Feds tell Colorado to repay $8 million in Medicaid money

The U.S. Department of Health and Human Services Office of the Inspector General released the audit report in July. Besides demanding $8 million in repayment, the report provides Colorado with recommended improvements to its Electronic Visit Verification system.

The Colorado Department of Healthcare Policy and Financing is in charge of administering personal care service Medicaid payments. 

The report estimated Colorado spent nearly $15 million, with $8 million of that being federal money. The report said that was dispersed by the department as “unallowable” reimbursements. 

The 21st Century Cares Act was passed in 2016 and had a provision that required states to adopt the Electronic Visit Verification system by January 2020. Colorado was one of the first states to adopt the EVV system when it soft-launched in 2019, and its implementation encouraged other states to follow.

The EVV system is used to verify that a personal care service attendant arrived at the job site and assisted the Medicaid enrollee with Medicaid-approved tasks. It was developed to identify weaknesses in the personal care service program, which could subsequently contribute to improper reimbursements, questionable quality of care and significant amounts of fraud. 

Under the provision, personal care service attendants are required to log into a system either by computer or phone, which records their location, time and type of services performed. Attendants must sign in when they arrive and log when they leave the home. 

A team from the Office of Inspector General said the Centers for Medicare and Medicaid State Medicaid Manual states expenditures “require adequate supporting documentation to be allowable for federal reimbursement.” The team told The Center Square that this requirement was not satisfied for personal care service and pointed to attendant support management plans that were not documented.

As a result, the federal government claims most of these “unallowable” reimbursements came from errors within the recorded logs from personal care attendants. 

However, the Colorado Department of Healthcare Policy and Financing disagrees with most of the audit’s findings, saying the audit only described minor and isolated paperwork issues instead of concrete proof that fraud was happening on a wide scale. The department also claims the state was treated differently than others. 

The team from the Office of Inspector General said Colorado was the second state to see an audit completed. Kansas was the first, and the team said similar findings were made there.

The audit's findings 

In Colorado, the audit reviewed processes from personal care service logs from July 1, 2023 until June 30, 2024. It sampled 1.3 million claims of $25 or more, which totaled nearly $152.8 million in federal reimbursements. 

From the 1.3 million claims, the auditors reviewed a random sample of 160 claims. They then found that 62 claims were entered manually into the EVV system. Seventeen were not entered at all, 18 lacked location information, and 18 had GPS exceptions that were never reviewed, according to the federal audit.

The audit found Colorado’s system did not always sufficiently confirm providers were collecting all required and verified information, nor properly signing in or out of the Electronic Visit Verification system. This inevitability resulted in payment errors, the federal department claimed. 

Moreover, the federal government found discrepancies within the recorded logs from personal care service visits. In some cases, the average claim was greater than 24 hours a day.

On one claim, the provider billed 3,876 units of services across eight different days, with an average of 121 hours a day, according to the audit.

The corresponding timesheets, however, only documented 161 service units over the course of five hours for eight days, the audit said. 

Out of the 160-claim sample compared to the full set of claims, the auditors concluded that 682,947 claims failed to meet state and federal guidelines. It also found excessive payments and failures to document background screenings for some personal care service attendants. 

In another example, the federal report found one instance where the attendant who was identified on the visitation record was not the same name that appeared on the timesheet. The audit stated this “discrepancy between EVV records and timesheets may indicate inaccurate service documentation and raises concerns regarding the integrity of claims submitted for reimbursement.” 

The Colorado Department of Healthcare Policy and Financing public information officer, Marc Williams, declined to be interviewed and instead pointed to his press release last week that addresses the audit. 

Though the Colorado department “does not agree with many of the key conclusions in the Office of Inspector General’s report,” it is committed to working with federal partners such as the Centers for Medicare and Medicaid Services to address the discrepancies, according to the news release.

The department claimed the audit does not “demonstrate that payments were made for services that were not authorized or not rendered, nor does it identify or suggest any fraudulent or intentional misuse of Medicaid funds.” 

The inspector general’s report did not outright claim payments were made for fraudulent services. But the Office of Inspector General's greatest concern was that due to the state’s inaccuracies in recording personal care service visits and failure to record visits in the EVV, this may have resulted in falsified payments – intentionally or unintentionally.

Williams also wrote in his statement that the state department noted “inconsistencies in OIG’s approach to fiscal findings across states, including differing treatment of similar issues in other audits, which raises concerns about the equitable application of federal oversight standards.” 

The Office of Inspector General responded to this claim, saying it had “similar findings” in an audit of Kansas, such as missing EVV data and manual EVV entries. As a result, the office made similar recommendations to that state.

The office also stated it disagreed with Colorado’s criticism that the government’s methodology are not being statistically accurate and truly representative of the claim population. “We maintain that our sampling and estimation (i.e., extrapolation) methodology was entirely appropriate. Federal courts have consistently upheld statistical sampling and extrapolation as a valid means to determine overpayment amounts in Medicare and Medicaid."

“The legal standard for use of sampling and extrapolation is that it must be based on a statistically valid methodology, not the most precise methodology,” the office added.

The Office of Inspector General also provided The Center Square with a near four-page explanation on how it conducted its methodology and statistical findings. 

"Our statistical approach resulted in a legally valid and reasonably conservative estimate of the unallowable payments for which the state agency claimed reimbursement," the office's team told The Center Square.