Colorado hospitals are backing legislation that will increase their financial transparency.

“We recognize the importance of financial transparency to policy- and decision-makers at the state level,” said Julie Lonborg, vice president of communications and media relations for the Colorado Hospital Association. “A lot of people, I think, expected us not to support this bill, and it’s proof that when [hospital representatives and legislators] work together, we can get some support on these types of things.”

HB19-1001 will require hospitals to disclose more information about spending on patient care, administration, capital construction and acquisitions of physician groups.

The Hospital Transparency Measures to Analyze Efficacy bill passed with bipartisan support in the House with a 39-22 vote in January and the Senate voted 34-1 to approve March 14.

However, an amended version clarifying the difference between an acquisition and an affiliation was sent back to the House, Lonborg said, adding hospital affiliations are common, including the sharing of resources such as HR and IT support.

“They may do that through an affiliation agreement, where they agree to share resources and there is a financial transaction that happens with that, but they haven’t acquired that organization — they don’t own it,” she said.

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The amended bill passed in the House March 18 with another bipartisan vote of support, according to a news release from Colorado House Democrats. The bill was signed by Gov. Jared Polis March 28.

And thus far, local health care providers appear to be on board.

Andrea Sinclair, a spokesperson for Centura Health, said via email that the health care system is supportive of the legislation.

“Centura Health applauds the efforts of the legislature and multiple stakeholders coming to the table to appropriately address issues around transparency,” she said.

A spokesperson for UCHealth directed questions about the legislation to the hospital association.

Lonborg said the organization and the hospitals it represents aren’t opposed to the bill’s requirements because the impact to hospitals is minimal.

“We worked closely when the bill was in the House … on trying to define what information needed to be turned in,” she said. “We tried wherever possible to give information that we already generate.

“We didn’t want to have to create a bunch of new information because that would have then added to the expense that hospitals would incur in order to do this.”

Do no harm

Rep. Chris Kennedy, D-Lakewood, who sponsored the bill, said in his party’s release that health care costs are harming both Colorado consumers and businesses.

“Hardworking people are struggling to keep up with the rising cost of health care, particularly in rural Colorado where we’re seeing some of the highest premiums in the country,” he said. “By requiring hospitals to be transparent about their spending, we can increase competition in a way that will reduce costs for all.”

John Bartholomew, finance office director of the Department of Health Care Policy and Financing, clarified that the bill alone will not lower health care or hospital costs.

“But it’s going to provide [legislators and state officials] with the information to start looking at specific actors that could maybe learn something from best practices,” he said. “We’re going to better understand cost growth and payment growth [of a hospital] over time.

“Hospitals will be able to learn from best practices that we will identify with this information and hopefully adapt it into their business model.”

Bartholomew said the legislation is needed to help assess why cost shifts to commercial insurance patients continue to rise even though the state has increased Medicaid rate reimbursements and expanded the federal insurance program, leaving fewer uninsured Coloradans.

“That had a direct impact on hospitals lowering their charity care and bad debt statistics by 60 percent, or about $400 million in one year,” he said. “These are positive things that have happened, yet when we see the data that the Colorado Hospital Association provides us — and it’s very high-level aggregated data — we see the cost shift continues to rise.”

In 2009, Colorado hospitals had a profit margin of about 5 percent, Bartholomew said, adding that number rose to 9 percent by 2016 and then fell to 8 percent in 2017.

The data was captured in a draft report released by the Department of Health Care Policy and Financing in January, that claims hospitals in the state mismanaged finances while profits increased and greater costs were shifted to insured patients.

Lonborg said hospital executives refused to accept the draft report in February.

“It was rejected because it was biased,” she said. “It failed to incorporate a lot of pertinent data.”

The hospital association is concerned over Bartholomew’s department’s ability to generate an unbiased report using the information HB19-1001 will provide, Lonborg said.

“They have struggled with their analytics and they struggled with their reporting,” she said. “This is the same agency that’s responsible for the analysis and model creation for the hospital provider fee every year.

“That provider fee starts every year in October, and this year, they struggled so badly to get the model and the analysis put together that the provider fee model wasn’t passed until February.”

That left hospitals operating from October to February without knowing reimbursement rates from the state, Lonborg said.

“That’s not a great track record to hand an agency another significant and complicated report,” she said. “So our hope is that the new report gets done well, is factual, is not biased, and that legislators find it useful, as they’re seeking data with which to make decisions.”

Bartholomew said he was “sad” to hear that the hospital association found the draft report to be biased.

“We just look at it through probably a different lens,” he said. “We are actually looking into getting some independent review of where the bias comes from, if any, but the department has no bias.

“The opportunity here is to present information that will help engage conversation around what’s going on because, right now, it’s a bit of a black box.”

Bartholomew said the hospital association continues to blame government-funded programs, such as Medicaid and Medicare, for the cost shift and the report highlights some alternative causes.

“And that’s why they have labeled the report a biased report,” he said.

Under HB 19-1001, the state will be granted access to the data bank hospitals use to pull information in addition to other financial information driving hospital costs up, Bartholomew said.

“This is a very meaningful piece of legislation that we’ve been working on with partners like the Hospital Association for more than a year,” he said. “We’re just happy to see it go to the governor’s desk.”