2003 KEY STATE LEGISLATIVE SUCCESSES AND PRIORITIES

While each session of the General Assembly has unique and defining issues to address, this session was truly remarkable due to the broad fiscal impacts to the state budget instituted this year and affecting future state expenditures as well. The full effect of TABOR was experienced as the Joint Budget Committee and the legislature struggled with large revenue shortfalls, mandated budget growth and constitutional spending limits. Health care providers will feel the indirect consequences of these fiscal decisions and legislative actions in multiple ways.

While the Medicaid program experienced a budget increase, primarily due to caseload growth; provider reimbursement remained unchanged. Nonetheless, by stripping Medicaid eligibility for legal immigrants and CHIP+ eligibility for prenatal care for expectant mothers, as well as capping CHIP+ enrollment, providers will experience the resulting increase in uncompensated care and bad debt.

Other changes to state funded health programs occurred with SB 03-268, Tobacco Litigation Settlement Fund, which eliminated tobacco research dollars and reduced monies available for tobacco prevention and education. Although SB 03-112, Modification to Program for the Medially Indigent, was primarily budget neutral, it did affect certain health care providers as the payment formula was modified.

Health care coverage and auto insurance will undergo significant change over the ensuing months. After ten years of community rating of premiums for small group coverage, HB 03-1164, Expanding Access to Insurance, removed this provision and reintroduces health status and claims experience as premium rating factors for employer groups with less than 51 employees. This bill also institutes a pilot program for small employer groups to band together for group purchasing of health care coverage through Multiple Employer Welfare Arrangements (MEWAs). CHA was able to use this bill as a vehicle to assure covered entities, as defined by federal HIPAA regulations, are able to conduct treatment, payment and operational duties without violating patient privacy or theft of medical information statutes.

Radical change to auto insurance resulted due to the inability to modify the No Fault auto insurance statutes slated for repeal July 1, 2003. Colorado will now join the 37 other states under tort based auto insurance coverage. Personal Injury Protection coverage will expire with the No Fault statute exposing health carriers and health care providers to the cost of care previously covered by this mandated coverage. HB 1188, Compulsory Insurance for Motor Vehicles, outlines the new minimum liability coverage required. It is yet unknown what types of optional medical payment coverage options will be offered in the marketplace and whether purchasers will find value in these optional policies.

On another front, Colorado further strengthened its sound medical malpractice statutes through a package of three tort reform bills: HB 03-1007, Limitation of Non-economic Damages; HB 03-1012, Corporate Practice of Medicine; and HB 03-1232, Inadmissibility of Admissions. Collectively, these bills reinstated the legislative intent in the areas of non-economic damage recoveries and the corporate practice of medicine; while also establishing some protection for provider/patient communication related to unexpected medical outcomes.

CHA was successful in moving forward, modifying, and defeating several measures addressing various aspects of health care operations and administration.

• HB 03-1255, Enhancement of Patient Safety, was initiated by CHA to secure confidentiality of information passed on to aggregators for the purposes of analysis and compilation of patient safety information.
• SB 03-015, Patient Disclosure of Estimated Charges, was amended from its introduced form to ease the administrative burden it would have imposed.
• HB 03-1355, Health Care Whistleblower Protection and HB 03-1364, Hospital Nursing Staff Ratios were introduced and defeated in the last few weeks of the session.

The Government Relations program is one of CHAs most valuable services to its members. However, its success depends on hospital CEOs relationships and access to their own state and federal legislators and CEOs personal grass roots advocacy with them. It is also crucial for CEOs to be involved in advocacy through CHAs Council on Legislation, Board of Trustees, and communications with CHA staff on issues affecting you or issues you would like to see pursued. You are strongly encouraged to make involvement in state and federal advocacy a continuing priority. It is crucial to hospitals viability and ability to serve their communities.

2002 KEY STATE LEGISLATIVE SUCCESSES AND PRIORITIES

As anticipated, the split partisanship of the Colorado House (Republican) and Senate (Democrat), combined with a new congressional seat and redistricting and decisive upcoming elections, led to numerous political face-offs on key issues. Some of the major confrontations included transportation funding, education funding, judicial funding and health care. Interestingly, the partisan issue in health care was partly who would get recognized as being the most innovative in addressing Medicaid, prescription drug availability and expanded access to insurance coverage. Compromises ultimately came, but not until the last few days of session and the personal lobbying efforts of the Governor.

