Colorado health department may use sampling to recover Medicaid overpayments

The state health care department may use a statistically valid sample and extrapolation to determine and recover Medicaid overpayments. This applies to providers of nonemergency medical transportation or pediatric behavioral therapy, including applied behavior analysis, for services provided from January 1, 2022, through December 31, 2023. The sampling and extrapolation must follow nationally recognized, generally accepted statistical principles, standards, and methods. The audit must begin after July 1, 2026, and the authority applies to the specified services provided from January 1, 2022, through December 31, 2023.

An auditor may use the same sampling method for later services when an earlier audit finds an error rate above 10%; the department must give notice before recovery. The follow-up audit covers the same transportation and pediatric behavioral therapy providers and services provided from January 1, 2024, through December 31, 2025. The earlier audit must identify a statistically significant pattern, defined here as a claims error rate above 10%. The notice must explain the alleged overpayment, calculation method, claim samples, findings, and other information needed to review the analysis. Before recovery begins, the provider may seek informal reconsideration or file a formal appeal. The follow-up authority applies to services provided from January 1, 2024, through December 31, 2025; the department must issue notice within 60 days after identifying an alleged overpayment.

The state auditor must examine each covered audit for proper sampling and extrapolation, and report the findings each year until those audits are complete. The examination covers audits of providers of nonemergency medical transportation or pediatric behavioral therapy conducted under the sampling authority. A private audit contract under this authority may not pay the contractor a percentage of the recovery collected from a provider. The annual reports continue until the covered audits are complete.

The act adjusts the 2026–27 Medicaid appropriation by reducing general funds and increasing cash funds from recoveries and recoupments. The adjustment concerns the department’s funding for medical and long-term care services for Medicaid-eligible people. The general-fund reduction does not apply if the annual budget provides less funding than the required adjustment or provides no funding for these services. The listed adjustment assumes federal funding will decrease by $6,861,775. This budget section takes effect only if the 2026–27 annual budget becomes law, and then starts on the later effective date of this act or that budget.