown, the bill only impacts larger, urban health care systems that are running "good margins." Those in support of the bill estimate that, assuming Medicare pays only 73% of costs, "this bill pays 20% more than cost for hospital services."
Brown said similar policies have been implemented in Oregon and Montana.
"What is unique about this approach is that we are specifically applying the savings to something, and that thing is the safety net," Brown said. "This is definitely a long-term solution, right? This is about making sure that regardless of what happens at the federal level, that we will have the resources to support our safety net providers. These are vital parts of our community that, again, provide care regardless of anyone's ability to pay."
As Congress and Donald Trump attack our healthcare system and providers, our rural hospitals, safety net providers, and federally qualified health centers are especially vulnerable. This bill provides a lifeline to these important rural and safety net providers that Coloradans rely on every day for essential healthcare.
- Eric Maruyama, Spokesperson for Governor Jared Polis
Brown defined safety net providers as providing health care to the most vulnerable sections of Colorado's population.
"Yes, all of our hospitals take some Medicaid, all of our hospitals take some Medicare. Some of them have larger books of commercial business and therefore have more sustainable financial margins and finances in general because of their payer mix," Brown said. "If the federal government gets its way and cuts hundreds of billions of dollars out of the Medicaid budget — it's going to be hundreds of thousands of people in Colorado who are going to lose their coverage, who are going to be in the community health centers."
At the start of the COVID-19 pandemic, legislation was passed by Congress guaranteeing anyone enrolled in Medicaid would keep that coverage during the public health emergency. That continuous coverage ended in May of 2023.
The Medicaid Unwind in Colorado refers to the review of 1.8 million people who were members of Colorado's Medicaid program and the Child Health Plan Plus. The redetermination process started in 2023 and ended in 2024.
"I would say that we had significant challenges in the Medicaid Unwind," Brown said. "We lost more people during that period of time than just about any other state. I think many people nationally looked at Colorado and thought we did this pretty poorly."
According to the Colorado Health Policy Coalition, "the Medicaid Unwind in Colorado is substantially increasing costs to states, taxpayers, and eligible individuals." That same report states over 675,000 Coloradans were disenrolled from the program, with 65% of those losing coverage for procedural reasons and "not necessarily because they are ineligible for Medicaid."
"This bill is about creating sustainable funding for the safety net providers that got hurt the most in the Unwind, but also realizing that in these troubling budgetary times, especially when we have federal cuts coming, the folks and the providers that are going to be impacted the most by those cuts are our community health centers," Brown said. "They do not have sources of commercial insurance. They are reliant upon Medicaid predominantly."
Many hospital leaders in Colorado are staunchly opposed to HB25-1174.
Dr. Kristen Fiddes, who has loved science, medicine, and caring for people since before her nursing school graduation, will celebrate 25 years working in health care this July.
"I went and worked in critical care when I first graduated, and did that for 15 years. I loved being a bedside nurse," she said.
Now, Fiddes is the chief nursing officer at HCA HealthONE Mountain Ridge in Thornton.
"We... serve a pretty underserved community and population around us. We have some of the poorest zip codes right around this hospital that are in the Denver metro area," Fiddes said. "What this bill is really saying is if we have a patient that comes in that has insurance, then we have to cap what we can ask for reimbursement. And that really impacts us, because we do take care of a large population of Medicaid patients and uninsured patients."
Fiddes recently wrote an op-ed in The Denver Post, where she said she is "sounding the alarm" on HB25-1174.
"When a patient comes in who has Medicare— which is a large population of the hospital population because that's our aging population, right? — they're the ones that need most of the health care. We're not getting fully reimbursed for the services that we provide for them," Fiddes explained. "We're also providing safety net care, but we don't fall into that category of a government-supported health care entity."
Fiddes said charity care is offered to patients who cannot afford to pay for their medical care and who may be uninsured. According to Fiddes, the Thornton hospital has increased the amount of charity care dramatically since the Medicaid Unwind.
"We have doubled the amount of charity care that we've provided year over year between 2023 and 2024. So, for us to continue to care for the community, we still have to have a way that we are financially solvent. And so, that comes from patients with insurance," Fiddes said. "We provided $55 million in charity care in 2023, and in 2024 we provided $122 million in charity care. And I don't know what 2025 is going to look like in the end, but it's not going to go down, I can tell you that... We have to be able to take care of everyone, regardless of their ability to pay for it."
