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Pfiffner supplies solutions for customers in the sectors of electrical energy and rolling stock.

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Lindenplatz 17

Hirschthal, 5042,

Switzerland

+41 62 739 28 28

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Colorado Court of Appeals Rejects TABOR Attack on Hospital Fee Ruling prevents loss of healthcare access, fiscal hole for state

Nov 23, 2020

November 23, 2020 Colorado avoided a devastating blow to its programs that provide access to healthcare for more than 1.5 million state residents when the Court of Appeals dismissed a lawsuit alleging that its financing mechanism violates the Taxpayer Bill of Rights. The Nov. 5 ruling declared that two taxpayer rights organizations and two individuals lacked standing to challenge both the current tool used to obtain matching funds from the federal government and reimburse hospitals for otherwise uncompensated care and its 2009 predecessor. The panel’s holding preserves a state fund most recently reaffirmed by the legislature in 2017. Had Colorado lost the case, the Department of Health Care Policy and Financing would have been forced to refund as much as $6 billion, plus interest, to the hospitals that have paid into it. The result would have been a gaping $2 billion hole in the state’s budget and a huge debt. “At least a million Coloradoans would lose their Medicaid coverage and the state would be stuck with a $6 billion payment obligation without any ability to collect that money and repay it,” said Sean Gallagher, an attorney at Polsinelli who represented the Colorado Hospital Association in the case. The financing mechanism, called the Healthcare Affordability and Sustainability Fee under a 2017 law that modified it, is used in part to provide Colorado’s required contribution to Medicaid. Under that program, first created in 1965, the U.S. pays a portion of the state’s costs. The federal share depends the state’s per capita income. According to data provided by the Kaiser Family Foundation, the costs of providing Medicaid under its 1965 iteration are equally shared by the Colorado and U.S. governments. Ninety percent of the expansion of Medicaid eligibility, an option available to states under the federal Affordable Care Act of 2010, is covered by the federal government. The expansion funding raises the portion of costs of care reimbursable to hospitals from 54 cents on the dollar under the legacy Medicaid program to 80 cents on the dollar. Without it, the nearly 1.4 million of the state’s residents now on Medicaid — “just under a quarter of the state’s population,” according to Kathryn Mulready, senior vice president and chief strategy officer at the Colorado Hospital Association — would be at risk of losing access to healthcare.” HASF, which is similar to a 2009 precursor called the Hospital Provider Fee, is collected into a central fund and then allocated to a variety of healthcare purposes. “Some of it goes to pay hospitals,” Mulready explained. “Some of it goes to pay for the Medicaid expansion population authorized in 2013 and also the Medicaid expansion population authorized in 2009. It pays for a portion of [Department of Health Care Policy and Financing] administrative costs, it pays for a couple of special programs, and the bulk of the remaining dollar does go to hospitals through … supplemental payments.” None of the money returned to hospitals from the state’s hospital fee pool after those funds are matched subsidizes profit from the care of impoverished patients. “We’re not generating any sort of profit and we’re losing significant resources in treating those patients,” Mulready said. In addition to paying for the state’s Health First Colorado program (Colorado’s title for Medicaid), HPAF finances the Colorado Indigent Care Program, which provides discounted healthcare to indigent residents, funds the Child Health Plan Plus program, and provides for “quality incentive payments” to hospitals. According to an annual report submitted to the governor and the legislature’s Joint Budget Committee in January, the state’s enterprise operation to administer the fee, known as Colorado Healthcare Affordability and Sustainability Enterprise, collected more than $917 million through HSAF during fiscal year 2018-2019 and reimbursed hospitals more than $410 million. The TABOR Foundation, one of the plaintiffs in the case, claimed that HPF and HASF, however they relate to Colorado’s healthcare sector, were subject to TABOR, the 1992 constitutional amendment, and should have been sent to the voters for approval. “It amazed me that the government wouldn’t say there’s this program that gives us our money back, but please give us permission to collect it in the first place,” Penn Pfiffner, a former state legislator and chairman of the organization’s board of directors, said. Pfiffner maintains  that HASF and HPF should both be characterized as a “bed tax.” He pointed out that, according to a 1993 opinion of the General Assembly’s Office of Legislative Legal Services, they meet the three criteria laid out by that agency: whether the charge is “pecuniary” in nature, imposed by the legislature, and used to raise money for a “public purpose.” The justices have never ruled on the question whether a particular assessment authorized by the General Assembly is a tax or a fee under TABOR. Most recently, in Sept. 2019 the court declined to address the question. “TABOR does not . . . define these key terms, nor have we,” Justice William Hood said in the majority opinion delivered in a case called Griswold v. National Federation of Independent Business. It is not a question of whether the use of the money raised by an assessment is important, Pfiffner said. “We don’t really take a position on the tax itself,” he said, using his organization’s preferred description of HASF and HPF. “What we take a position on is the state legislature saying, ‘we know we took an oath to protect the state constitution, which includes the Taxpayer Bill of Rights, but we don’t have to play by the rules.’ When we see that, the TABOR Foundation reacts.” Gallagher decried that stance as inconsistent with the state’s limits on the circumstances when taxpayers can challenge a program under TABOR and said that the court of appeals reasonably found that none of the plaintiffs had standing. “The state district court found that there was no evidence that individual bills from a hospital were any higher as a result of the fee,” he said. “That’s because, when the fee is collected and matched with federal funds and then we provide additional funding for people with Medicaid, it’s not a given that hospital overhead goes up. In fact, in many cases hospital overhead may go down because they are now being compensated for providing services to others that they previously had to provide without any compensation.” Mulready said that Judge Michael Berger’s unanimous court of appeals decision to dismiss the case is a relief to her organization and hospitals all over the state. The hospital assessments are “the cornerstones of how we have been able to achieve greater than 90 percent of our population with insurance coverage over the past decade,” she said. Losing them “would certainly undercut, if not eliminate, our ability to do that.” Pfiffner said that TABOR Foundation attorneys are considering an appeal to the supreme court. The case is TABOR Foundation v. Colorado Department of Health Care Policy and Financing, No. 2020COA156.

Pfiffner Acquisitions

1 Acquisition

Pfiffner acquired 1 company. Their latest acquisition was Haefely on September 02, 2019.

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Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

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9/2/2019

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9/2/2019

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