Looming high above other issues was the billion-dollar shortage in state revenues - a shortage that is continuing. This shortage resulted in across-the-board reductions for the current state fiscal year and in dramatic budget cuts and reductions for the 2002-03 state fiscal year. Most all new capital construction projects are eliminated, including controlled maintenance, the state reserve funds are being tapped, and additional across-the-board reductions implemented. New programs were rare and often depended upon grants and donations. In contrast however, the Governor and legislative Joint Budget Committee determined to retain funding levels for major programs, including specifically Medicaid and K-12 education, in order to avoid an increasing funding gap between service demands and available funds. If the base funding was reduced this one year, the gap could not be made up even with future increased state revenues because of constitutional spending limitations on general fund increases under TABOR.

Given the gloomy state fiscal picture, Medicaid providers are fortunate to be receiving a 1% inflationary increase. This, coupled with utilization and case load increases, resulted in a total "medical services premium" (Medicaid) increase of 8.7%, in spite of the overall state limitation of 6% and the fact that the Department of Health Care Policy and Financing has the second largest state budget at $2.7 billion.

Several issues topped the health care agenda. These included:

• Expanded Access to Health Insurance. (HB 02-1003) House Majority Leader Rep. Lola Spradley (R) and Sen. Bob Hagedorn (D) sponsored this bill that ultimately became an omnibus bill containing the substance of several other bills. The key component being the inclusion of four forms of high deductible small group health benefit designs that a small group carrier may select when offering a "basic" health plan. Other provisions include out-of-area coverage by HMOs, nursing shortage studies, Medicaid disease management, a pilot program on direct provider contracting with the state, and (again) a major health systems interim study.
• Enhanced "prompt payment" provisions for health claims. (SB 02-13) The new provisions specify the uniform claim form and necessary elements, require next day receipt for electronic claims, provide for prior payment when charge audits are conducted, and increase the penalty for late payment.
• Limitations on retroactive claim adjustments. (HB 02-1353) This Act will generally prohibit a carrier, and provider, from retroactively adjusting claims more than 12 months old, and 36 months old for federal claims, and from denying eligibility if previously verified.
• Public/Private health care partnerships. (SCR 1) This is a proposed constitutional amendment CHA initiated and that was on the statewide ballot in 1998. It has returned; this time originating from an interim legislative committee addressing rural access to care. If approved by voters, it will allow public hospitals to directly joint venture with private persons and entities for the provision of health services.
• Prenatal and postpartum care. (HB 02-1155) This Act will provide for prenatal and postpartum care for pregnant women who are not Medicaid eligible under the Children's Basic Health Plan. Funding is to come from tobacco settlement funds.
• Nursing workforce issues. (SB 02-134 and HB 02-1003) Various aspects of the nursing shortage are addressed in HB 02-1003 as mentioned above. These provisions were originally contained in SB 02-134, however, CHA ultimately had to oppose and defeat SB 02-134 due to the inclusion of employer restrictions on nurse staffing decisions regarding overtime.

• Auto no-fault extension. (SB 02-90) CHA strongly opposed HB 02-1351 which would have totally revised auto insurance laws and required no coverage for medical expenses in certain cases. That bill would have also extended the scheduled repeal of the auto no-fault laws on July 1, 2002. While several bills proposed to extend the law, SB 02-90 was the ultimate selection to do so after it was totally amended from its original purpose.
• Child passenger restraints. (HB 02-1070) Critical in this Act is the inclusion of requiring a booster seat for children four to six years of age and less than fifty-five inches tall.
• Medicaid managed care revisions. (HB 02-1292) This act was initiated to protected the state from future litigation from managed care organizations over capitation rates and to give the Department of Health Care Policy and Financing more flexibility in managing the Medicaid program. Among other changes, it removes the requirement that the managed care program cover seventy-five percent of the Medicaid population.

The Government Relations program is one of CHA's most valuable services to its members. However, its success depends on hospital CEOs' relationships and access to their own state and federal legislators and CEOs' personal grass roots advocacy with them. It is also crucial for CEOs to be involved in advocacy through CHA's Council on Legislation, Board of Trustees, and communications with CHA staff on issues affecting you or issues you would like to see pursued. You are strongly encouraged you to make involvement in state and federal advocacy a continuing priority. It is crucial to hospitals' viability and ability to serve their communities.

2001 KEY STATE LEGISLATIVE SUCCESSES AND PRIORITIES

Once again, Medicaid funding for hospitals was the issue demanding the most attention of CHA and its member hospitals. The Governor's Office of State Planning and Budgeting and the Department of Health Care Policy and Financing ("department") originally proposed hospital reductions of $21.7 million, which included a $6.2 million loss from no inflationary increase. Due to the efforts of CHA and member hospitals, the reductions were decreased to $11.2 million: $5 million from elimination of an apparent duplicate facility fee for outpatient care and $6.2 million inflationary loss. According to budget policy of the legislature's Joint Budget Committee, inflationary increases for Medicaid are not included in proposed budgets and must be requested and justified separately by the department. Hence, inflationary increases will continue to be an issue.