Fiddes said there will be a number of impacts on the hospital system if this bill were to become law.
"Right now, we're building onto the hospital. We're adding additional beds to the hospital, because we are at capacity every single day to provide care for the community, and we have to be able to reinvest back into the facility so we can continue to grow and add that space for more patients to come in. We would not be able to do that," Fiddes said. "Other things that could impact is not being able to get the equipment we need for the nurses to provide the care for the patients. We would not be able to recruit physicians in and pay physicians to provide the care for our patients."
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She said she believes there will also be impacts patients will feel from HB25-1174.
"The longer-term effects of that is if we then have to continue to cap the insurance, premiums are going to go up. What you pay out of pocket for your insurance is going to go up," Fiddes said. "As the uninsured person, your impact is, if I [the hospital] can't continue to grow the way we need to grow, then your ER wait times get longer."
Fiddes has a personal understanding of how the Medicaid Unwind in Colorado impacted the state — her own sister, Karen, lost her coverage during that time. Karen has Down syndrome.
"She's got chronic conditions, as most people with disabilities do, and had to pay out of pocket for medications and those kinds of things," Fiddes said. "Maybe this is overly simplistic — she has a permanent disability. She should always have health insurance, always."
It took five to six months for Fiddes to help her sister get her coverage back.
"She's one of the lucky ones, because she got it back. Like I said, there's still half a million plus people who haven't gotten it back and can't get care," Fiddes said. "They essentially doubled the amount of uninsured in the state of Colorado in like one fell swoop, really. It's hard to come back from that, unless you're going to give people insurance again."
Dr. Jim Caldwell, chief medical officer of UCHealth Parkview Medical Center, is frustrated with the bill.
"The impression that hospitals just make a ton of money is just not accurate in most cases... Currently, there are 70% of Colorado hospitals that have a negative operating margin, and those hospitals are currently having to look at significant cuts to service lines, or in some cases, even closing completely," Caldwell said. "These rate caps could have a catastrophic effect on them because their operating margin is so low or it's already negative, so it further pushes them in the direction of having to close or cut service lines."
According to Caldwell, UCHealth Parkview provides safety net care — but it is still considered a large hospital in an urban setting.
"Coming out of COVID, it was incredibly devastating to our bottom line. We had an incredibly negative operating margin, and we were facing having to close a lot of service lines," Caldwell explained. "We actually did have to close our inpatient behavioral health unit at a time when we absolutely needed behavioral health available to the community, but it's something that we had to do in order to stay open."
In 2023, Parkview Medical Center merged with UCHealth, and an approximate investment of $200 million into the Pueblo hospital was promised over the next decade. The hospital serves patients from 14 counties across Southern Colorado.
"We were luckily able to reach out to UCHealth at that time. We saw not only that we had a negative operating margin, but that it was just going to continue to get worse," Caldwell said. "If we had not been able to reach out to UCHealth, there would have been some even more significant decisions that we would have had to make, and it could have been up to and including, can Parkview survive?"
Caldwell said roughly 17% of Parkview patients use commercial insurance, and that the hospital primarily sees people on government health insurance plans or paying out of pocket.
"Medicare and Medicaid programs do not cover the cost of care, so we depend on that 17% of commercial insurers to help us be able to continue to serve this patient population," Caldwell said. "A small cap, small reduction, like is being proposed by this bill, can have catastrophic events, catastrophic results, for a hospital like Parkview."
When asked what solution Caldwell sees to the problem, he said the first and best fix would have been dealing with the Medicaid Unwind differently.
"Let's really look at some ideas that don't weaken the safety net in some areas in order to strengthen it in other areas...It's frustrating when you hear something like this. That just suggests that, you know, perhaps we have different motives, and that money is the motivator for these sorts of things, when it's really — we just want to be able to be here and taking care of patients," Caldwell said. "It's also just the wrong time for this, because we have a potential $800 billion on the table in federal Medicaid cuts."
The bill looks to create a feasibility study that would explore a similar reimbursement limit for local governments and school districts.
Brown is waiting for the bill to be scheduled for House floor work next, and if the Colorado House of Representatives passes HB25-1174 it will head to the State Senate next.
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