The federal government wants Colorado to return $8 million in Medicaid funding after accusing the state of misspending money on an in-home care program for people with disabilities.
The Office of Inspector General released its findings Tuesday after reviewing Colorado’s electronic visit verification system for in-home personal care services for Medicaid patients.
To meet federal requirements, caregivers must log into a system, either by phone or computer, that records their location and other data, including the type of service and how long it lasted. Providers are supposed to log in when they arrive and when they leave a person’s home.
Colorado’s verification system allows care providers to manually enter visit records later in cases where there is no phone or internet service at a visit or if the caregiver forgets to check in or out while on the visit. Unlike some other states, Colorado does not require caregivers to use GPS tracking and allows providers to either log into an app or call into the system.
The audit was based on the 2024 state fiscal year, for which the state provided 1.3 million claims that were at least $25 or more. The cost of the claims was nearly $300 million, split between the federal government and the state.
Out of those 1.3 million claims, federal auditors looked at a random sample of 160 claims.
Colorado Medicaid officials disagreed with most of the audit’s findings and called the sample size inadequate.
“We gave them 1.3 million claims. Their audit sample was 160 claims, so an incredibly small sample size that they looked at, and so we have representation concerns,” said Bonnie Silva, director of the Office of Community Living at the Colorado Department of Health Care Policy and Financing. “We have a lack of confidence that 160 claims actually represents the sample of 1.3 million. It’s 0.0001% of those claims.”
The issues were “isolated documentation and system-related issues,” not spending on care that didn’t occur, she said.
“There was nothing in their findings that indicated that the services that were provided or billed for were not actually delivered, were not authorized as they were supposed to be, or were provided by ineligible caregivers,” Silva said. “There’s nothing to indicate that the services were not provided as required, so we should not be paying those dollars back.”
Colorado, one of the first states to launch the electronic verification program, developed other ways for care providers to verify their location instead of using GPS tracking. That’s likely one of the reasons Colorado was one of the first states to get an OIG review.
State Medicaid officials saw a draft of the report a couple of months ago and were allowed to dispute its findings before the final report was released Tuesday. The audit report, and how much Colorado will ultimately have to pay, is a negotiation that could last several years.
The audit found that Colorado’s system did not always confirm that care providers were collecting all the required verification information, resulting in payment “errors.” Some of the caregiver time sheets reviewed in the federal audit did not document the services provided, for example. The audit also found errors related to background screenings of caregivers.
Based on the OIG sample, the federal agency estimated that Colorado spent at least $15 million, including $8 million in federal money, in “unallowable” reimbursements in 2024.
Beyond the $8 million in 2024, federal inspectors said Colorado may have improperly spent up to $89 million, including $45 million in federal dollars. Those reimbursements need further review by the Centers for Medicare and Medicaid Services and could result in “potential recovery” by the federal government, the audit says.
The OIG recommended that the state Medicaid program, part of the Colorado Department of Health Care Policy and Financing, refund the $8 million and work with federal Medicaid officials to determine how much of the additional $45 million it might have misspent.
It also said Colorado should tighten up its verification system, including by making sure it captures the location where services are provided and allows for system edits if the wrong location is captured.
States were required to start using electronic visit verification in January 2020 to prove that a caregiver had arrived on the job. The system “requires attendants to log in electronically to prove the time and location of their visits,” which was controversial in Colorado and other states as caregivers and patients complained it was an invasion of privacy.
The federal government said the system was needed to “address weaknesses” that contributed to “improper payments, questionable quality of care, and notable amounts of fraud.”