Although CHA and its impacted members were not pleased with these reductions or any reductions because of overall reimbursement levels, it is recognized that the JBC and state legislature have very significant budgetary restraints due to the constitutional revenue limitations of TABOR ("Taxpayer's Bill of Rights") and the six percent spending limit on state general funds. TABOR restrictions have prompted CHA to initiate efforts to seek a ballot measure in 2002 to at least remove the restrictions on state budget and general fund expenditures for Medicaid. Consideration will also be given to a dedicated funding source.

The availability and affordability of health insurance in rural areas of the state were, and continue to be, major issues for hospitals. Although the legislative focus has been on rural access due to a few carriers leaving the rural market, there continues to be strong interest in statewide issues.

To address rural access, the Commissioner of Insurance formed a task force, on which CHA participated, that proposed legislation addressing, among other provisions, non-participating provider payments. Competing legislation was also introduced and ultimately passed which gives some flexibility to PPO networks in rural areas regarding member travel requirements and provider payments. CHA played a crucial role in the development and outcome of this measure and, while it may restrict unlimited fee-for-service charges for physicians and some hospitals, it does provide for fair payment to providers and incentives to prevent PPOs from leaving rural areas altogether. Legislators, providers and carriers generally recognize additional study and changes may be required regarding health care insurance access, particularly but not exclusively in rural areas, and hence an interim committee is meeting on these issues.

Other Acts and bills of significant interest include:

• Medicaid expansion bills generally failed or were rewritten to obscurity, including: breast and cervical cancer coverage; Medicaid transitional assistance; elimination of the asset test for children; and substance abuse. However, a Medicaid buy-in proposal did pass with a condition of budget neutrality (H.B. 01-1271);
• A state Medicaid civil false claims Act was passed (H.B. 01-1040) which would allow the state to pursue claims under its own statute rather than federal law. Through efforts of CHA and the Colorado Medical Society, the Act was significantly modified on what is unlawful conduct and maximum penalties;
• Public hospitals must now (effective August 8th) make a record of executive sessions, excluding attorney-client discussions. The new law (H.B. 01-1359) also includes significant notice and documentation requirements;
• Administrative and governance changes to the Children's Basic Health Plan (S.B. 01-52 and H.B. 01-1331);
• A newly named CoverColorado program replaces the "CUHIP" program for high-risk, uninsurable persons. In addition to some administrative and coverage changes, the program will now be funded by a health carrier assessment (H.B. 01-1319);
• Professional licensure laws were extended and amended for physician assistants (S.B. 01-128), physical therapists (S.B. 01-113), and respiratory therapists (S.B. 01-11);
• A mandated requirement for background checks on EMTs, but allowing flexibility depending on length of residency (S.B. 01-174);
• A pregnant woman's right to obtain fetal remains, at any period of gestation, is reassured by H.B. 01-1308;
• Nursing facilities will now perform and make available satisfaction surveys, and be subject to a study on reforming the survey and certification process; (S.B. 01-78);
• Preauthorization and utilization review procedures for biologically-based mental illness will now have parity with other medical coverage procedures (H.B. 01-1236).

Recognizing that health care issues and altruistic legislative proposals to solve them are a continuing challenge, it is of value to review some of the key bills that failed. Some of them will return, including Medicaid issues, pharmaceutical subsidies, wellness promotion and others. Two issues addressed at length this year and possibly returning include:

• The regulation of bloodborne pathogens, more commonly referred to as sharps or needlestick regulations for public hospitals (H.B. 01-1333); and
• Hospital notification of treatment to auto carriers and potential non-compliance penalties (amendment added and deleted from a bill). CHA and member hospitals are currently working with carriers to resolve this issue without legislation if possible.

The Government Relations program is one of CHA's most valuable services to its members. However, its success depends on hospital CEOs' relationships and access to their own state and federal legislators and CEOs' personal grassroots advocacy with them. It is also crucial for CEOs to be involved in advocacy through CHA's Council on Legislation, Board of Trustees, and communications with CHA staff on issues affecting hospitals or issues that should be pursued. I strongly encourage CEOs to make involvement in state and federal advocacy a continuing priority. It is crucial to hospitals' viability and ability to serve their communities.

