Aurora, Colo.-based UCHealth has prevailed in a lawsuit with Colorado’s Medicaid agency over provider fee money. State officials said the decision could move up to $50 million a year away from public hospitals and into private hospitals, The Colorado Sun reported June 27.
The dispute centered around whether two hospitals managed by UCHealth should be considered public or private, according to the report. Fort Collins, Colo.-based Poudre Valley Hospital and Colorado Springs, Colo.-based Memorial Hospital were once public, but have been managed for years by UCHealth under long-term lease agreements.
The Colorado Department of Health Care Policy and Financing has continued to classify the two hospitals as public for the purpose of the hospital provider fee, according to the report. The hospitals have been classified as “non-state government owned,” but UCHealth sued to reclassify the hospitals as private.
A district court judge in May sided with UCHealth, writing that the hospitals were incorrectly categorized because the court held that the system was the sole owner and operator of the facilities.
Under the provider fee mechanism, hospitals pay a fee based on their amounts of inpatient and outpatient care. The state combines that money with matching federal funds and redistributes it with a focus on assisting hospitals that treat more Medicaid patients. In the most recent fiscal year, Colorado hospitals paid about $1.3 billion in fees and received $1.8 billion in payments, netting them $500 million. However, some hospitals get less than they pay in.
A UCHealth spokesperson told the news outlet that “following federal law and correctly classifying hospitals is important to ensure proper payments to hospitals that care for Medicaid patients.”
“An incorrect classification can result in underpayments — and this hurts both the hospital and Medicaid patients,” the spokesperson said.
State officials are considering appealing the decision, according to the report. They argue the ruling could negatively affect other hospitals classified as “non-state government owned public hospitals,” shifting between $25 million and $50 million away from publicly owned facilities.
