Aug 7, 2018

Recent articles

20th Anniversary Milestones: How CCLP’s Conversion Advocacy Changed Philanthropy in Colorado

by | Aug 7, 2018

In celebrating the 20th anniversary of Colorado Center on Law and Policy, we are publishing a series of vignettes about the organization’s most significant accomplishments.

Over the last 20 years, CCLP has been a vital watchdog when health care nonprofits are acquired by for-profit entities by ensuring that these transactions are valued fairly, the proceeds are dedicated to  the public good, and the resulting foundations use the proceeds to support the health of the public. Ultimately, this work has benefitted Coloradans most in need of assistance.

“We’re responsible for hundreds of millions of dollars  more being spent in the provision of health care to low-income people and to poorer parts of Colorado,” said Ed Kahn, an attorney who helped found CCLP and acted as lead counsel in some of Colorado’s largest conversion cases.

Kahn represented the public interest when the nonprofit insurer Blue Cross Blue Shield of Colorado was sold to the for-profit Anthem Inc. in the late 1990s. Earlier, Kahn helped draft legislation that established the legal parameters for such deals. The Blue Cross conversion led to the creation of the Caring for Colorado Foundation in 1999 from the proceeds of that sale. Due in part to CCLP’s involvement, Kahn noted, the Caring for Colorado Foundation’s valuation was set about $55 million higher than Anthem’s initial offer of $100 million.

The Caring for Colorado Foundation reported $201 million in assets and awarded 106 grants totaling more than more than $6.63 million to organizations throughout Colorado in 2017. Last year, the foundation funded nonprofits that specialize in children’s mental health and dental work for the medically underserved along with many other nonprofit organizations, including CCLP.

In the early 2000s, as a result of Kahn’s advocacy, the Colorado Health Foundation (then a partner of for-profit HCA in the HealthONE joint venture) dramatically increased its annual funding to community organizations. This came after Kahn filed complaints with the Internal Revenue Service and Colorado’s Attorney General because the foundation’s failure to grant a more substantial share of its funds violated federal and state law. Today, the Colorado Health Foundation has $2.4 billion in assets, partly as a result of the sale of its interest in the HCA-HealthONE partnership. In 2016, the foundation awarded more than $94 million in grants and contributions to nonprofit organizations, government agencies and other groups to improve the health and health care of Coloradans.

In 2016, Kahn and CCLP staff, including Health Care Program Director Elisabeth Arenales and Health Care Attorneys Bethany Pray and Allison Neswood,  successfully made the case to Colorado’s Attorney General for preserving the full fair-market value of InnovAge for public purposes in Colorado.  InnovAge,  a nonprofit that converted to for-profit status,  provides community-based comprehensive care for people in need of long-term services and support. In addition to arguing that the value of InnovAge was $16 million higher than the proposed acquisition amount, Kahn and CCLP maintained that assets from the conversion should primarily benefit Colorado’s frail elderly and disabled people rather than being dispersed in other states. In her decision approving the conversion, Attorney General Cynthia Coffman increased InnovAge’s valuation and ordered that 80 percent of InnovAge’s value remain in Colorado for the benefit of frail elderly and disabled Coloradans. Coffman also ordered InnovAge to fund an ombudsman to oversee the interests of InnovAge clients.

As a result of the sale, $202 million (including $15 million held in escrow) created the Next 50 Initiative foundation. Next 50 Initiative is committed to awarding $8 million in its first year for programs and products that improve the lives and capacities of people over age 50.

In addition to these matters, CCLP helped establish the right to attorneys’ fees when a common fund is established from an insurance company conversion. CCLP also worked on several smaller conversions, including the 2017 acquisition of the nonprofit health insurer Rocky Mountain Health Plans by UnitedHealthcare.

Kahn credits former Attorneys Mary Catherine Rabbitt and Christy Murphy (later CCLP Executive Director) and Jean Dubofsky for indispensable assistance in CCLP’s nonprofit conversion work.

-By Bob Mook

Recent articles

HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

To maintain health and well-being, people of all ages need access to quality health care that improves outcomes and reduces costs for the community. Health First Colorado, the state's Medicaid program, is public health insurance for low-income Coloradans who qualify. The program is funded jointly by a federal-state partnership and is administered by the Colorado Department of Health Care Policy & Financing.

