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Colorado mental health therapists are quitting Medicaid over latest payment debacle

Several behavioral health providers say they will no longer treat Medicaid patients after 199 providers received letters ordering them to return payment for therapy already completed.

The logo for the Colorado Department of Health Care Policy and Financing, which administers Medicaid in the state, on a sign in the department's offices on Feb. 26, 2019. (John Ingold, The Colorado Sun)
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As a single parent going back to college, Carla D’Agostino-Vigil signed up for Medicaid and used the government-run health insurance to attend “life-saving” therapy. So when she graduated and started her own mental health counseling practice in Westminster, D’Agostino-Vigil was adamant that she would open her doors to Medicaid patients. 

“When it was my turn, I felt very strongly about being involved,” she said. “The way things have played out, my heart is broken.”

Two years after opening her practice, D’Agostino-Vigil is among the latest round of health care providers in Colorado who are quitting the Medicaid program. Nearly half of the 175 patients at Ignite Counseling Colorado are on Medicaid, and during a six-month transition phase, D’Agostino-Vigil will “try like heck” to find other counselors who will take them. If that doesn’t work, she intends to continue helping some pro bono. 

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Her list of reasons is long. There was the 20% rate cut in 2020, just ahead of an increase in need for mental health care because of the isolating days of the pandemic. There were the threatening letters warning her that she was “overusing” a billing code — the code for a full hour of therapy — and that she should instead see patients for 30- or 45-minute sessions. 

But what pushed D’Agostino-Vigil, one of the only specialists in obsessive compulsive disorder taking Medicaid in Colorado, over the edge was a “recoupment” notice received by her practice and nearly 200 others in Colorado this fall. The letter said that due to incorrectly filed claims, providers would have to pay hundreds or thousands of dollars to the agency – called Colorado Community Health Alliance — that dispenses their payments. In some cases, recoupment amounts have totaled $17,000 or $18,000 for a single mental health therapist in private practice. 

The letters, copies of which were reviewed by The Colorado Sun, warn that providers have 60 days to pay up or the management agency could withhold future payments. 

Nearly 200 behavioral health care offices received letters requesting recoupment for claims that were incorrectly filed. The letters said that if providers did not pay within 60 days, the contractor could recoup the funds by withholding future payments.

The debacle is the latest headache for Medicaid providers who for years have complained of redundant paperwork and clogged bureaucracy. And in this case, it’s not that therapists and counselors were overpaid — they are being asked to return money for services they provided during the prior two years, all because of a provider identification number that was not included in the claims. 

Multiple behavioral health clinicians told The Sun they included the provider identification number. It was the computer system used by their payer, Colorado Community Health Alliance, which is owned by private insurance giant Anthem, that scrubbed the identification numbers from its claims, thinking they were not needed. 

The health alliance, which is the middleman between providers and the state Medicaid program, realized its mistake two years ago and began warning therapy practices back in March 2020 that they would have to resubmit claims, said spokeswoman Colleen Daywalt. The provider number is required by state and federal law, so when the alliance discovered the problem in July 2019, the agency began working to correct its software system to include the number on its claim forms. The problem was fixed in October 2020, Daywalt said. 

Colorado Community Health Alliance, which is the payer for behavioral health providers in Boulder, Broomfield, Clear Creek, El Paso, Gilpin, Jefferson, Park and Teller counties, began notifying providers in March 2020 that claims filed during a two-year period were out of compliance. But many of the 1,175 providers under the alliance did not take action, overwhelmed by the task of resubmitting hundreds of claims. 

A therapist who saw a client weekly during those two years would have filled about 104 claims — and that’s just for one patient. 

Last month, the health alliance sent 199 letters asking for “recoupment” payments, setting off panic and a firestorm of complaints, including in a private Facebook group where therapists and counselors vent about Medicaid frustrations. 

Colorado Community Health Alliance sent letters to 199 mental health care providers asking for money to recoup payment for claims “paid in error.”

Daywalt said it’s not the health alliance’s intent to recoup any payments, only to comply with state and federal law. She would not say the total amount of money involved in the out-of-compliance claims or the range of recoupment amounts sent to providers. 

But several therapists contacted The Sun regarding the payment debacle and shared their recoupment amounts. 

Allison Harvey, who works at a small group practice in Arvada, said the health alliance is asking for $7,000 for 74 claims in 2020. “The problem is that we submitted all of these claims correctly with all of the information necessary for payment,” she said. “The data is getting removed sometime after the claims leave our hands. Our group, like all providers who choose to serve Medicaid clients, just want to simply be paid for the work we do with this important clientele.” 

Christia Young, with Badass Therapy in Brighton, was asked to return $7,200. Now Young has stopped taking Medicaid patients through Colorado Community Health Alliance. Even before the latest claims issue, she was spending 80% of her time dealing with Medicaid claims because the health alliance was “repeatedly auditing” her filings, she said. 

And Sarah Carlson, a licensed marriage and family therapist who has accepted Medicaid for 13 years, is quitting her Medicaid contract with the health alliance effective next month. She founded The Parent-Child Interaction Center, one of the largest group practices that accepts Medicaid in Larimer, Weld and Boulder counties. 

Carlson said she’s been fighting about claims with the health alliance for years. The agency owes her thousands of dollars in past claims and now is asking for about $6,000 in recoupment on payments she received for 2020 and 2021, she said. 

“I love how they can find the claims suddenly when they want the money back, but somehow manage not to have the others on file?” Carlson said. “It’s a game, and it’s disgusting. Especially during the pandemic when the need has been soaring.”

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Carlson said she would struggle to pay her office rent just serving Medicaid clients and has to subsidize Medicaid patients with those who have private insurance. “Sadly, it’s my underserved clients who will suffer, but I cannot continue this way any longer,” she said. 

The Colorado Department of Health Care Policy and Financing, which runs the Medicaid program and contracts with Colorado Community Health Alliance to disperse payments to the providers, said providers have been warned of the claims error via multiple newsletters and meetings in 2020 and 2021. 

“While we understand this is frustrating for providers, providers and payers are responsible for submitting and processing compliant claims,” said an emailed statement from department spokesman Marc Williams. “Our contractor identified a system issue preventing this and corrected the issue. They have given providers 21 months to submit corrected claims, which they are still able to do before the recoupments take effect.”

While some providers are ending their Medicaid contracts this fall, the number of behavioral health providers who take Medicaid has grown statewide in the last year, Williams said. Practitioners in the network reached 8,371 in June, compared with 6,029 in April 2020, he said.

But Stephanie Farrell, CEO of Left Hand Management, a consulting group that helps behavioral health care offices across the state with billing and training, said the health alliance caused the problem and should have to fix it — not put the burden on small counseling centers. Colorado Community Health Alliance should pay the consequences, Farrell said, including any potential federal fines for submitting incomplete paperwork. 

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“It’s just a clerical issue. A data issue,” she said. “Can’t they say, ‘Let’s call it a mulligan?’”

It’s the latest example in what Farrell says is a messed-up system in which the people providing the mental health care have no voice and are buried by mountains of paperwork. She blames the organizational structure and the contractors that dispense payment.

“It’s the wild, wild West,” she said. “They just do whatever they want and they are grinding up providers in the process.”