Colorado Medicaid Overbilling Issues Uncovered

In November, officials in Colorado’s Medicaid system addressed a significant error that had been impacting transit agencies in the metro Denver area.

Five years prior, the government had instructed these agencies to bill as if they were providing specialized ambulance services. By 2022, this led to costs exceeding $640 per pickup, which are projected to rise to nearly $669 by 2025.

However, a congressional staffer revealed to lawmakers that the intended charge should have been just $65. “This is like — what?” questioned Sen. Judy Amabile, a Democrat from Boulder, highlighting the stark contrast in pricing. “Did we really pay ten times what we were supposed to?”

The extent of the damage from this incorrect billing guidance on the state’s Medicaid program remains uncertain. Yet, analysts informed the Joint Budget Committee that rectifying this billing mistake could save approximately $60.5 million during the 2026-27 fiscal year, with $18.2 million coming from the state’s already strained main spending account.

Fixing the mistake in November was predicted to save the state nearly $33 million in the ongoing fiscal year, which wraps up on June 30.

Some lawmakers expressed skepticism about these savings. “You’re either going to laugh or cry when you look at this,” said Rep. Kyle Brown, another Democrat on the Budget Committee. “I think it’s probably closer to $20 million. This has been an ongoing issue since 2020. That’s a massive amount.”

Legislative officials clarified that the billing discrepancies were inadvertent. The Denver Post reached out to Mark Williams, a spokesperson for the Health Policy and Finance Bureau, which is currently gathering comments on the situation. Williams later contradicted legislative staff by suggesting the original change was intentionally made to accommodate special requirements for transporting larger wheelchairs.

“In 2020, the department advised that healthcare providers might utilize the ‘Specialized Ambulance Service’ billing code for XL wheelchair services,” he stated. At that time, the cost per specialized ambulance trip stood at $232.44, a figure that nearly tripled shortly after to align better with Medicare standards.

He also mentioned that the department is currently assessing how the increased fee structure will impact the state’s finances. Late last year, the department implemented reduced fees: $34 for transportation with one chaperone and $65 for two individuals plus mileage.

Understanding the Overpayment Issues

According to a recent report submitted to the committee, Medicaid officials expressed worries that Metro Transit might have been unclear about which billing code to employ in 2020. These companies provide Medicaid members with transportation to medical appointments at no cost, coordinating services within the nine counties surrounding Denver.

Medicaid officials had directed intermediaries to utilize billing codes for specialty ambulances.

This billing error persisted for years, even after Medicaid officials identified other issues within the transportation program. In a recent report, it was revealed that an international fraud scheme had defrauded another aspect of the transportation program of $25 million.

Legislative officials questioned why Medicaid didn’t discover the error sooner. The Office of Health Policy (HCPF), which oversees Medicaid, attributed this oversight to their heavy focus on the fraud scheme discovered about three years after the erroneous billing guidance was issued.

“During the disruption caused by the late 2023 fraud incident and various changes made by HCPF in response, a thorough review of these program details did not occur until 2025,” the department indicated in a legislative review. “This particular aspect was not highlighted in the published policy, rendering it less noticeable.”

The Medicaid Fee Advisory Board also did not catch this discrepancy during its review in 2024.

Rep. Emily Sirota, D-Denver, who chairs the Budget Committee, questioned why the committee failed to recognize such a glaring difference in charges. A legislative analyst argued that there were no known issues with patient access to services.

“Cool,” was Sirota’s dry response. “I’m just unable to comprehend how this went unnoticed for such a long time.”

Williams noted that uptake of the high-cost billing codes was minimal until 2023, but surged significantly thereafter. However, the department took an additional two years to notice this surge and the rising costs associated with it.

Recovery of Funds: Is It Possible?

The excess funds spent on unnecessary large wheelchair transportation claims far exceeded losses from other fraud cases this year, according to legislative analysis. Providers are unable to recover or track these excess funds due to instructions from HCPF, a congressional staffer mentioned.

Adela Flores-Brennan, director of Colorado Medicaid, confirmed to a separate committee that the state would not seek to reclaim funding from healthcare providers.

Yet, late on Wednesday, Williams stated that HCPF will investigate potential “upcoding” among some providers and will “evaluate outlier provider claims for further action, including post-payment review and payment recovery.”

Lawmakers voiced additional concerns about whether the federal government, which partially funds Medicaid, would aim to recover some of its funding. Amabile’s question elicited a moment of silence that was followed by nervous laughter.

“I’m not sure,” said JBC analyst Eric Kurtz.

“This is a significant problem on their part,” Brown said regarding HCPF. “I really don’t know how to address this beyond emphasizing the need for a substantial fix.”

HCPF informed Budget Committee staff that it is already conducting an analysis of the transportation program with an external contractor, who is providing recommendations on cost reduction strategies for the Non-Emergency Medical Transportation program.

Now, lawmakers must determine the appropriate fees for large wheelchair transportation. Providers in the Denver metro area received $669, while those in other regions were primarily collecting $65.

Legislative staff and HCPF suggested all members should adhere to the $65 fee. However, some lawmakers indicated they were hearing requests from transit operators for amounts exceeding that.

“I’d like to review further details before making a vote,” stated Sen. Barbara Kirkmeyer, a Republican from Brighton, noting the necessity of vehicle lifts for loading large wheelchairs for Medicaid members.

Consequently, lawmakers directed staff to coordinate with HCPF for a future hearing to gather more information on the way forward.