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Health Law and Policy Update: Suthers approves HealthONE hospital deal, with conditions

This week's updates



Headlines of the week

Suthers approves HealthONE hospital deal, with conditions
Colorado Attorney General John Suthers on Thursday announced approval of a deal for the Colorado Health Foundation to sell its 40 percent interest in the HealthONE hospital system, including conditions such as an agreement to not close any of its seven acute care hospitals for at least five years.

The approval is a major milestone in a $1.45 billion transaction that will dramatically restructure the Colorado Health Foundation's assets and turn over full ownership of the Denver area's largest hospital system to a for-profit company. Following completion of the deal, the Colorado Health Foundation will have about $2.1 billion in assets and become the third largest health foundation in the country. The Colorado Center on Law and Policy favored the deal provided certain conditions were imposed to protect the public interest, most of which are part of the transaction Suthers approved.

"We're pleased (Suthers) adopted in large part the suggestions we made," Ed Kahn, special counsel for CCLP, told The Denver Post. "The one thing he did not - we think the price should have been higher."

Among the other conditions on the deal:

  • The board of community trustees will continue for an additional five years beyond the 10 years laid out in the original proposed transaction;
  • The indigent care policy and the community-benefit program will continue for an additional five years beyond the 10 years laid out in the original proposed transaction.
  • The $12 million initially earmarked for the community-benefit program will be compounded annually at the rate of increase in the Medicare reimbursement rate for 10 years and would not decrease even if the Medicare reimbursement rate does.
  • The Office of the Attorney General will mediate any disputes that arise concerning the non-compete agreement prior to the filing of any litigation.
  • Annual reporting to the attorney general by the Colorado Health Foundation and HealthONE demonstrating compliance with the agreements and conditions.

CCLP receives funding from the Colorado Health Foundation.

Old Age Pension crackdown saved money but led to 'harsh outcome'
Colorado Center on Law and Policy Health Care Attorney Adela Flores-Brennan pointed out the human consequences from tighter restrictions on who's eligible to participate in Colorado's Old Age Pension program in a Sunday article in The Denver Post.

"They cut people off who were on the program," Flores-Brennan said. "I feel like that's a really harsh outcome. ... They weren't only just losing access to a financial benefit," she said. "It was the medical benefit that was a big concern."

What's new

Medical Services Board to decide on increased cost-sharing for CHP+ families
Colorado's Medical Services Board gave initial approval today to increase cost-sharing for families in the Child Health Plan Plus (CHP+) program. The Medical Services Board is the rule-making body for programs including CHP+ and Medicaid.

The rule comes as a result of Gov. John Hickenlooper's veto of Senate Bill 11-213, a measure that would have imposed monthly premiums on families with children in the CHP+ program. Hickenlooper issued a statement accompanying the veto that called on the Department of Health Care Policy and Financing (HCPF) to investigate increased cost-sharing, and for the Medical Services Board to use its authority to realize those increases. The Colorado Center on Law and Policy opposed SB213 and urged the governor to veto it.

SB213 would have created a monthly premium for CHP+ families with incomes between 205 percent and 250 percent of the federal poverty level (roughly $45,800 to $55,800 per year for a family of four). The monthly premiums would have been a considerable increase from the annual premium CHP+ families already pay and were predicted to result in 2,000 families losing coverage, and a significant administrative burden to the state. In response, HCPF conferred with stakeholder groups over the summer and presented today a rule that serves as an alternative to the monthly premium proposal in SB213. The rule triples the annual enrollment fee for families with incomes from 205 percent to 250 percent of the federal poverty level beginning Jan. 1, 2012. The rule also increases or creates new copayments for families in all the CHP+ income tiers for services like emergency room visits, urgent care, brand name drugs, and inpatient and outpatient stays. The new copayment structure is to take effect in July 2012.

CCLP recognizes the value of the stakeholder engagement process that allowed for a greater level of input than would be otherwise available during a legislative process and ultimately led to a better outcome for Colorado families than SB213. However, CCLP representatives presented concerns about the negative effect the increases could have on families who are turning to CHP+ coverage because coverage is otherwise unavailable or unaffordable. The increases in copays could have a chilling effect on accessing needed services and create a significant financial burden for families.

Exchange board discusses executive director search, funding options
The Colorado Health Benefit Exchange Board of Directors met in private Monday to receive legal advice on its search for an executive director, its plan of operations and operations of board committees. In a public session, the board agreed to have its bylaws subcommittee fine-tune the plan of operation.

The board also heard a report on finances. Because the board missed a Sept. 30 grant application deadline for federal funding, there is some concern about whether existing funds can carry the exchange through to the next deadline, Dec. 30. Based on the information presented to the board, it appears there is enough funding to sustain operations at current levels, but board members are exploring supplemental funding.

Colorado Springs might hand over control of its hospital system
Colorado Springs' Memorial Health System might be leased to a nonprofit or for-profit hospital system operating other hospitals in the state, The Gazette newspaper reported this week. Early this year, Colorado Attorney General John Suthers ruled informally a transfer of the control or the assets of Memorial Health System would be subject to the Hospital Transfer Act, a state law governing sales or hospital assets or control.

If a transaction shifting control of Memorial Health System moves forward, it is likely to be reviewed by the attorney general, either under the act, or perhaps under the attorney general's common law authority over charitable assets.

Advancing the debate

More work remains to deliver high-quality care to vulnerable populations
Policymakers should take steps to ensure vulnerable populations receive high-quality health care as part of implementing the Patient Protection and Affordable Care Act, The Commonwealth Fund said in a report issued Oct. 7.

The report "features three overarching strategies to close the health care divide: 1) ensure that health coverage provides adequate access and financial protection; 2) strengthen the care delivery systems serving vulnerable populations; and 3) coordinate care delivery with other community resources, including public health services."

Benefits summary will help consumers understand choices
Armed with an easy-to-understand explanation of a health plan's benefits required under the nation's health reform law, consumers will have a better shot at finding the coverage they need, the Kaiser Family Foundation said in an issue brief released Wednesday.

"Efficient market competition relies fundamentally on transparency of information, with consumers able to distinguish plans that are cheaper because they cover less from those that are cheaper because they are more efficient," the paper says.

The Patient Protection and Affordable Care Act requires health plans to produce a uniform summary of benefits and coverage (SBC) to all applicants and enrollees. Kaiser's issue brief discusses what must be included in the summary, and the costs and benefits of that provision of the law.

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales  

Health Care Attorney
Adela Flores-Brennan  

Special Counsel
Ed Kahn  

Rice Fellow
Danny Rheiner

Communications Director
Perry Swanson

Released Oct. 14, 2011