Title of Rule:	Colorado Indigent Care Program Allocation and Distribution of Colorado Health Care Services Payment	
Rule Number:	MSB 08-06-17-B	
Division / Contact / Phone:	Budget Div/Safety Net Programs Section / Cindy Arcuri /3996	
SECRETARY OF STATE
RULES ACTION SUMMARY AND FILING INSTRUCTIONS

SUMMARY OF ACTION ON RULE(S)

1.	Department / Agency Name:	Health Care Policy and Financing / Medical Services Board	
2.	Title of Rule:	MSB 08-06-17-B, Colorado Indigent Care Program Allocation and Distribution of Colorado Health Care Services Payment	
3.	This action is an adoption of:	an amendment	
4.	Rule sections affected in this action (if existing rule, also give Code of Regulations number and page numbers affected): 	
Sections(s) 8.903.C.14, Colorado Department of Health Care Policy and Financing, Staff Manual Volume 8, Medical Assistance (10 CCR 2505-10).	
5.	Does this action involve any temporary or emergency rule(s)?	Yes	
If yes, state effective date:		
Is rule to be made permanent? (If yes, please attach notice of hearing).	Yes	

PUBLICATION INSTRUCTIONS*
Please replace the current text at 8.903  PROVISIONS APPLICABLE TO QUALIFIED HEALTH CARE PROVIDERS from 8.903.C.14 to the end of that paragraph with the attached text from 8.903.C.14 through 8.903.C.14.d.  This change is effective 07/11/2008.

Title of Rule:	Colorado Indigent Care Program Allocation and Distribution of Colorado Health Care Services Payment	
Rule Number:	MSB 08-06-17-B	
Division / Contact / Phone:	Budget Div/Safety Net Programs Section / Cindy Arcuri /3996	
STATEMENT OF BASIS AND PURPOSE

1.	Summary of the basis and purpose for the rule or rule change.  (State what the rule says or does and explain why the rule or rule change is necessary).	
The rule establishes the allocation of funds from the Colorado Health Care Services Fund to community health clinics and primary care clinics in FY 2008-09 and FY 2009-10.  In addition, the rule creates a new methodology for distributing funds to primary care clinics.

For FY 2008-09, 18% of the moneys appropriated from the Colorado Health Care Services Fund shall be allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, the proposed rule states that 85% of the remaining funds shall be allocated to community health clinics operated by a qualified health care provider and 15% shall be allocated to primary care clinics operated by a qualified health care provider.

For FY 2009-10, 18% of the moneys appropriated from the Colorado Health Care Services Fund shall be allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, the proposed rule states that 88% of the remaining funds shall be allocated to community health clinics operated by a qualified health care provider and 12% shall be allocated to primary care clinics operated by a qualified health care provider.

The proposed rule establishes a formula so that the distribution of available funds for primary care clinics will be based upon historical data for the number of unique low-income clients who received primary care services at a primary care clinic and their number of visits. 	
2.	An emergency rule-making is imperatively necessary	
	to comply with state or federal regulation and/or	
	for the preservation of public health, safety and welfare.	

Explain:
	
State regulations specifying the allocation of funds to community health clinics and primary care clinics expired at the end of FY 2007-08.  In order for Health Care Services Fund payments to be made to qualified health care providers in FY 2008-09 an allocation must be established for FY 2008-09. 	
3.	Federal authority for the Rule, if any:	
  	
4.	State Authority for the Rule:	
25.5-1-301 through 25.5-1-303, C.R.S. (2007);

Title of Rule:	Colorado Indigent Care Program Allocation and Distribution of Colorado Health Care Services Payment	
Rule Number:	MSB 08-06-17-B	
Division / Contact / Phone:	Budget Div/Safety Net Programs Section / Cindy Arcuri /3996	
REGULATORY ANALYSIS

1.	Describe the classes of persons who will be affected by the proposed rule, including classes that will bear the costs of the proposed rule and classes that will benefit from the proposed rule.
Community health clinics and primary care clinics benefit from the Colorado Health Care Services Fund.  This funding partially compensates them for providing primary care services to Colorado Indigent Care Program clients.
As required by statute, 18% of the annual appropriation to the fund has been allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, 82% of the remaining funds were allocated to community health clinics and 18% was allocated to primary care clinics.  Enabling legislation for this funding requires the allocation between community health clinics and hospital primary care clinics to be based on prior utilization.  Based on an analysis of prior utilization, the proposed rule establishes that, after the 18% appropriation to Denver Health Medical Center, the allocations to community health clinics and primary care clinics shall be as follows:
In FY 2008-09, 85% of the remaining funds shall be allocated to community health clinics and 15% of the remaining funds shall be allocated to primary care clinics.  In FY 2009-10, 88% of the remaining funds shall be allocated to community health clinics and 12% of the remaining funds shall be allocated to primary care clinics.  
The proposed rule establishes a distribution for primary care clinics in FY 2008-09 and 
FY 2009-10 based on the average payment derived from historical unique client count and the number of visits.  Presently, the distribution of funds to primary care clinics is based only on unique client count.  By also incorporating the number of visits into the distribution methodology, providers that serve Colorado Indigent Care Program clients with higher utilization needs will benefit

