HB 1412

HOUSE BILL 26-1412
BY REPRESENTATIVE(S) Sirota and Taggart, Brown, Woodrow,
Bradley, Keltie;
also SENATOR(S) Bridges and Kirkrneyer, Amabile, Hinrichsen.
CONCERNINGAUTHORIZINGTHEDEPARTMENTOFHEALTHCAREPOLICY AND
     FINANCING TO USE STATISTICAL SAMPLING AND EXTRAPOLATION TO
     RECOVER OVERPAYMENTS TO PROVIDERS FOR CERTAIN MEDICAID
     SERVICES, AND, IN CONNECTION THEREWITH, MAKING AND REDUCING
     AN APPROPRIATION.
Be it enacted by the General Assembly of the State of Colorado:
       SECTION 1. Legislative declaration. ( 1) The general assembly
finds and declares that:
       (a) The federal centers for medicare and medicaid services, the
office of inspector general in the federal department of health and human
services, and other federal agencies regularly employ statistical sampling
and extrapolation methodologies to identify and recover improper payments
from the Colorado medicaid program administered by the department of
health care policy and financing, or HCPF;
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
       (b) Certain medicaid service areas, including nonemergency medical
transportation and pediatric behavioral therapy, such as applied behavior
analysis services, have been identified as having elevated rates of
insufficient documentation, improper billing, or fraud, waste, and abuse,
characterized by rapid outsized spending growth not explained or supported
by a corresponding increase in the number of individuals served;
      ( c) Requiring HCPF to individually audit each claim submitted for
payment by a provider to determine the appropriate error rate and
overpayment recovery imposes an unrealistic and unsustainable
administrative burden;
       (d) The inability for HCPF to audit every claim submitted by a
provider results in under-represented recoupments, recovery delays, and
increased risk for federal disallowance, which the state is solely financially
responsible for;
       (e) Statistical sampling and extrapolation methodologies, when
applied consistently with recognized federal standards, provide a reliable
and efficient basis for overpayment recovery; and
        (f) Using statistical sampling and extrapolation across providers
treating medicaid members for services covered under the nonemergent
medical transportation benefit and the pediatric behavioral therapy benefit,
including applied behavioral analysis, will protect Colorado medicaid funds
and the state general fund; deter fraud, waste, and abuse and related
practices; and align state practices with established federal methodologies
and standards.
       SECTION 2. In Colorado Revised Statutes, 25.5-4-301, add
(3)(a)(Vl.5) as follows:
       25.5-4-301. Recoveries - overpayments - penalties - interest -
adjustments - liens - review or audit procedures - cash fund - rules -
definitions - repeal.
      (3) (a) A review or audit of a provider is subject to the following
procedures:
       (Vl.5) (A)      IF   AN AUDIT    OF   A   PROVIDER WHO PROVIDES
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NONEMERGENCY MEDICAL TRANSPORTATION SERVICES OR PEDIATRIC
BEHAVIORAL THERAPY, INCLUDING APPLIED BEHAVIORAL ANALYSIS, IS
INITIATED AFTER JULY 1, 2026, FOR SERVICES PROVIDED FROM JANUARY 1,
2022, THROUGH DECEMBER 31, 2023, THE STATE DEPARTMENT IS
AUTHORIZED TO DETERMINE AND RECOVER AN OVERPAYMENT TO A
PROVIDER USING A SAMPLING OF RECORDS AND EXTRAPOLATION OF THE
RECORDS SO LONG AS THE SAMPLING AND EXTRAPOLATION METHODS
EMPLOYED UTILIZE A STATISTICALLY VALID SAMPLE AND ARE DESIGNED AND
IMPLEMENTED IN ACCORDANCE WITH NATIONALLY RECOGNIZED, GENERALLY
ACCEPTED STATISTICAL PRINCIPLES, STANDARDS, AND METHODS.
       (8)     IF AN   AUDIT CONDUCTED PURSUANT TO  SUBSECTION
(3)(a)(Vl.5)(A) OF THIS SECTION IDENTIFIES A STATISTICALLY SIGNIFICANT
PATTERN OF ALLEGED OVERPAYMENTS TO A PROVIDER OF NONEMERGENCY
MEDICAL TRANSPORTATIONSERVICESORPEDIATRICBEHAVIORAL THERAPY,
THE AUDITOR IS AUTHORIZED TO USE THE SAME STATISTICAL SAMPLING AND
EXTRAPOLATION METHODS TO AUDIT SERVICES PROVIDED BY THE PROVIDER
FROM JANUARY 1, 2024, THROUGH DECEMBER 31, 2025. FOR THE PURPOSES
OF   THIS    SUBSECTION   (3)(a)(Vl.5)(8),   "STATISTICALLY   SIGNIFICANT
PATTERN" MEANS A CLAIMS ERROR RATE IDENTIFIED THROUGH THE AUDIT
THAT EXCEEDS TEN PERCENT.
       (C) IF AN AUDIT IDENTIFIES AN ALLEGED OVERPAYMENT, THE STATE
DEPARTMENT SHALL ISSUE A NOTICE TO THE PROVIDER OF THE ALLEGED
OVERPAYMENT WITHIN SIXTY DAYS AFTER THE ALLEGED OVERPAYMENT IS
IDENTIFIED. THE NOTICE OF THE ALLEGED OVERPAYMENT MUST INCLUDE THE
BASIS OF THE ALLEGED OVERPAYMENT, THE RATIONALE FOR THE ALLEGED
OVERPAYMENT, THE METHODOLOGY USED TO CALCULATE THE ALLEGED
OVERPAYMENT, AND INFORMATION ON HOW THE STATE DEPARTMENT
IDENTIFIED THE ALLEGED OVERPAYMENT, INCLUDING CLAIMS SAMPLES USED,
CLAIM-LEVEL FINDINGS, AND OTHER DOCUMENTATION TO ENABLE THE
PROVIDER TO FULLY EVALUATE AND REPLICATE THE AUDITOR'S ANALYSIS.
PRIOR TO THE STATE DEPARTMENT IMPLEMENTING RECOVERY OF AN
OVERPAYMENT, THE PROVIDER HAS THE RIGHT TO AN INFORMAL
RECONSIDERATION IN ACCORDANCE WITH SUBSECTION (3)(a)(VII) OF THIS
SECTION OR THE RIGHT TO A FORMAL APPEAL IN ACCORDANCE WITH
SUBSECTION (3)(a)(VIII) OF THIS SECTION.
       (D) IF THE STATE DEPARTMENT ENTERS INTO A CONTRACT FOR THE
PURPOSE OF CONDUCTING AN AUDIT PURSUANT TO THIS SUBSECTION
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(3)(a)(Vl.5), THE CONTRACT MUST NOT BE A CONTINGENCY-BASED
CONTRACT BASED ON A PERCENTAGE OF THE AMOUNT OF RECOVERY
COLLECTED FROM THE PROVIDER.
       (E) AFTER THE STATE DEPARTMENT COMPLETES AN AUDIT OF A
PROVIDER PURSUANT TO THIS SUBSECTION (3)(a)(Vl.5), THESTATEAUDITOR
OR A PERSON AUTHORIZED BY THE STATE AUDITOR SHALL CONDUCT AN
EXAMINATION IN ACCORDANCE WITH SECTION 2-3-103 TO DETERMINE
WHETHER THE STATE DEPARTMENT USED PROPER STATISTICAL SAMPLING
AND EXTRAPOLATION METHODS WHEN DETERMINING WHETHER
OVERPAYMENTS WERE MADE TO A PROVIDER.. THE STATE AUDITOR SHALL
ANNUALLY PRESENT A REPORT OF THE FINDINGS MADE PURSUANT TO THIS
SUBSECTION (3)(a)(Vl.5)(E) TO THE LEGISLATIVE AUDIT COMMITTEE AND
THE JOINT BUDGET COMMITTEE UNTIL THE AUDITS ARE COMPLETE.
       SECTION 3. Appropriation - adjustments to 2026 long bill.
(1) Except as provided in subsection (3) of this section, to implement this
act, the appropriation made in the annual general appropriation act for the
2026-27 state fiscal year to the department of health care policy and
financing for medical and long-term care services for Medicaid-eligible
individuals is adjusted as follows:
      (a) The general fund appropriation is decreased by $6,861,775,
which amount is subject to the "(M)" notation as defined in the annual
general appropriation act for the same fiscal year; and
        (b) The cash funds appropriation from recoveries and recoupments
is increased by $13,723,550.
        (2) For the 2026-27 state fiscal year, the general assembly
anticipates that the federal funds received by the department of health care
policy and financing for medical and long-term care services for
Medicaid-eligible individuals will decrease by $6,861,775. The
appropriation in subsection (l)(a) of this section is based on the assumption
that the department will not receive this amount of federal funds.
        (3) Subsection (l)(a) of this section does not require a reduction of
an appropriation in the annual general appropriation act for the 2026-27
state fiscal year if:
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       (a) The amount of the general fund appropriation made in the annual
general appropriation act for the 2026-27 state fiscal year to the department
of health care policy and financing for medical and long-term care services
for Medicaid-eligible individuals is less than the amount of the adjustment
required in subsection (l)(a) of this section; or
      (b) The annual general appropriation act for the 2026-27 state fiscal
year does not include an appropriation to the department of health care
policy and financing for medical and long-term care services for
Medicaid-eligible individuals.
       SECTION 4. Effective date. This act takes effect upon passage;
except that section 3 of this act takes effect only if the annual general
appropriation act for the 2026-27 state fiscal year becomes law, in which
case section 3 of this act takes effect upon the effective date of this act or
of the annual general appropriation act for state fiscal year 2026-27,
whichever is later.
       SECTION 5. Safety clause. The general assembly finds,
determines, and declares that this act is necessary for the immediate
preservation of the public peace, health, or safety or for appropriations for
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the support and maintenance of the departments of the state and state
institutions.
J~ ~  James Rashad Coleman, Sr.
SPEAKER OF THE HOUSE  PRESIDENT OF
OF REPRESENTATIVES  THE SENATE
v~~
Vanessa Reilly  Esther van Mourik
CHIEF CLERK OF THE HOUSE  SECRETARY OF
OF REPRESENTATIVES  THE SENATE
      APPROVED q,,_ 7'i-._,.,.jrl   k      'Ji>- 2-0Z..Go c,_,/, I,..: 1°r,-,_,
                                ( ate and Time)
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