Hospitals Won’t Sue Colorado, Signals Truce Over Polis Reinsurance Fees

David Zalubowski/AP
A patient heads into Denver Health Medical Center’s primary care clinic located in a low-income neighborhood in southwest Denver, March 9, 2017.

Colorado hospitals have dropped the lawsuit they filed over funding for the state's high-profile reinsurance program. The move could help ease tensions between hospitals and the administration of Democratic Gov. Jared Polis. 

Colorado’s reinsurance program has helped limit health insurance premiums and is paid for in part by a $40 million annual fee levied on hospitals.

The Colorado Hospital Association said the state wanted them to pay the fee months earlier than state law allowed and they sued to stop it. Now hospitals say the state has halted the emergency rules, so it has withdrawn its suit.

The CHA stands by its position that payments can’t be collected until the next state fiscal year, which begins July 1, 2020.

“We support a forthcoming legislative solution that is a win-win-win for the reinsurance program, for hospitals, and for the state budget,” said Chris Tholen, CHA president and chief executive officer. 

That said, he noted, if the Polis administration proceeds with an attempt to collect hospital payments early, “especially in the face of a workable solution, we’ll be back in court if necessary.”

The sides will still meet to hammer out details on the payments.

State Insurance Commissioner Michael Conway, in a statement, said he was “pleased that this frivolous lawsuit has been dismissed.” Thanks to the reinsurance program, he said insurance premiums for those buying on the individual market dropped by an average of 20 percent. 

“Now that this distraction is over, we will continue to work with stakeholders as we strive to serve Coloradans," he said.

The development seems to represent a cooling off of a showdown between hospitals and the state that has been brewing for months over health costs and how to best lower them. The detente comes as lawmakers on the state’s powerful legislative budget committee got good news about funding for the reinsurance program.

As the Colorado Sun reported, the administration shaved their nearly $60 million figure to a budget request of $9 million for the program when the federal government said it would provide more money to the state than expected. And the administration also decided to cut its request for the third year of funding for the program. The reinsurance program is now approved for funding for the first two years.

Earlier: Disagreement Between Polis And Hospitals Over Reinsurance Just Boiled Over Into The Courts