For years, Colorado Medicaid mistakenly paid a program’s providers several times too much — costing millions

In November, Colorado Medicaid officials corrected a mistake.

Five years earlier, they’d told contracted transportation providers in metro Denver to bill the state as if the providers were specialty ambulances. By 2022, those providers were billing the state for more than $640 for every pick-up. By 2025, the rate increased more, to nearly $669.

In reality, the pick-ups should have cost $65, legislative staff told lawmakers Tuesday.

“This just seems like — what?” said Sen. Judy Amabile, a Boulder Democrat, citing the final difference: “We paid 10 times what we were supposed to pay?”

It’s unclear how much the incorrect billing guidance has cost the state’s Medicaid program. But the analyst told lawmakers on the Joint Budget Committee that the fixed billing error would save $60.5 million in the 2026-27 fiscal year, of which $18.2 million would’ve come from the state’s primary — and cash-strapped — spending account.

Fixing the error in November was projected to save nearly $33 million in the current fiscal year, which ends June 30.

Lawmakers were incredulous.

“You either laugh at this one, or you cry,” said Rep. Kyle Brown, another Democrat on the budget committee. ” … So maybe it’s $20 million in a given year, and it’s been going on since 2020. That’s a lot of money.”

Legislative staff described the billing discrepancy as a mistake. The Denver Post asked Marc Williams, the spokesman for the Department of Health Care Policy and Financing, for comment for this story early Wednesday afternoon. In a statement provided just before 8 p.m., Williams seemed to contradict legislative staff by casting the initial change as an intentional choice, made to accommodate the special requirements of transporting patients who use larger wheelchairs.

“Because of the additional staffing and equipment, the Department provided guidance in 2020 that providers could use the ‘specialty ambulance service’ billing code when XL Wheelchair services were needed,” Williams wrote.

At the time, he said, “the cost per pick-up for specialty ambulance services was $232.44.” But just a couple years later, the rate nearly tripled “to better align with Medicare.”

He said the department was evaluating how much the higher billing code cost the state, and he said the department established lower rates — $34 for pick-ups with one attendant and $65 pick-ups for those with two, plus mileage — late last year.

How overpayments happened

According to a JBC staff report presented to the committee this week, Medicaid officials were concerned in 2020 that metro transportation providers were confused about which billing code to use. The companies provide rides to medical appointments for Medicaid members at no cost to the patients, and in a nine-county region around Denver, they’re coordinated by a broker.

Medicaid officials told the broker — who then told the companies — to use a billing code intended for specialty ambulances.

The mistake persisted for years, even after Medicaid officials identified a separate problem within the transportation program. In 2023, as The Post has reported, officials learned that a coordinated — and international — fraud scheme targeted a different part of the transportation program, bilking Medicaid out of $25 million, according to a recently released estimate.

Legislative staff asked Medicaid officials why they “didn’t catch the error for five years,” according to the report. The health care policy department, which oversees Medicaid and goes by HCPF, replied that they hadn’t noticed it earlier in part because they were focused on the fraud scheme — which was identified roughly three years after the billing guidance was released.

“In the midst of the chaos caused by the fraud event in the fall of 2023, and HCPF’s implementation of the numerous changes to the program in response, reviews of program details such as this did not happen until 2025,” the department explained, according to the legislative report. “This aspect of the program had not been specified in published policy and so the issue was not immediately apparent.”

Nor had a Medicaid rate advisory panel noticed the discrepancy in 2024, when it conducted a review of Medicaid billing codes.

Rep. Emily Sirota, a Denver Democrat who’s the budget committee’s chair, asked why the panel hadn’t picked up on the “absurd” difference between what was being paid versus what should’ve been paid. (The panel, which is under HCPF, did not return an email seeking comment Wednesday afternoon.)

A legislative analyst replied that the panel didn’t notice any problems with patients accessing the service and determined it was fine.

“Cool,” Sirota replied dryly. “… I just don’t understand how this could’ve gone so unnoticed for so long.”

Williams, the Medicaid spokesman, said that there was low utilization of the higher-rate billing code until 2023, when it “started to spike” — after the rate had increased sharply. Still, he said it took the department two more years to identify the increase and “the associated cost growth.”

Can state claw back money?

The money that was set to be spent on unnecessary wheelchair transport billing this year alone was more than double the amount lost in the separate fraud scheme, according to the legislative analysis. Because providers were following instructions from HCPF, which oversees Medicaid, the excess money can’t be clawed back or pursued, legislative staff told lawmakers Tuesday.

Adela Flores-Brennan, the director of Colorado Medicaid, confirmed to a separate legislative committee Wednesday that the state would not try to get the money back from providers.

But on Wednesday evening, Williams wrote that HCPF would investigate whether “upcoding has taken place” among some providers and “evaluate outlier provider billings for further action, including post payment reviews and payment recoupments.”

Lawmakers raised another concern Tuesday: Would the federal government, which jointly funds Medicaid, try to retrieve some of the money? The question, from Amabile, was greeted with brief silence and then a wave of nervous laughter.

“I don’t know,” replied Eric Kurtz, the JBC analyst.

“This is a huge mess-up on their part,” Brown said of HCPF. “I don’t know what to do about this, exactly, other than the fact that they probably need to correct it in some meaningful way.”

HCPF told the budget committee’s staff that it was already conducting an analysis of the transportation program with an outside contractor, who has “provided further recommendations to the Department on areas of cost savings for the (non-emergency medical transport) program and rates.”

Now, legislators have to figure out how much HCPF should be paying for pick-ups in the large wheelchair program. While the metro Denver providers were getting the $669 reimbursement, providers elsewhere were largely receiving the $65 payments.

Legislative staff and HCPF recommended that lawmakers just pay everyone the $65 rate. But some lawmakers said they’d already heard from metro providers who wanted more than $65.

“I would like to have additional information before we decide to vote on it,” Sen. Barbara Kirkmeyer, a Brighton Republican, said. She noted that the vehicles for the program needed to have lifts to load the Medicaid members’ larger wheelchairs.

The legislators instead directed staff to summon HCPF for a future hearing to provide more information about how they should proceed.

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