Colorado tax funds Medicaid expansion, hospital pay raise

The state's two largest physician and hospital associations supported the tax, which will help expand coverage to an additional 100,000 people.

By Doug Trapp — Posted April 28, 2010

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

As most states search for ways to limit Medicaid spending, Colorado is using a hospital tax to expand its program and increase hospital pay.

Colorado's tax on inpatient and outpatient revenue is expected to raise $1.2 billion in state and federal funds when fully implemented in fiscal year 2013. The money will be used to expand Medicaid eligibility to about 100,000 additional residents and increase hospital pay under Medicaid and the Colorado Indigent Care Program, a safety net program for state residents.

Colorado Gov. Bill Ritter signed the hospital tax into law in April 2009, but the state was not able to implement it without an approval from the Centers for Medicare & Medicaid Services, which granted one in early April of this year.

"This will pay off in both fiscal and personal health for our state and its residents and will be accomplished without additional costs to the general fund," Ritter said.

The tax on inpatient and outpatient care is expected to raise $600 million a year when fully implemented, drawing an additional $600 million in federal Medicaid funding for a total of $1.2 billion. The tax will apply retroactively to July 1, 2009, said Steven Summer, president and CEO of the Colorado Hospital Assn., which pushed for the legislation.

The hospital pay increases will reduce the need for hospitals to cost shift to account for uncompensated care, Summer said. Medicaid hospital pay will increase to 100% of Medicare rates in Colorado, up from at least 90%. Also, the Colorado Indigent Care Program's hospital pay will increase to 100% of hospital costs, up from 72%, according to an analysis by the nonpartisan Colorado Legislative Council.

When the expansion is fully implemented in 2012, the state's Medicaid program will cover about 50,000 more adults without children and about 43,000 more parents earning up to the poverty level. The state also will allow adults with disabilities and children in families earning up to 450% of the federal poverty level to buy Medicaid coverage.

The Colorado Medical Society supported the tax, which is part of broader changes to the state's health system, said Alfred Gilchrist, the medical society's CEO. For example, Gilchrist said, the state's Medicaid program soon will release a draft proposal for accountable care organizations, collaborations that reward physicians and hospitals for savings generated through care coordination. Summer said the medical society's support helped get the tax adopted.

At least 43 states have adopted some version of a hospital or physician tax, according to Dick Cauchi, health program director with the National Conference of State Legislatures.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn