Two dozen other states already have a hospital provider fee similar to one under consideration in Colorado, but Gov. Bill Ritter's plan would be among the first to use the money in an attempt to whittle the number of uninsured.

Ritter, in his State of the State speech last week, proposed that hospitals pay a fee to Colorado and that fee would be used to win federal matching funds.

The new money - as much as $600 million a year - would expand eligibility for publicly funded health insurance programs, allow some people to buy into Medicaid and increase reimbursements for hospitals that treat Medicaid patients.

While states, including Illinois, Kansas and Missouri, have a hospital provider fee, most of them use the fee primarily to increase payments to providers. In Colorado, the fee is intended to help add 100,000 more to public insurance rolls. The state has an estimated 790,000 uninsured.

"It's a very innovative way to cover more of the uninsured, given the current economic situation," said Joan Henneberry, executive director for the Colorado Department of Health Care Policy and Financing.

The details of the hospital fee plan are under discussion between Ritter, health insurers, hospitals and other business groups.

Among the points: the amount of the fee and whether hospitals of different sizes and patient populations should pay a different rate.

"It's much closer to being an art than a science," said Colorado Hospital Association President Steven Summer, who said the association's leaders are on board with the concept.

Both sides have agreed that the fee won't be passed along to the patients. The models the parties are considering include a 3 percent fee on each hospital's patient revenue, which would result in an additional $600 million a year.

The effort to establish Medicaid provider fees in Colorado comes as the weakening economy results in more unemployed and more uninsured patients in hospital emergency rooms, which are legally required to see all patients who enter their doors. Uninsured patients and Medicaid under-payments to hospitals are two of the biggest drivers of cost-shifting in health care, with Colorado hospitals incurring more than $375 million in uncompensated costs by serving Medicaid patients.

"I think it's a good step and it's really a needed step to address the number of uninsured and underpayment, and it's something we can do in this fiscal environment," said Dede de Percin, executive director of the Colorado Consumer Health Initiative.

Some Republican legislators, however, are skeptical about the program.

"It looks to me like patients and insurance payers are going to be on the hook for a large government program," said Senate Minority Caucus Chairman Mike Kopp, a Republican from Littleton, after hearing of Ritter's plan last week.

davisj@RockyMountainNews.com or 303-954-2514.

About Ritter's plan

WHAT IS THE PROPOSED HOSPITAL FEE?

Hospitals would pay a fee to the state, which would be used to win federal matching funds. The new money would then be used to expand eligibility for publicly funded health insurance programs, allow some people to buy into Medicaid and increase reimbursements for hospitals that treat Medicaid patients.

DO OTHER STATES HAVE A SIMILAR FEE?

Some 40 states have some kind of provider fee program in effect, though a number are not specifically hospital fees, said Joan Henneberry, executive director for the Colorado Department of Health Care Policy and Financing. Illinois, Kansas, Missouri and Vermont are among the states that have a hospital provider fee.

WHAT HOSPITALS COULD BENEFIT MOST FROM THIS?

Hospitals like Denver Health, the city's primary safety-net hospital, that provide the most unreimbursed care to uninsured and Medicaid patients . Figuring out how to allocate the fee to hospitals based on their Medicaid patient load is under discussion, said Colorado Hospital Association President Steven Summer.

Rocky staff writer Ed Sealover contributed to this report.