Colorado budget writers this week rejected cuts to a Medicaid program that helps hospitals train new doctors, saying they feared that cutting the program could lead to future physician shortages.
Members of the Joint Budget Committee voted unanimously Monday not to adopt the cuts, which the state Medicaid agency had recommended as part of its proposal to close the state’s nearly $1 billion overall budget hole. The cuts would have affected a program that helps hospitals offset the cost of teaching medical residents — trainee doctors who have graduated from medical school and are working their first jobs.
“On this one, I just can’t,” said Rep. Rick Taggart, a Republican from Grand Junction who sits on the JBC.
State Rep. Rick Taggart, R-Grand Junction, attends a Joint Budget Committee meeting on Monday, Jan. 6, 2025. (Jesse Paul, The Colorado Sun)Noting hospitals’ argument that residency programs are important for the workforce pipeline, especially in places outside the Front Range, Taggart said: “It is extremely difficult to recruit doctors to rural Colorado. Extremely difficult.”
Two government programs help fund medical education in Colorado. One pays the direct costs, mainly the salaries of the medical residents. The other pays the indirect costs of the training programs, which mostly result from teaching hospitals operating less efficiently than others. It was this second program the state had proposed reducing.
The Colorado Department of Health Care Policy and Financing, which administers Medicaid, had proposed to cut about $50 million in indirect medical education funding. Because a dollar cut is not a dollar saved in Medicaid, the plan would have freed up about $14 million for the state to use elsewhere in the budget, while the remainder would have been lost federal dollars that Colorado could no longer claim after pulling back state support.
The cuts would have targeted only hospitals that are part of large systems, with UCHealth University of Colorado Hospitals and Children’s Hospital Colorado most significantly affected. Denver Health and rural hospitals were exempted from the cuts.
The sign stands outside UCHealth University of Colorado hospital Friday, April 1, 2022, in Aurora, Colo. (AP Photo/David Zalubowski)When the Joint Budget Committee’s nonpartisan staff unveiled their own recommendation Monday, they proposed going further and cutting the whole program for all hospitals — a $77 million cut that would have saved the state $22 million in general fund spending.
The JBC staff argued that some states provide no funding for post-graduation medical education and that there might be better ways to pay for training new doctors. Federal analyses of a similar federal program have found that payments to hospitals may exceed their actual training-related costs.
“The JBC staff is concerned that reimbursements for medical education are not entirely equitable and in proportion to the teaching provided,” a JBC budget analyst wrote in a briefing for committee members.
Hospitals argued that cutting the fund would force them to trim the number of residents they can train in a year by hundreds of spots. Because doctors often go on to practice long-term where they do their residency, that could mean hundreds of fewer doctors entering the workforce in Colorado. That problem could be especially acute in rural Colorado, where leaders say that recruiting physicians who did their residencies locally is their best strategy for attracting and retaining doctors.
“We have a workforce shortage in this area, and I think this would compound it,” Sen. Barbara Kirkmeyer, a Brighton Republican who is also a JBC member, said during Monday’s meeting.
However, Monday’s vote may not be the last word on the matter. JBC members asked the state Medicaid agency to provide information on other possible ways to fund medical education in Colorado. That suggests the issue could come under scrutiny again next year, especially if lawmakers are once again scrambling to fill a budget hole.
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