Time is getting short as Colorado lawmakers point fingers over elusive hospital provider fee deal

“I’ve just been handed a note,” he said. “There’s no deal.”
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District 1 Senator Jerry Sonnenberg laughs as he hands a toy tractor, a fixture on his desk, to the family of Senate President Kevin Grantham. The first day of the Colorado state legislative session. Jan 11, 2017. (Kevin J. Beaty/Denverite) legislature; copolitics; politics; legislative session; capitol; kevinjbeaty; denver; denverite; colorado;

State Sen. Jerry Sonnenberg was in the midst of explaining a compromise in the ongoing effort to rework the state budget to save rural hospitals when he paused.

"I've just been handed a note," he said. "There's no deal."

According to House Democrats, there never was a deal, but the sides were and remain very close to a deal.

And Colorado hospitals are asking lawmakers to just get it done, please, for the love of God.

The major sticking point appears to be a proposal to increase in co-pays for Medicaid patients, who are poor, disabled or low-income pregnant women, from $2 to $4.

Sonnenberg said it's been on the white board in his office where he's been tracking all the moving pieces of this legislation since the middle of last week. House Majority Leader K.C. Becker, the House Democratic sponsor of the bill, said putting something on a white board doesn't mean it was discussed or agreed to. And it's a sticking point for Democrats.

"I don't think we have ever had a real discussion of the co-pay piece," Becker said. "It's a big enough deal for our side that we wanted to slow down."

In a press conference on the steps of the Capitol Monday afternoon, Colorado Hospital Association President and CEO Steven Summer said this legislation was "critical" to Colorado hospitals and pleaded with legislators to pass the bill in some form. He said that while hospitals are "sensitive" to the impacts of co-pay increases on their poorest patients, those patients would be hurt far worse if funding cuts made to balance the rest of the budget go through. And he said he'd leave the details to the legislature to work out.

"We are in the golden hour for this bill," Summer said, using a term that describes the window to save trauma patients. "Time is of the essence, and lives are at stake."

What's this all about?

The problem: The state budget as preliminarily approved by the House and Senate cuts $264 million in funding for hospitals, which amounts to $528 million in total because the state money is matched by federal dollars. Rural hospitals are particularly hard hit, though so are urban hospitals with high Medicaid patient loads.

The Colorado Hospital Association estimates that as many as 12 rural hospitals could close, and every hospital in the state faces cuts to staff and programs.

This money is being cut because the hospital provider fee, a fee on patient revenue, contributes to the state going over the revenue limits set by the Taxpayer's Bill of Rights. It was instituted as part of the Medicaid expansion under the Affordable Care Act. If the amount of fee money collected were not reduced, spending would have to be cut from other parts of the budget.

Also a problem: Transportation funding has not kept up with needs, and rural roads don't rate high on the state's priority list. A proposal to ask voters to approve a sales tax increase for transportation died last week, and while there are alternative proposals coming forward, it's not clear whether there will be more funding for transportation in the near future or where that money might come from.

The fix: Sonnenberg, a Sterling Republican whose district includes several endangered hospitals, has been working with Senate Minority Leader Lucia Guzman, a Denver Democrat who has championed this issue for several years, on a bill that would turn the hospital provider fee into an enterprise fund. That's a kind of state business venture that pays for itself and is exempt from TABOR requirements. Making this change would take the hospital provider fee out of the budget equation not just this year but in perpetuity and do a lot to shore up the financial stability of hospitals, at least as long as that federal match remains available.

The problem with the fix: To make this deal palatable to Republicans, there needs to be some sort of offset somewhere else in the budget. And for many Democrats, that defeats the purpose of creating an enterprise fund. Democrats want to free up more money in the state budget that they can spend without bumping up against the revenue cap and having to return money to taxpayers.

The outlines of the deal are this:
  • Reduce the TABOR revenue cap for next year by $200 million, much less than Sonnenberg had initially proposed;
  • Create a business personal property tax credit of up to $25,000 for small businesses;
  • Increase co-pays for Medicaid patients to the maximum allowed by the federal government;
  • Impose a cap of 3 percent on how much the Department of Health Care Policy and Finance can spend to administer its fund;
  • Guarantee the Senior Homestead Property Tax Exemption is protected in years when the state might have to give a TABOR refund;
  • Raise the special sales tax rate on marijuana to the full 15 percent that voters authorized, instead of the 10 percent being collected now, with that money being used to offset the business tax credit and provide more money for schools.

So that's a collection of spending reductions, tax relief and new revenue.

"In order to solve this problem, I have to find that sweet spot of compromise," Sonnenberg said.

SB-267 would require state departments to submit budget proposals next year that are 2 percent smaller than this year, though the actual allocations would still be up to the legislature.

The bill funds a $2 billion bond program -- $1.8 billion for roads and $200 million for other capital projects -- by selling certificates of participation on state-owned buildings, a little bit like taking out a second mortgage on the buildings. It doesn't require going to voters like a regular bond program would.

The bill provides $30 million over three years for rural schools and $33 million for the state education fund. That's much less than the $79 million this year and $160 million a year for the next two years in the original version. Marianne Goodland at The Colorado Independent reported that rural schools think $10 million a year is woefully inadequate to solve their problems and suggested the money would be better used in the state education fund.

Becker said the amount of business tax relief and the administrative cap on HCPF both still need additional work before a deal is finalized. And she said the bill is getting too far afield from its original purpose.

"We don't have to solve every problem in Colorado with this bill," she said.

Sonnenberg and Becker both said that the four co-sponsors had signed an informal agreement that described the outlines of a deal -- a deal made over breakfast at the Fork and Spoon last week. Sonnenberg said he believed the co-pays were part of that agreement, but a copy of the deal provided by House Democrats, though hard to make out at certain points, does not mention co-pays.

Nonetheless, Becker said nobody is walking away.

"We have made incredible progress, and we are all sincerely working together," she said.

Sonnenberg also said he would keep working, even as he suggested Democrats had walked back from commitments they had made privately.

"I'm just a country boy," he said. "Where I'm from, we make $100,000 deals over the phone."

This is a developing story and may be updated.

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