2000 KEY STATE LEGISLATIVE SUCCESSES AND PRIORITIES

Governor Bill Owens and the Colorado General Assembly established tax reductions, school reform, and gun control as priorities for the legislative session and made significant changes in these areas. State income taxes and sales taxes were reduced over $200 million per year, public schools will be under closer scrutiny for student achievement, and gun control efforts were strengthened, including state background checks and prohibitions on providing guns to minors. To the extent these changes were improvements is subject to debate. Other key issues included local growth and campaign finance. In all, over 860 bills and resolutions were considered within the constitutional 120-day session. Before the next session in January, legislative issues will continue to be addressed by interim committees, state agencies and lobbyists representing various organizations.

The most notable health care legislation from a public perspective was adoption of legislation on the allocation of tobacco settlement dollars among various programs and the trust (Senate Bill 00-71). These payments are estimated to average $100 million per year over 25 years. Overall, 43% is initially allocated to public health (increasing to 59%), 19% for childrens reading improvement programs and 38% initially to the long-term trust (decreasing to 22%). Related legislation (House Bill 00-1454) which would have securitized or sold the anticipated revenue payments failed to pass in the last days of session due to disagreement on a minimal floor for a lump sum payment, estimated around $900 million, in lieu of the 25 year stream of payments estimated to be $2.9 billion.

The most significant issue for hospitals was a proposed 20% or $9.5 million Medicaid reduction in the rate of reimbursement for ancillary services to 28 hospitals. This proposal was of grave concern due to the precedent it would set, its fiscal impact and the fact that its application divided hospitals by size, region and disproportionate share eligibility, thereby fracturing the united voice by which hospitals advocate through CHA. After extensive consideration by CHA membership, negotiations began with the Department of Health Care Policy and Financing and the Joint Budget Committee (JBC), and ultimately resulted in a compromise. Rather than a $9.5 million reduction in reimbursement, the compromise resulted in a $5 million reduction in the annual inflationary adjustment, which applies to all hospitals. Despite objection from the governors Office of State Planning and Budget, the compromise was adopted by the JBC in the budget bill (House Bill 00-1451). The reduction never became a caucus issue or floor issue, which could have resulted in further reductions. The JBC and the Department continue to explore Medicaid reforms and are looking to CHA for participation in a reform process. This will be a priority for CHA in the interim.

Numerous bills of impact or interest to hospitals were introduced and effectively addressed by CHA's staff. Significant bills included the creation of a state Emergency Medical and Trauma Services Advisory Council (Council) and the creation of the Regional Emergency Medical and Trauma Services Advisory Councils (RETACs). The new state Council will complete the merger of the current Statewide Trauma Council and the Emergency Medical Services Council (Senate Bill 00-180). This Act modifies the allocation of the EMTS grants program and expands the regulatory authority of the state Council.

Prenatal care for undocumented women will be made available under a voluntary pilot program through regional managed care organizations (MCOs), which are selected through a request for proposal process.(House Bill 00-1076) The MCO will absorb the cost of prenatal care, for which federal Medicaid funds are not available, and will be reimbursed at the rate previously provided to hospitals and practitioners for labor and delivery only.

Hospital or health service districts, along with all special districts, will have greater flexibility to provide services or facilities to defined areas of their district and assess a levy for such services under House Bill 00-1271. This will allow health service districts to address needs specific to a particular community, rather than spreading the costs to the entire district.

Two bills were introduced to address civil false claims, one of which was limited to Medicaid false claims only. A broader false claim bill (House Bill 00-1094) included a private right of action or qui tam provision with strong financial incentives for whistle blower litigation, in addition to state legal action on false claims. This bill failed. The second civil Medicaid false claims bill passed both houses after significant amendments by CHA and others. However, strong disagreement between the houses and interested parties over the level of intent required to prove a false claim ultimately led to the bills failure in the last days of session. The Department and bill sponsor indicate the bill will return next year.

Strong opposition by CHA resulted in the failure of an auto insurance PIP payment bill. Auto carriers introduced legislation by which they would, under an indemnity policy, be authorized to unilaterally determine the reasonableness of providers charges and avoid responsibility for amounts in excess of what they define as reasonable. The bill also would have prohibited providers from balance billing patients. The bill would have denied any payment if a hospital failed to notify the auto carrier within thirty days of initial treatment.

A second bill defeated due to strong opposition by CHA would have prohibited a hospital or health plan from asking for any additional credentialing information from a physician or health care professional other than what is provided from the credentialing organization designated by the professional. While trying to simplify the process, the bills numerous restrictions raised significant quality of care concerns and hospital liability issues.

