A bipartisan coalition of state lawmakers representing rural Colorado is calling on the state’s Medicaid agency to delay a $60 million funding clawback that would affect 28 hospitals statewide.

A letter signed by Reps. Dusty Johnson, R-Fort Morgan, and Matthew Martinez, D-Monte Vista, and Sens. Rod Pelton, R-Cheyenne Wells, and Dylan Roberts, D-Frisco, says the Department of Healthcare Policy and Financing should hold off on asking the hospitals for repayment, as the agency is planning to appeal the court ruling in which the state sided with UCHealth over provider fee money.

The case, which was resolved in a Denver District Court in May, arose when UCHealth, a private nonprofit, purchased two public hospitals in Fort Collins and Colorado Springs. Despite this, HCPF never reclassified the hospitals as private and continued to charge UCHealth for provider fee reimbursement under its public hospital payment structure.

According to Johnson, HCPF is planning to appeal the ruling, as there are concerns it will disproportionately impact rural hospitals and safety net providers that serve low-income and Medicaid patients.

“Subjecting rural hospitals to immediate repayment—before the appeal process concludes—could needlessly destabilize essential healthcare services,” the Rural Caucus wrote. “Our rural hospitals are the lifeblood of frontier Colorado. If these funds are clawed back now, we face the real danger of service cuts, staffing losses, or even permanent closures in communities that lack alternatives for emergency, maternity, and ongoing care.”

The lawmakers say they are willing to partner with HCPF, the governor’s office, and the rest of the General Assembly to “craft a responsible solution,” which they suggest could include a temporary pause on repayments until the appeal is resolved, utilizing reserve funds through HCPF’s Colorado Healthcare Affordability and Sustainability Enterprise, and additional funding to rural hospitals from the legislature.

“We’re kind of in limbo because the courts are in limbo,” Johnson told Colorado Politics, adding that it’s unclear when the court will make a decision on the appeal. “I’m always against a knee-jerk reaction; the courts can come back and say, ‘we overturn it, no fees have to be paid,’ or they can come back and say, ‘we uphold what we did, we do need funds.'”

If HCPF forces the hospitals to pay the $60 million and the original ruling is overturned, any reimbursements made to the hospitals might come too late, Johnson said.

“Is the department gonna give all that money back? Are we gonna save those hospitals that went under? There’s so many what-ifs, so we’re just asking if we can slow down,” she said.

While some larger hospitals might be able to afford paying back HCPF — and even then, it will be difficult — others won’t be able to do so without serious consequences, including possibly having to close their doors.

“It’s gonna put some of my other hospitals out of business completely,” said Johnson, who represents seven counties on the Eastern Plains. “Then does that mean that the hospitals that are somewhat close, can absorb those patients? Are they gonna have to say no to people now? Maybe they can handle the financial burden, but can they take the overflow and do they have the staff to do it?”

During the 2025 legislative session, lawmakers tackled the state’s crumbling healthcare infrastructure by passing a bill appropriating an additional $60 to the state’s safety net providers over the next half decade. However, Johnson is unsure they’ll be able to do something similar during the 2026 session to help the hospitals impacted by the clawback.

“We just struggled this year to try to fund health care, especially fighting for rural hospitals and keeping them afloat, and this is gonna put all that back again if HCPF decides to go through with clawing back all this money,” she said. “We’re gonna see more of a financial cut moving forward. We had to cut like $1.2 billion this past session, and we’re gonna have to keep making cuts and we’re not gonna have all those special funds we found on the side this year, because those are gone. So if we can find money… I mean, we’re gonna have to. We have to keep our hospitals alive. That’s our lifeblood to keep communities.”

When asked for comment, HCPF said in a statement that the District Court ordered HCPF to reclassify Memorial Hospital and Poudre Valley as “privately owned and operated” for the FY 2023-2024 and ongoing, although Memorial and Poudre Valley had been classified as non-state government owned for the previous 12 years.

The statement stressed that HCPF is appealing this decision in the Court of Appeals, asking for a stay of the district court order pending resolution of the appeal. However, as it stands now, the FY 2023-2024 fiscal impact is $59.7 million for the hospitals in questions.