Benefits of the program include behavioral health, dental services, emergency care, family planning services, hospitalization, laboratory services, maternity care, newborn care, outpatient care, prescription drugs, preventive and wellness services, primary care and rehabilitative services.

In tandem with the Affordable Care Act, Colorado expanded Medicaid eligibility in 2013 - providing hundreds of thousands of adults with incomes less than 133% FPL with health insurance for the first time increasing the health and economic well-being of these Coloradans. Most of the money for newly eligible Medicaid clients has been covered by the federal government, which will gradually decrease its contribution to 90% by 2020.

Other populations eligible for Medicaid include children, who qualify with income up to 142% FPL, pregnant women with household income under 195% FPL, and adults with dependent children with household income under 68% FPL.

Some analyses indicate that Colorado's investment in Medicaid will pay off in the long run by reducing spending on programs for the uninsured.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

Hunger, though often invisible, affects everyone. It impacts people's physical, mental and emotional health and can be a culprit of obesity, depression, acute and chronic illnesses and other preventable medical conditions. Hunger also hinders education and productivity, not only stunting a child's overall well-being and academic achievement, but consuming an adult's ability to be a focused, industrious member of society. Even those who have never worried about having enough food experience the ripple effects of hunger, which seeps into our communities and erodes our state's economy.

Community resources like the Supplemental Nutrition Assistance Program (SNAP), formerly known as Food Stamps, exist to ensure that families and individuals can purchase groceries, with the average benefit being about $1.40 per meal, per person.

Funding for SNAP comes from the USDA, but the administrative costs are split between local, state, and federal governments. Yet, the lack of investment in a strong, effective SNAP program impedes Colorado's progress in becoming the healthiest state in the nation and providing a better, brighter future for all. Indeed, Colorado ranks 44th in the nation for access to SNAP and lost out on more than $261 million in grocery sales due to a large access gap in SNAP enrollment.

See the Food Assistance (SNAP) Benefit Calculator to get an estimate of your eligibility for food benefits.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

Every child deserves the nutritional resources needed to get a healthy start on life both inside and outside the mother's womb. In particular, good nutrition and health care is critical for establishing a strong foundation that could affect a child's future physical and mental health, academic achievement and economic productivity. Likewise, the inability to access good nutrition and health care endangers the very integrity of that foundation.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides federal grants to states for supplemental foods, health care referrals, and nutrition information for low-income pregnant, breastfeeding and non-breastfeeding postpartum women and to infants and children up to age five who are found to be at nutritional risk.

Research has shown that WIC has played an important role in improving birth outcomes and containing health care costs, resulting in longer pregnancies, fewer infant deaths, a greater likelihood of receiving prenatal care, improved infant-feeding practices, and immunization rates

Financial Security:
Colorado Works

In building a foundation for self-sufficiency, some Colorado families need some extra tools to ensure they can weather challenging financial circumstances and obtain basic resources to help them and their communities reach their potential.

Colorado Works is Colorado's Temporary Assistance for Needy Families (TANF) program and provides public assistance to families in need. The Colorado Works program is designed to assist participants in becoming self-sufficient by strengthening the economic and social stability of families. The program provides monthly cash assistance and support services to eligible Colorado families.

The program is primarily funded by a federal block grant to the state. Counties also contribute about 20% of the cost.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

Child care is a must for working families. Along with ensuring that parents can work or obtain job skills training to improve their families' economic security, studies show that quality child care improves children's academic performance, career development and health outcomes.

Yet despite these proven benefits, low-income families often struggle with the cost of child care. Colorado ranks among the top 10 most expensive states in the country for center-based child care. For families with an infant, full-time enrollment at a child care center cost an average of $15,140 a year-or about three-quarters of the total income of a family of three living at the Federal Poverty Level (FPL).

The Colorado Child Care Assistance Program (CCCAP) provides child care assistance to parents who are working, searching for employment or participating in training, and parents who are enrolled in the Colorado Works Program and need child care services to support their efforts toward self-sufficiency. Most of the money for CCCAP comes from the federal Child Care and Development Fund. Each county can set their own income eligibility limit as long as it is at or above 165% of the federal poverty level and does not exceed 85% of area median income.

Unfortunately, while the need is growing, only an estimated one-quarter of all eligible children in the state are served by CCCAP. Low reimbursement rates have also resulted in fewer providers willing to accept CCCAP subsidies.