The Joint Budget Committee (JBC) of Colorado convened on January 6, 2025, to discuss critical evaluations of the state's Medicaid Recovery Audit Contractor (RAC) Program, mandated by House Bill 231295. This independent assessment, conducted by the consulting firm Barry Dunn, aimed to identify areas for improvement within the program, which is essential for ensuring accurate payments to healthcare providers.

The evaluation revealed significant findings regarding the operation of the RAC program, which is designed to review Medicaid claims for overpayments and underpayments. One of the primary concerns highlighted was the inconsistency and lack of clarity in the audit scenarios used by the current contractor, Health Management Systems (HMS). The report indicated that outdated standards led to erroneous overpayment findings, resulting in over $13 million in rescinded claims. The JBC emphasized the need for the Department of Health Care Policy and Financing (HICPUF) to enhance its controls over the audit process to prevent such costly mistakes in the future.

Another critical issue discussed was the contingency fee structure in the contract with HMS. The current arrangement allows HMS to be compensated based on identified overpayments rather than actual recoveries, which contradicts federal regulations. The JBC recommended amending this provision to align incentives with the goal of accurately identifying and recovering overpayments, a change that HICPUF agreed to implement by August 2024.

The meeting also addressed concerns about the monitoring of HMS staff credentials, revealing gaps in HICPUF's oversight. The committee urged HICPUF to require routine documentation of staff qualifications to ensure that audits are conducted by adequately trained professionals.

Additionally, the potential conflict of interest arising from Gainwell Technology's acquisition of HMS was a focal point. The JBC called for HICPUF to obtain disclosures from both companies to assess and manage any conflicts effectively.

In conclusion, the discussions at the JBC meeting underscored the importance of transparency and accountability in Colorado's Medicaid program. The recommendations made aim to enhance the integrity of the audit process, ultimately benefiting healthcare providers and ensuring that taxpayer funds are used appropriately. The committee's commitment to follow up on these recommendations will be crucial in addressing the identified issues and improving the overall efficiency of the Medicaid system in Colorado.