In a recent meeting of the Joint Budget Committee, significant discussions centered around the evaluation of Colorado's Medicaid Recovery Audit Contractor (RAC) program, mandated by House Bill 231295. The evaluation, conducted by the consulting firm Barry Dunn, aimed to assess the program's design and operations, identifying areas for improvement that could directly impact healthcare providers and Medicaid recipients across the state.

The presentation, led by Yoko McCarthy from Barry Dunn, highlighted key findings from the evaluation, which included a review of audit scenarios used to identify overpayments to providers. The report revealed inconsistencies and outdated standards in the audit processes, leading to substantial financial implications for healthcare providers. For instance, over $13 million in overpayment findings were rescinded due to errors in the audit scenarios, which had not accounted for changes in billing policies or provider practices.

One of the critical recommendations from the evaluation was for the Department of Health Care Policy and Financing (HICPUF) to enhance its internal controls regarding the approval of audit scenarios. This recommendation aims to ensure that the right staff are involved in the process, potentially preventing costly errors and appeals that burden both providers and the state.

Another significant issue raised was the contingency fee structure for the RAC contractor. The current contract allows the contractor to be paid based on identified overpayments rather than actual recoveries, which contradicts federal regulations. The committee members expressed concern over this misalignment, noting that it could incentivize audits that do not lead to actual financial recoveries for the state. HICPUF agreed to amend the contract to align payments with recoveries by August 2024.

The meeting underscored the importance of transparency and accountability in the Medicaid audit process, as the findings could lead to more efficient operations and better financial outcomes for both the state and healthcare providers. As the committee moves forward, the implementation of these recommendations will be closely monitored to ensure that they effectively address the identified issues and improve the overall integrity of the Medicaid program in Colorado.