HB 1412 — Department of Health Care Policy & Financing Statistical Sampling & Extrapolation

NOTE:

This bill has been prepared for the signatures of the appropriate legislative officers and the Governor.

To determine whether the Governor has signed the bill or taken other action on it, please consult the legislative status sheet, the legislative history, or the Session Laws.

also SENATOR(S) Bridges and Kirkmeyer,Kirkrneyer, Amabile, Hinrichsen.

CCONCERNINGAUTHORIZINGTHEDEPARTMENTOFHEALTHCAREPOLICYAND ONCERNINGAUTHORIZINGTHEDEPARTMENTOFHEALTHCAREPOLICYANDFINANCINGTO FINANCING TO USE STATISTICAL SAMPLING AND EXTRAPOLATION TO RECOVER OVERPAYMENTS TO PROVIDERS FOR CERTAIN MEDICAID SERVICESSERVICES, ,ANDAND, ,INCONNECTIONTHEREWITHINCONNECTIONTHEREWITH, ,MAKINGANDREDUCINGMAKINGAND REDUCING AN APPROPRIATIONAPPROPRIATION. .

Be it enacted by the GeneralGeneralAssembly Assemblyofthe of the State ofofColorado: Colorado:

(1)( 1) The general assembly finds and declares that:

(a) The federal centers for medicare and medicaid services, the office of inspector general in the federal department ofofhealth health and human services, and other federal agencies regularly employ statistical sampling andextrapolationmethodologiestoidentifyandrecoverimproperpayments from the Colorado medicaid program administered by the department of health care policy and financing, or HCPF;

________ Capital letters oro& bold & italic numbers indicate new material added to existing law;

dashes through words or numbers indicate deletionsdeletionsfrom from existing law andandsuch such material is not part of the act.

(b) Certainmedicaidserviceareas,includingnonemergencymedicalCertainmedicaidserviceareas, includingnonemergencymedical transportation and pediatric behavioral therapy, such as applied behavior analysis services, have been identified as having elevated rates of insufficient documentation, improper billing, or fraud, waste, and abuse, characterizedbyrapidoutsizedspendinggrowthnotexplainedorsupportedcharacterizedbyrapid outsizedspendinggrowthnotexplainedorsupported by a corresponding increase in the number ofofindividuals individuals served;

(d) The inability for HCPF to audit every claim submitted by a provider results in under-represented recoupments, recovery delays, and increasedriskforfederaldisallowance,whichthestateissolelyfinanciallyincreased risk for federal disallowance, which the state is solely financially responsible for;

and (f) Using statistical sampling and extrapolation across providers treating medicaid members for services covered under the nonemergent medicaltransportationbenefitandthepediatricbehavioraltherapybenefit,medical includingappliedbehavioralanalysis,willprotectColoradomedicaidfundstransportation benefit and the pediatric behavioral therapy benefit, includingappliedbehavioral analysis, willprotectColoradomedicaidfunds and the state general fund;

In Colorado Revised Statutes, 25.5-4-301, add (3)(a)(VI.5)(3)(a)(Vl.5) as follows:

(VI.5)(Vl.5) (A) IF AN AUDIT OF A PROVIDER WHO PROVIDES PAGE 2-HOUSE BILL 26-1412 NONEMERGENCY MEDICAL TRANSPORTATION SERVICES OR PEDIATRIC BEHAVIORAL THERAPYTHERAPY, , INCLUDING APPLIED BEHAVIORAL ANALYSISANALYSIS, ,ISIS INITIATED AFTERJULYAFTER 1,2026,FORJULY 1, 2026, FOR SERVICES PROVIDED FROM JANUARY 1, 2022, THROUGH DDECEMBER ECEMBER 31, 2023, THE STATE DEPARTMENT IS AUTHORIZED TO DETERMINE AND RECOVER AN OVERPAYMENT TO A PROVIDER USING A SAMPLING OF RECORDS AND EXTRAPOLATION OF THE RECORDS SO LONG AS THE SAMPLING AND EXTRAPOLATION METHODS EMPLOYEDUTILIZEASTATISTICALLYVALIDSAMPLEANDAREDESIGNEDANDEMPLOYED IMPLEMENTEDINACCORDANCEWITHNATIONALLYRECOGNIZEDUTILIZEASTATISTICALLYVALID ,GENERALLYSAMPLEAND AREDESIGNEDAND IMPLEMENTEDINACCORDANCE WITHNATIONALLYRECOGNIZED, GENERALLY ACCEPTED STATISTICAL PRINCIPLES,STANDARDSPRINCIPLES, ,ANDSTANDARDS, METHODSAND .METHODS.