2.	To the extent practicable, describe the probable quantitative and qualitative impact of the proposed rule, economic or otherwise, upon affected classes of persons.
As specified in 25.5-3-112(1)(b), C.R.S. (2007), in FY 2008-09 and FY 2009-10, $15,000,000 will be appropriated from the general fund to the Colorado Health Care Services Fund.  Eighteen percent (18%) of this appropriation, which is $2,700,000 plus federal financial participation of $2,700,000, resulting in a total of $5,400,000 will be paid to Denver Health Medical Center.
In FY 2008-09, after the appropriation to Denver Health Medical Center, 85% of the remaining Health Care Services funds, or $10,455,000 in general fund plus $10,455,000 in federal financial participation, for a total of $20,910,000 will be allocated to community health clinics.  The remaining 15%, which is $1,845,000 in general fund plus the federal match of $1,845,000 results in a total allocation of $3,690,000 to primary care clinics.
In FY 2009-10, after the appropriation to Denver Health Medical Center, 88% of the remaining Health Care Services funds, which is $10,824,000 in general fund plus $10,824,000 in federal financial participation, for a total of $21,648,000 will be allocated to community health clinics.  The remaining 12%, which is $1,476,000 in general fund plus the federal match of $1,476,000 results in a total allocation of $2,952,000 to primary care clinics.
3.	Discuss the probable costs to the Department and to any other agency of the implementation and enforcement of the proposed rule and any anticipated effect on state revenues.
There are no measurable costs to the Department or to any other agency regarding the implementation and enforcement of the proposed rule.
4.	Compare the probable costs and benefits of the proposed rule to the probable costs and benefits of inaction.
The costs of inaction are noncompliance with State statute, which is not an option.
5.	Determine whether there are less costly methods or less intrusive methods for achieving the purpose of the proposed rule.
State law requires the Department to implement a rule addressing the allocation and distribution of the Health Care Services Fund based on prior utilization.  Providers submit data to the Department so that the Department may calculate the allocation and distribution.  The data collection process is neither costly nor intrusive.
6.	Describe any alternative methods for achieving the purpose for the proposed rule that were seriously considered by the Department and the reasons why they were rejected in favor of the proposed rule.
The Department examined other allocation strategies.  Stakeholders were in agreement that the proposed allocations in FY 2008-09 and FY 2009-10 meet the intent of the enabling legislation.  The selected allocation between the community health clinics and primary care clinics is based on cost.
The Department has also modeled other distribution methodologies.  A distribution based on uncompensated costs would be highly undesirable because payments were found to be heavily skewed to one provider.  The Department determined that the proposed methodology, which takes into account both unique client count and the number of visits to primary care clinics, results in the lowest variance and standard deviation of payments to primary care clinic providers.

14.    Colorado Health Care Services Payment.     This payment is an allocation of the Colorado Health Care Services Fund and is available to community health clinics and primary care clinics operated by a qualified health care provider that provides primary care services.  For this section, primary care services are defined in Section 8.930.1.A of the regulations for the Comprehensive Primary/Preventive Care Grant Program.

a.	For FY 2007-08, 18% of the moneys appropriated from the Colorado Health Care Services Fund shall be allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, 82% of the remaining funds shall be allocated to community health clinics operated by a qualified health care provider and 18% shall be allocated to primary care clinics operated by a qualified health care provider

For FY 2008-09, 18% of the moneys appropriated from the Colorado Health Care Services Fund shall be allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, 85% of the remaining funds shall be allocated to community health clinics operated by a qualified health care provider and 15% shall be allocated to primary care clinics operated by a qualified health care provider.

For FY 2009-10, 18% of the moneys appropriated from the Colorado Health Care Services Fund shall be allocated to Denver Health Medical Center.  After the appropriation to Denver Health Medical Center, 88% of the remaining funds shall be allocated to community health clinics operated by a qualified health care provider and 12% shall be allocated to primary care clinics operated by a qualified health care provider.
b.	In order to receive a payment from the Colorado Health Care Services Fund, the qualified health care provider who operates a primary care clinic is required to complete a Colorado Health Care Services Fund Application as issued by the Department.  This application for the current state fiscal year shall be submitted to the Department by July 31 of each State fiscal year.  
c.	Distribution of available funds for primary care clinics operated by a qualified health care provider shall be based upon historical data for the number of unique low-income clients who received primary care services at a primary care clinic and their number of visits.  A qualified health care provider’s distribution is calculated based on the average of the dollar amount derived from the provider’s number of unique clients who received primary care services at a primary care clinic relative to the total number of clients who received primary care services at a primary care clinic for all qualified health care providers and the dollar amount derived from the provider’s number of low-income primary care services visits at a primary care clinic relative to the total number of low-income primary care services visits at a primary care clinic for all qualified health care providers.  The historical data will be reported in the Colorado Health Care Services Fund Application and related to the most recently available annual report published by the Colorado Indigent Care Program prior to rate setting by the Department for each upcoming State fiscal year.  
d.	Distribution of available funds for community health clinics operated by a qualified health care provider shall be based upon historical uncompensated costs for clients who received primary care services at a community health clinic.  An individual community health clinic’s distribution is calculated based on the community health clinic’s historical uncompensated costs for clients who received primary care services at a community health clinic relative to the total historical uncompensated costs for all clients who received primary care services at community health clinics.  The historical uncompensated costs shall be that as reported in the most recently available annual report published by the Colorado Indigent Care Program prior to rate setting by the Department for each upcoming State fiscal year.