Medicaid spending doubled in Colorado despite enrollment

By Derek Draplin
The Center Square

Colorado has seen Medicaid spending doubled over the last decade, according to a new report.

Meanwhile, the state’s unit tasked with investigating and prosecuting Medicaid fraud has had to triage its investigations as the number of referrals it receives has outpaced its staff.

Since 2015, spending by the state Department of Health Care Policy and Financing, which administers Colorado’s Medicaid program, has increased 101% to $16 billion. According to a recent analysis by Common Sense Institute Colorado, Medicaid enrollment only went up 7.6% from fiscal year 2018 through 2024, while the department’s full-time equivalent employment grew 72% during that time.

Meanwhile, the state’s Medicaid Fraud, Abuse and Neglect Unit, a branch of the Attorney General Phil Weiser’s office that’s responsible for investigating and prosecuting fraud by providers, has become backlogged by cases, according to state documents.

“Despite staffing additions over the last few years, the pace of incoming referrals continues to exceed existing staffing,” HCPF’s November report, delivered annually to state lawmakers, said for fiscal year 2024-25. “Over time, funding for the Medicaid program has continued to rise faster than funding for the MFANU, resulting in a backlog of cases and the inability to pursue certain leads and complaints.”

A spokesperson for HCPF told The Center Square there is not more recent public data than fiscal year 2024-25, which ended in June.

According to the new report, MFANU has had to “triage” its investigative cases, “turning down matters involving lower monetary losses and at times limiting the scope of ongoing investigations.”

The caseloads for the unit’s investigators have tripled since 2023, while attorney caseloads are up fivefold, the report stated. At the time of the report, MFANU had 56 referrals approved for investigation that had not been assigned “due to continuing staffing limitations.”

“This number has continued to increase, and the Unit anticipates that the need to triage investigations will continue through the next reporting period,” the report said.

The unit received 497 complaints in fiscal year 2024-25 and opened 172 investigations. MFANU recovered over $45.6 million in civil actions through litigation or settlements, collecting over $1.7 million from providers, according to the annual report on the unit by the attorney general’s office.

MFANU identified criminal restitution ordered to Medicaid totaling $139,299, according to the HCPF report.

“In regard to only provider fraud, fraud continues to involve the provision of in-home services and off-site services, including billing the Medicaid program for services that were not provided and over billing for services rendered,” the report said. “Several of these schemes involved providers of in-home nursing care, providers of day habilitation services for developmentally disabled Medicaid clients, and adult day service providers.”

Several cases of Medicaid fraud in the state have been prosecuted or settled in recent months.

The U.S. Attorney’s Office and the state Attorney General’s Office office earlier this month announced an individual from Mesa County was charged for defrauding Medicaid’s non-emergent medical transportation program by billing over $1 million through Armistead Twin Rides LLC. Another individual from Douglas County was charged with fraud billed $3.3 million in non-emergent medical transportation ride through a limo company.

Last month, a Greeley eye care clinic agreed to a $280,000 settlement for allegedly illegally billing Medicaid, while an eye clinic in Fountain agreed to a $240,000 settlement.

“We continue to look for and hold accountable bad actors,” Attorney General Weiser said last week, answering The Center Square’s questions during a virtual news conference. “That has been a key focus that we have brought to that.”

A spokesperson for the attorney general told The Center Square in a follow-up email that MFANU’s staffing increased from 17 to 23 full-time equivalent positions from 2017 to 2023.

“Since AG Weiser has been in office, [MFANU] has recovered more than $50M through court orders (civil recoveries and criminal restitution), convicted 62 defendants, and settled 111 civil fraud cases,” the spokesperson said.

The unit has also regularly holds a Health Care Fraud Working Group to collaborate with state and federal partners and added a community outreach program in 2024, the spokesperson added.

CSI Healthcare Fellow Greg D’Argonne, one of the authors of the analysis, suggested in an interview with The Center Square that some of the overhead dollars HCPF uses for a Recovery Audit Contractor program instead go to “beef up” its own fraud oversight.

“Let’s put money back into HCPF’s pockets and take it away from the fraudsters and quit focusing so much on providers who are rendering services in good faith but because of some minor billing error or technical error, they’re getting dollars recouped going back as much as seven years,” he said.

“HCPF has added over 300 FTEs over the last few years,” he noted. “Why don’t they deploy some of those people over to the fraud unit? Because really, that should be what the state should be going after, is fraud.”

The HCPF spokesperson told The Center Square that the agency ” is committed to preventing, identifying, and rooting out fraud, waste and abuse (FWA).

“We are leveraging tools available to take legal action against Medicaid providers who have defrauded taxpayers and participated in abusive business practices,” the spokesperson.

“We are also working to improve our FWA efforts,” the spokesperson added, noting the department recently established a “FWA Finder” tool that will help “identify provider billing anomalies.”

“While this tool will help, HCPF is working through a more comprehensive review of the additional needs, tools, staff, and resources necessary to address the nation’s increase in provider FWAs, such as up-coding and other over-billing schemes — similar to those seen under Medicare Advantage or industry software and strategies designed to facilitate these practices,” the HCPF spokesperson said. “More resources are essential for HCPF to keep pace with this reality,.”