(B)(8 ) IF AN AUDIT CONDUCTED PURSUANT TO SUBSECTION (3)(a)(VI.5)(AOF(3)(a)(Vl.5)(A) OF THIS SECTION IDENTIFIES A STATISTICALLY SIGNIFICANT PATTERN OF ALLEGED OVERPAYMENTS TO A PROVIDER OF NONEMERGENCY MEDICALTRANSPORTATIONSERVICESORPEDIATRICBEHAVIORALTHERAPYMEDICALTRANSPORTATIONSERVICESORPEDIATRICBEHAVIORALTHERAPY, ,THE THEAUDITORISAUTHORIZEDTOUSETHESAMESTATISTICALSAMPLINGANDAUDITOR EXTRAPOLATIONMETHODSTOAUDITSERVICESPROVIDEDBYTHEPROVIDERISAUTHORIZEDTO FROMUSETHE JANUARYSAME 1,2024,THROUGHSTATISTICALSAMPLING DAND ECEMBEREXTRAPOLATION 31,2025.FMETHODS ORTHEPURPOSESTO OFAUDITSERVICES THISPROVIDED SUBSECTIONBYTHE (3)(a)(VI.5)(B),PROVIDER STATISTICALLYFROM SIGNIFICANTJANUARY PATTERN1, "MEANS2024, A CLAIMS ERROR RATE IDENTIFIED THROUGH THEDECEMBER31, AUDIT2025. THAT EXCEEDS TEN PERCENT .

(C)FOR IFANAUDITIDENTIFIESANALLEGEDOVERPAYMENT ,THESTATE DEPARTMENT SHALL ISSUE A NOTICE TO THE PROVIDERPURPOSES OF THETHIS ALLEGEDSUBSECTION OVERPAYMENT(3)(a)(Vl.5)(8),"STATISTICALLY WITHINSIGNIFICANT SIXTYPATTERN" DAYSMEANS AFTERA THECLAIMS ALLEGEDERROR OVERPAYMENTRATE ISIDENTIFIED IDENTIFIED.THENOTICEOFTHEALLEGEDOVERPAYMENTMUSTINCLUDETHETHROUGH BASIS OF THE ALLEGEDAUDIT OVERPAYMENTTHAT ,THEEXCEEDS RATIONALETEN FORPERCENT. THE ALLEGED OVERPAYMENT , THE METHODOLOGY USED TO CALCULATE THE ALLEGED OVERPAYMENT , AND INFORMATION ON HOW THE STATE DEPARTMENT IDENTIFIEDTHEALLEGEDOVERPAYMENT INCLUDINGCLAIMSSAMPLESUSED , CLAIM LEVEL FINDINGS ,AND OTHER DOCUMENTATION TO ENABLE THE PROVIDER TO FULLY EVALUATE AND REPLICATE THE AUDITOR S ANALYSIS.

PRIOR(C) TOIF THEAN STATEAUDIT DEPARTMENTIDENTIFIES IMPLEMENTING RECOVERY OF AN OVERPAYMENTALLEGED ,OVERPAYMENT, THE PROVIDERSTATE HASDEPARTMENT THESHALL RIGHTISSUE TOA ANNOTICE INFORMALTO RECONSIDERATIONTHE INPROVIDER ACCORDANCEOF WITH SUBSECTION (3)(a)(VIIOF THIS SECTION OR THE RIGHTALLEGED TOOVERPAYMENT AWITHIN FORMALSIXTY APPEALDAYS INAFTER ACCORDANCETHE WITHALLEGED SUBSECTIONOVERPAYMENT (3)(a)(VIIIOFIS THISIDENTIFIED. SECTION.

(D)THENOTICEOFTHEALLEGEDOVERPAYMENTMUSTINCLUDETHE IFBASIS OF THE STATEALLEGED DEPARTMENTOVERPAYMENT, ENTERSTHE INTORATIONALE A CONTRACT FOR THE PURPOSEALLEGED OFOVERPAYMENT, CONDUCTINGTHE ANMETHODOLOGY AUDITUSED PURSUANT TO THISCALCULATE SUBSECTIONTHE PAGEALLEGED 3-HOUSEOVERPAYMENT, BILLAND 26-1412INFORMATION (3)(a)(VI.5),THEON CONTRACTHOW MUSTTHE NOTSTATE BEDEPARTMENT AIDENTIFIEDTHEALLEGEDOVERPAYMENT, CONTINGENCYINCLUDINGCLAIMS -BASEDSAMPLES CONTRACTUSED, BASEDCLAIM-LEVEL ONFINDINGS, AAND PERCENTAGEOTHER OFDOCUMENTATION TO ENABLE THE AMOUNTPROVIDER OFTO RECOVERYFULLY COLLECTEDEVALUATE FROMAND REPLICATE THE PROVIDERAUDITOR'S .ANALYSIS.

(E)PRIOR ATO FTER THE STATE DEPARTMENT COMPLETESIMPLEMENTING ANRECOVERY AUDIT OF AAN PROVIDERPURSUANTTOTHISSUBSECTIONOVERPAYMENT, (3)(a)(VI.5)THESTATEAUDITORTHE ORPROVIDER AHAS PERSON AUTHORIZED BY THE STATERIGHT AUDITORTO SHALL CONDUCT AN EXAMINATIONINFORMAL RECONSIDERATION IN ACCORDANCE WITH SECTIONSUBSECTION 2-3-103(3)(a)(VII) TOOF DETERMINETHIS WHETHERSECTION OR THE STATERIGHT DEPARTMENTTO USEDA PROPERFORMAL STATISTICALAPPEAL SAMPLINGIN ANDACCORDANCE EXTRAPOLATIONWITH METHODSSUBSECTION WHEN(3)(a)(VIII) DETERMININGOF WHETHERTHIS OVERPAYMENTSSECTION. WERE MADE TO A PROVIDER .

