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UCHealth Memorial Hospital Central.

The Department of Health Care Policy and Financing released a report Thursday that accused several Front Range "mega" hospital systems of price-gouging Colorado consumers to fatten their own wallets. 

The announcement came one day before a Joint Budget Committee hearing on costs for a public option plan and the state's 2019 reinsurance program, which are expected to exceed initial estimates by hundreds of millions of dollars.

And at least one lawmaker in Thursday's news conference used the time to strike back at the hospitals and others who are running a six-figure ad campaign decrying aspects of the public option plan released last November.

The HCPF report, an analysis of Colorado hospital cost-shifting, claimed hospitals, primarily large for-profit and non-profit hospitals in the Front Range, have failed to reduce health care costs, despite state efforts going back more than a decade to reduce the burden of uncompensated care. The report is a final one that follows a draft report from January 2019

In 2009, the General Assembly set up the state's hospital provider fee program, intended to draw down federal dollars to help pay for the health care costs of uninsured Coloradans. A year later, the Affordable Care Act was put in place, and eventually, the state expanded Medicaid coverage for low-income Coloradans.

The hospital provider fee annually draws $1.4 billion from hospitals, coupled with the same amount from the federal government, and then redistributes that money to hospitals to pay for health care for uninsured Coloradans and to cover the gap between what Medicaid pays and a hospital's cost of services. Much of that goes to rural hospitals and critical care facilities.

Cost-shifting has long been blamed as one reason for the rising cost of health care. It takes place when a hospital shifts uncompensated costs from those who can't pay for their health care to those with private insurance, which Lt. Gov. Dianne Primavera said Thursday drives up health care premiums for everyone. 

But since the hospital provider fee went into place in 2009, the costs for uninsured health care have dropped by half, according to the report. Hospitals have reduced their losses by $385 million, the report said. 

According to a 2009 letter from the Colorado Hospital Association, "By increasing hospital reimbursement rates and covering the uninsured, we will reduce the rate of rising healthcare costs," the letter said. 

The exact opposite has happened, according to Primavera and HCPF Executive Director Kim Bimestefer. Hospital per-patient profits are soaring, from $500 per patient in 2009 to three times that amount in 2018. "Despite significant reductions in uncompensated care and significant increases in Medicaid and Medicare" provider payments, "hospitals are persistently increasing the price of care," according to a fact sheet distributed Thursday.

"On average, Americans pay twice as much for health care than other developed nations, and in exchange, we get to enjoy middle-of-the-pack results and the lowest life expectancy in the developed world."

"If all the money spent on health care isn't making us healthier, where is it going?" Primavera asked. The report answers that question, she said. "There are plenty of middlemen, insurance companies, pharmaceutical companies and hospitals, whose business model is to stand in between caregivers like doctors and nurses and their patients." 

What happened, according to Primavera, was that large hospital systems did not pass on that taxpayer money to consumers to lower the costs of healthcare. They sent those taxpayer dollars to their executives and shareholders and lined their own pockets with it, she said.

As a result, she said, hospital profit margins in Colorado are up 280% over the last decade, the second highest in the nation, and hospitals cleared $2 billion in profit just in 2018.

"We were naïve to trust the large hospital systems," Primavera said, saying that policymakers should not make that mistake again.

Bimestefer claimed Thursday that cost-shifting is now a myth. Price increases in health care are not about cost shifting, she said. It's based on strategic decisions by hospitals, tied to profit margins.

House Assistant Majority Leader Chris Kennedy, D-Lakewood, at one point held up a mailer that's part of a six-figure ad campaign by the Partnership for America’s Health Care Future and Colorado’s Health Care Future on the public option proposal. "It makes my blood boil when I received this in my mailbox, saying contact your state legislator to protect the status quo.... This came out of your premium dollars!" he thundered. 

That campaign is backed by health insurers and targets a public option proposal that they claim will shift $1.5 billion in health care costs over a five-year period to Coloradans who have their own health insurance.

Colorado's Health Care Future also claims the public option will jeopardize access to health care in rural hospitals and critical care facilities and could result in 13 rural hospitals closing.

The Front Range for-profit and non-profit hospitals named in the news conference for their huge profits: University Hospital, which Bimestefer said has grown from one hospital to 10 in the past decade and which made $800 million in profits in 2018, Centura and HCA Systems, which made $1 billion in profit in 2018 and which operates seven hospitals in the Denver metro area, including Swedish, Presbyterian/St. Luke, Skyridge, the Medical Center of Aurora and North Suburban Medical Center.

"Do these profits stay here or do they go to home offices" in other states, Bimestefer asked. 

The Colorado Hospital Association, in a statement Thursday, said the report is a distraction "from the unintended, yet predicted, consequences of the state’s own policies. For example, the state’s reinsurance program – touted as saving consumers 20% on average – has also caused prices to increase for some consumers, and now the state is attempting to unlawfully force hospitals to pay $40 million dollars one year early."

That refers to a lawsuit filed by the CHA against the Division of Insurance a week ago that they say violates both rules and laws laid out in the reinsurance program.

The CHA statement added that cost shifting still exists because of "chronic underfunding of state and federal public health care programs – namely Medicare and Medicaid," and is tied to a number of factors.

That includes low payments to providers by the state, which the association says underpays hospitals by 30 cents on the dollar for health care services covered by Medicaid and Medicare. They also attributed the cost shift to instability in the market and in state and federal policies. 

The association did acknowledge that Colorado hospitals have improved their profit margins, which they attributed in part to the state's strong economy and population growth. 

"Much of the improvement referenced in today’s report came as Colorado’s vulnerable hospitals improved their overall financial condition and are operating closer to the national sustainability threshold of 4%," the statement read. "Margin improvement is also due to hospitals working to control their costs as they work to address affordability and operate during a time of great uncertainty. This is critical in an environment where hospitals are seeking to assure access to quality health care. There also continues to be wide variation in margins throughout the state, which is a function of payer mix, services provided and local economic environment."

The association also disputed the profit numbers, calling them "highly inflated" and that they do not take into account expenses for taxes, hospital-owned physician practices and training the next generation of providers. 

Finally, the report does not reflect the work of hospitals to reduce health care costs since Gov. Jared Polis took office, including funding the state's reinsurance program and elimination of surprise billing. 

"Hospitals have been good partners in addressing costs with the Polis administration and are disappointed that the state doesn’t acknowledge its role in driving cost shift. The under-reimbursement by government payers has driven cost shift by more than $1 billion since 2010," the association said.

Correction: the campaign against the public option is backed by health insurers but not the Colorado Hospital Association.

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