Colorado's District three has the highest Medicaid enrollment in the entire state. The rural hospitals that serve the population here are often operating at a loss or on a shoestring budget. Here's the Colorado Hospital Association's Josh Hannes.
Hannes: So rural hospitals in particular are disproportionately affected. They tend to serve larger Medicaid populations anyway, which doesn't pay for the cost of care. So Medicaid reimbursement is about 79 cents on the dollar. So those facilities are already losing money in providing that care."
One of the tools rural hospitals use to make ends meet is provider fees. The provider fee freeze is the less glaring and less talked about aspect of House Bill One or the Big Beautiful Bill, but no less consequential. The Bell Policy Center's Chris deGruy Kennedy explains.
deGruy Kennedy: Provider fees are a mechanism used by states all across the country, I believe 45 states in order to draw down additional federal dollars. And so what's done is we ask Colorado hospitals to pay a fee, and then that fee is used to draw matching federal dollars that then make those Colorado hospitals hold for the fee that they have paid. And then we bring in additional federal money on top that has been used to increase provider reimbursements and keep rural hospitals in particular afloat.
From next year through 2032, the current limit on provider fees of 6% net patient revenue will drop to just 3.5. This loss of funding, in combination with the expected disenrollment of 100,000 eligible Coloradans from Medicaid, due to things like stricter paperwork requirements and work checks, Hannes says that rural hospitals could begin to disappear.
Hannes: When you take into account. The changes in HR1 that impact, for example our provider fees and the money that we generate from hospitals, and then get matched by the feds. HR1 makes significant changes to that over the next couple of years.
And that's something like, I mean, the number's huge. It's like a $10 billion loss over five years if those changes stay in effect, or go into effect as a result of HR1. So, what you could see, worst-case scenario, is entire hospitals close because they're not going to be able to get the reimbursement necessary to care for their community.
This is the first part of a series examining rural healthcare through the lens of federal changes.