Respiratory therapists, after several years of attempts, were finally able to convince the legislature the quality of patient care would be enhanced if they were licensed. The new law (House Bill 00-1294)provides a one-year grandfather for current therapists to take the national exam if they are not already nationally credentialed.

Medical record copying fees would have increased under Senate Bill 00-188. Questions on accessibility by state agencies, law enforcement and the media were raised after the bill had passed both houses. The bill failed due to inaction when the governor looked on the bill with disfavor.

Numerous controversial gun control bills were introduced this year. Although many bills failed prompting at least one citizens initiative on the statewide ballot this fall, several measures were adopted which add additional violations and significantly enhance penalties. Measures adopted include: the reestablishment and expansion of state CBI background checks, felony offenses for possession by a convicted felon, a felony offense for straw purchases of weapons for other ineligible persons, parental consent for any transfer to a juvenile and expanded violations for persons providing handguns to juveniles when aware that the handgun may be used unlawfully.

1999 KEY STATE LEGISLATIVE SUCCESSES AND PRIORITIES

The election of Governor Bill Owens as the first Republican Governor in two decades was a clear signal of changes to come in both the executive and legislative branches of government. In the legislative arena, Governor Owens' campaign agenda of transportation and tax reduction dominated the legislative agenda of over 777 measures considered by the state General Assembly. State gun regulation also became a major issue since the new Governor was open to standardized state regulation and eliminating city and county variations in the law. The most significant general health proposals from a legislative perspective related to the national tobacco settlement between the states' attorneys general and major tobacco companies.

CHA was again a major participant in numerous health care issues and lobbying efforts on legislation concerning public health policy and other matters of concern to its member hospitals. CHA was active in this regard in bills ranging from the use of tobacco settlement moneys to open records' requirements for public hospitals.

Legislation relating to the national tobacco settlement invoked several factions among legislators, including those who supported the entire amount being dedicated to public health, those who wanted it all refunded as excess state revenues and those who supported the Governor's plan to allocate thirty percent to public schools for safety repairs and a third grade reading program. Although the main bill for programmatic allocation of the settlement funds failed to pass (Senate Bill 99-132), as did additional funding from settlement moneys for the Children's Basic Health Plan (House Bill 99-1093), other necessary related legislation was passed. These include Senate Bill 99-172 and 99-231 which assure the settlement moneys will not default to the state general fund which would result in all the moneys being refunded to taxpayers as excess state revenues; Senate Bill 99-231 which also establishes a trust fund which will receive at least twenty percent of the settlement funds; and House Bill 99-1208 which was required by the national settlement to prevent unfair competitive advantage for tobacco companies which were not party to the national settlement. CHA was and continues to be a key player in these issues as proposed legislation is developed this summer for next year.

CHA's own proposal for clarifying hospitals' Y2K responsibilities also passed. The bill, Senate Bill 99-222, was sponsored by Senator Tom Blickensderfer (R-Englewood) and Representative Doug Dean (R-Colorado Springs), the majority leaders of the Senate and House. This law will provide public assurance of quality care and protect hospitals from frivolous law suits.

The new law having the greatest interest, at least in terms of the number of persons interested, is House Bill 99-1250 by Representative Steve Johnson (R-Fort Collins) and Senator Mary Ellen Epps (R-Colorado Springs) which provides penalties for failure of health carriers to promptly pay claims. Electronic claims are due within thirty days, hard copy within forty-five days and all claims are to be paid, denied or settled within ninety days. Late payments must pay interest at the rate of ten percent annual interest and a flat three percent penalty on the total amount due. CHA worked closely with the Colorado Medical Society and the bill sponsors on this legislation and efforts toward its passage.

CHA and its subsidiary, Support Services, Inc., also proposed and obtained successful passage of legislation (House Bill 99-1061) to clarify provisions in unemployment compensation laws regarding unemployment claims for health reasons, when on leave of absence and based upon domestic abuse.

More specific to hospital services and operations, CHA worked with bill proponents for two years and finally reached compromise on standards for patient restraints (House Bill 99-1090). The law is intended to establish a minimum set of standards for the use of patient restraint. The new law generally conforms to existing practice and accreditation standards.

Once again legislation on managed care liability and external review was considered at length by the HEWI Committees (Health, Environment, Welfare and Institutions Committees) resulting in the passage of House Bill 99-1306 which provides for internal and external review of decisions by managed care plans. It is hoped this approach will achieve the preferred result of timely response and independent review without having to impose a costly, untimely litigious approach to resolving patient and provider appeals.