A rural Colorado hospital is staring down a multimillion-dollar bill from the state — and its leaders warn it could gut services that families rely on every day.

State Wants $57.9 Million Back from Public Hospitals

The Colorado Department of Health Care Policy and Financing (HCPF) has asked public hospitals statewide to return nearly $58 million in hospital provider fees. Delta Health, a small hospital in Delta, Colorado, has been asked to repay $3.2 million of that sum.

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The huge clawback comes in the wake of a lawsuit involving UCHealth, a private non-profit system that successfully argued that two of its newly acquired hospitals were wrongly classified as ‘public.’ That misclassification triggered the state’s attempt to recalculate provider fees and claw back funds.

Rural Hospitals Left Holding the Bag

Jonathan Cohee, President and CEO of Delta Health, says the order couldn’t come at a worse time for small rural facilities already fighting to stay afloat.

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“It’d be devastating for hospitals like us to be able to have to fork up $3.2 million,” Cohee said. “Those dollars keep critical services running in communities that can’t afford to lose them.”

In his view, the state’s mishandling should not become rural hospitals’ burden — especially when HCPF’s own administrative fees have jumped by more than 250% in the last decade.

How Provider Fees Work — And What Went Wrong

So what’s the issue here? Hospitals pay provider fees to help cover patient care costs, then get matching federal dollars back through the state. That money flows back to hospitals to fund everything from maternity wards to home health care.

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The lawsuit over UCHealth’s status means the whole funding pot must be recalculated to account for private hospitals — so now, public hospitals like Delta Health are being asked to repay millions to balance the books.

Here’s what could be on the chopping block:

• Obstetrics and delivery services

• Oncology infusions

• Physical and occupational therapy

• Home health and urgent care

• Primary and specialty care clinics

Cohee: “Use the State’s Own Reserves Instead”

Cohee argues that the state could — and should — use its reserves to absorb the impact, instead of punishing already strapped rural providers.

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“HCPF and the chase fees have a lot of money in reserves to be able to absorb this miscalculation on their part,” he said. “Rather than take that away from small rural hospitals.”

With rising costs and chronic staff shortages, local hospitals like Delta Health say any big clawback would put them on thin ice, threatening care in communities with few other options.

A Battle with Broader Implications

Delta Health’s fight is part of a larger standoff between the state’s funding models and the rural facilities that keep huge swathes of Colorado covered.

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Hospital leaders warn that if rural care collapses under financial strain, patients could face longer travel times, higher costs, and gaps in services that cities take for granted.

For now, Delta Health’s $3.2 million bill hangs over its head — a stark reminder that sometimes a paperwork error can echo all the way to a newborn delivery room in a tiny Colorado town.