(D) IF THE STATE AUDITORDEPARTMENT SHALLENTERS ANNUALLYINTO PRESENT A REPORTCONTRACT OFFOR THE FINDINGSPURPOSE MADEOF CONDUCTING AN AUDIT PURSUANT TO THIS SUBSECTION (3)(a)(VI.5)(ETOPA THEG LEGISLATIVEE AUDIT3-H COMMITTEEO ANDU SE BILL 26-1412 (3)(a)(Vl.5), THE JOINTCONTRACT BUDGETMUST COMMITTEENOT UNTILBE A CONTINGENCY-BASED CONTRACT BASED ON A PERCENTAGE OF THE AUDITSAMOUNT AREOF COMPLETERECOVERY .COLLECTED FROMTHE PROVIDER.

(E) AFTER THE STATE DEPARTMENT COMPLETES AN AUDIT OF A PROVIDERPURSUANTTOTHISSUBSECTION(3)(a)(Vl.5),THESTATEAUDITOR OR A PERSON AUTHORIZED BY THE STATE AUDITOR SHALL CONDUCT AN EXAMINATION IN ACCORDANCE WITH SECTION 2-3-103 TO DETERMINE WHETHER THE STATE DEPARTMENT USED PROPER STATISTICAL SAMPLING AND EXTRAPOLATION METHODS WHEN DETERMINING WHETHER OVERPAYMENTS WERE MADE TO A PROVIDER..THE STATE AUDITOR SHALL ANNUALLY PRESENT A REPORT OFTHE FINDINGS MADE PURSUANT TO THIS SUBSECTION (3)(a)(Vl.5)(E) TO THE LEGISLATIVE AUDIT COMMITTEE AND THE JOINTBUDGET COMMITTEE UNTIL THE AUDITS ARE COMPLETE.

(1) Except as provided in subsection (3) ofofthis this section, to implement this act, the appropriation made in the annual general appropriation act for the 2026-27 state fiscal year to the department of health care policy and financing for medical and long-term care services for Medicaid-eligible individuals is adjusted as follows:

(2) For the 2026-27 state fiscal year, the general assembly anticipates that the federal funds received bytheby the department ofofhealth health care policy and financing for medical and long-term care services for Medicaid-eligible individuals will decrease by $6,861,775.

The appropriationinsubsection(1)(a)ofthissectionisbasedontheassumptionappropriation in subsection (l)(a) ofthis section is based on the assumption that the department will not receive this amount ofo f federal funds.

(3) Subsection (1)(a)(l)(a) ofo f this section does not require aareduction reductiono off an appropriation in the annual general appropriation act for the 2026-27 state fiscal year if:

PAGE 4-HOUSE BILL 26-1412 (a) TheamountofthegeneralfundappropriationmadeintheannualTheamountofthegeneral generalappropriationactforthe2026-27statefiscalyeartothedepartmentfund ofappropriationmade healthintheannual caregeneral policyandfinancingformedicalandlong-termcareappropriation act for the 2026-27 state fiscal yearto the department ofhealth carepolicy and financing for medical and long-term care services for Medicaid-eligible individuals is less than the amount ofofthe the adjustment required in subsection (1)(a)(l)(a) ofofthis this section;

or (b) Theannualgeneralappropriationactforthe2026-27statefiscalThe annual general appropriation act for the 2026-27 state fiscal year does not include an appropriation to the department of health care policy and financing for medical and long-term care services for Medicaid-eligible individuals.

except that section 3 of this act takes effect only if the annual general appropriation act for the 2026-27 state fiscal year becomes law, in which case section 3 ofofthis this act takes effect upon the effective date ofofthis this act or of the annual general appropriation act for state fiscal year 2026-27, whichever is later.

The general assembly finds, determines, and declares that this act is necessary for the immediate preservation ofofthe the public peace, health, or safety or for appropriations for PAGE 5-HOUSE BILL 26-1412 the support and maintenance of the departments of the state and state institutions.

____________________________J ____________________________~ Julie~ McCluskie James Rashad Coleman, Sr.

SPEAKER OF THE HOUSE PRESIDENT OF OF REPRESENTATIVES THE SENATE ____________________________ ____________________________ Vanessa Reilly Esther van Mourik CHIEF CLERK OF THE HOUSE SECRETARY OF OF REPRESENTATIVES THE SENATE APPROVED________________________________________APPROVED (Dateq,,_7'i-._,.,kjrl 'Ji>2-0Z..Go c,I,.1°r,-,_, ( ate and Time) _________________________________________PAGE Jared6-HOUSE S.BILL 26-1412

Polis GOVERNOR OF THE STATE OF COLORADO PAGE 6-HOUSE BILL 26-1412