Colorado Medicaid Provider Fee

The Colorado Medicaid provider fee has improved access to health care for tens of thousands of Colorado’s most vulnerable citizens without drawing any money from Colorado’s General Fund. To date, the hospital-paid tax has enabled more than 65,000 previously uninsured Coloradans to receive health care coverage. By the time implementation of the Colorado Healthcare Affordability Act (the 2009 state legislation that created the provider fee) is complete, as many as 100,000 residents throughout the state are expected to benefit.

As of August 2012, the provider fee has funded the following Medicaid expansions:

• 38,961 parents at 60 to 100 percent of the federal poverty level (FPL)
• 452 pregnant women enrolled in Child Health Plan Plus (CHP+) at 205 to 250 percent FPL
• 13,731 children enrolled in CHP+ at 205 to 250 FPL
• 338 people with disabilities through a Medicaid buy-in program
• 9,652 adults without dependent children

How does it work?
The provider fee is assessed on hospitals by the State of Colorado. The resulting revenue is then used to draw a dollar-for-dollar federal match that is used to cover the uninsured by expanding eligibility for Medicaid and CHP+. The provider fee also increases the amount that providers are reimbursed for treating patients enrolled in Medicaid or the Colorado Indigent Care Program (CICP).

Who benefits?
The provider fee is a win-win-win because it provides medically underserved Coloradans with access to high-quality health care; reduces the amount of uncompensated care for hospitals; and does not draw upon state funds.

• Uninsured Coloradans: As many as 100,000 uninsured Coloradans will be able to access critically important preventive, primary and acute care services through Medicaid and CHP+ expansions.
• Hospitals: The provider fee increases hospital reimbursement rates and reduces the amount of uncompensated care by providing coverage for more previously uninsured patients. Medicaid payments to hospitals still fall short of the cost of providing them ($0.79 on the dollar in 2011, as opposed to $0.61 in 2008 prior to the enactment of the provider fee); however, the increased reimbursements have been instrumental in decreasing operational losses for hospitals.
• All Coloradans: Hospitals are forced to make up for shortfalls created by low reimbursement rates and treating uninsured patients by requiring higher payments from commercially insured patients, which in turn forces consumers to pay higher health insurance premiums. The provider fee helps reduce this “cost shift.”
• The Colorado state budget: The provider fee does not use any of the state’s tax revenue in its General Fund. While Medicaid enrollment has increased in Colorado over the past few years, this is due to a challenging economy and not a change in Medicaid eligibility. Additionally, from inception of the provider fee in July 2009 through September 2013, Colorado hospitals will have provided more than $170 million in General Fund relief via the provider fee.

Colorado hospitals provided nearly $1.7 billion in uncompensated care in 2009. The Colorado hospital provider fee has helped reduce levels of Medicaid and Colorado Indigent Care Program (CICP) underpayment by $237 million annually compared to 2009, but these improvements have been more than offset by more than $250 million in reductions to Medicare payments. Colorado hospitals are committed to increasing coverage and access to health care without increasing the burden on the state or its taxpayers. Click here to learn more about uncompensated care at Colorado hospitals and what it means for health care in our state.

For more information on the provider fee, visit the Colorado Department of Health Care Policy and Financing website.