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Colorado hospitals just avoided tens of millions of dollars in federal funding cuts — but it might not last

The cuts would most affect hospitals like Denver Health that care for a lot of uninsured patients

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In what is becoming a near-monthly escape, Colorado hospitals last week narrowly avoided getting hit with tens of millions of dollars in federal funding cuts. But the victory comes with a catch — they have to do it all over again next month.

The cuts would come from what are called “disproportionate share payments,” which help hospitals that treat a lot of uninsured people and, thus, often don’t get paid for the care they provide. According to a memo prepared this month for the legislature’s Joint Budget Committee, Colorado hospitals receive more than $100 million a year in federal DSH — pronounced “dish” — payments, as they are known.

The payments have been on the federal government’s chopping block since the passage of the Affordable Care Act. The thinking was that, with the ACA expected to lead to fewer people without insurance, the federal government could scale back on helping hospitals treat the uninsured. This has proven true in Colorado, where the uninsured rate has dropped by more than half and where hospitals have reduced the annual amount of free care they shoulder by more than $400 million, according to the budget committee memo.

But hospitals have successfully fought off the cuts for years — most recently in September, when Congress punted the cuts to Nov. 21. Now, with the passage of a budget measure to keep the government open for another month, Congress has again delayed the cuts, until Dec. 20.

To Colorado hospitals, that was a good sign.

“We appreciate the efforts of our legislators to work out a solution that does not harm safety net hospitals that rely on this funding and believe the latest resolution shows efforts will continue,” Denver Health CEO Robin Wittenstein said in a written statement.

Denver Health received more than a third of the state’s total DSH payments last fiscal year — about $39 million — while Children’s Hospital Colorado, North Colorado Medical Center, University of Colorado Hospital and Platte Valley Medical Center also received big chunks. In total, 19 hospitals across the state benefited from DSH payments last fiscal year, according to the budget committee memo.

Nationwide, the DSH cuts are expected to total about $4 billion. But it’s unclear how deeply the cuts will dig into Colorado hospital budgets.

The budget committee memo says Colorado hospitals are looking at about a $28 million funding cut in 2020. That’s down from an estimated $35 million cut in September, when Gov. Jared Polis wrote a letter to the state’s congressional delegation urging them to postpone the cuts because “safety net and rural hospitals depend on DSH payments to help them provide care to the community.”

When the Colorado Hospital Association wrote its own letter to the state’s congressional delegation in October, however, it estimated the cuts at $70 million for 2020 and increasing in subsequent years.

“Such devastating reductions will affect funding used to support vital care provided to vulnerable patients across Colorado,” Steven Summer, the association’s president and CEO, wrote in the letter.

In October, Denver Health’s chief financial officer told The Colorado Times Recorder that the cuts would probably not be so steep as to force layoffs at the hospital. But she said the hospital may have to hold off on plans to expand services outside its central Denver campus.

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