Colorado hospitals will have to hand over more financial information under two new laws

Hart Van Denburg/CPR News
Longmont United Hospital, December 2, 2021.

Hospitals will have to give the public and the state government more information about their finances and operations under a pair of bills to be signed by Gov. Jared Polis today.

The bipartisan proposals build on earlier measures that required hospitals to report financial details to the state, including audited financial statements.

One of the new measures, HB23-1226, adds additional disclosure requirements. For example, starting next July, hospital chains will have to provide details about their acquisitions of new practices, their plans for major construction projects and details about how they shuffle money around.

Rep. Chris deGruy Kennedy, a Democratic sponsor of the bill, said he wanted the state to have a better sense of how mergers and acquisitions are reshaping the health care industry, among other changes.

“Sometimes just by shining a light on what's going on with these practices, there's a public pressure created that will make hospitals voluntarily do better in cases where they're not,” he said. “I also think that there are certain kinds of public policies that we can write based on this [information.]”

The bill adds requirements that would show how hospital owners move money around their  organizations — potentially including across state lines. “Are they charging Coloradans more money and then treating us as cash cows, moving that money out of state to wealthy executives in other states?” said Rep. Matt Soper, a Republican cosponsor. 

If that’s what a few years of data reveals, he added: “Then, I think, we need to have a very tough policy conversation with executives and say, ‘This is not right.’”

Nonprofit hospitals will also have to submit information about the compensation for their five highest-paid administrators, though that will not be published on an individual basis. Soper said that it’s important to know how hospitals with a nonprofit mission — especially those in poor, rural areas — are spending money, saying it seemed wrong to him for an executive to be clearing more than $500,000 a year.

The New York Times has reported extensively on how some nonprofit hospitals have strayed far from their mission of public service

Hospitals will also have to provide information retroactively for several previous years. They may face fines up to $20,000 per week for repeated or knowing and willful noncompliance.

Also starting next July, bills sent to patients will have to include a minimum level of information, such as the provider’s name, the date and a description of the services.

In the Senate, HB-1226 was cosponsored by Republican Sen. Perry Will and Democratic Sen. Dylan Roberts. The effort began back in 2017, when deGruy Kennedy led another bipartisan bill to get more information out of hospitals. That measure failed in the Senate, which was controlled by Republicans at the time.

Eventually, a hospital transparency law passed in 2019, after Democrats took control of the statehouse. This year, DeGruy Kennedy said the new law was meant to address shortcomings that arose from that earlier law, as well as to capture details that couldn’t be included in it at the time.

The effort didn’t face particularly intense opposition this time around. The Colorado Hospital Association requested amendments, but did not formally oppose the bill.

A second new law, SB23-252, will require hospitals to make public how much Medicare — the federal insurance program for older people — reimburses them for any given procedure. 

“When you have increased transparency, that helps all Coloradans because it means that hospitals have to show their cards to the public,” said Sen. Julie Gonzales, a Democratic sponsor.

As with the other hospital disclosure measure, this law went through with bipartisan support. It was cosponsored by Sen. Kevin Van Winkle and Rep. Anthony Hartsook, both Republicans, and Democratic Rep. Lindsey Daugherty. The bill was originally more expansive, aiming to force hospitals to disclose their “standard charges” for hundreds of items and services, but it was stripped down amid hospital opposition.

Some of the information that will be provided to the state under the new laws is already provided to the federal government, but the sponsors said setting state-level requirements would make sure it’s easier to access by Coloradans.

In a statement, a spokesperson for the Colorado Hospital Association said the organization has a “long history of supporting transparency that helps patients,” and said its “members will work closely with [the state] to ensure that hospitals can comply with the new requirements.”