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Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
REENGROSSED
This Version Includes All Amendments
Adopted in the House of Introduction
LLS NO. 26-0978.01 Shelby Ross x4510 HOUSE BILL 26-1412
House Committees Senate Committees
Appropriations
A BILL FOR AN ACT
CONCERNING AUTHORIZING THE DE PARTMENT OF HEALTH CARE101
POLICY AND FINANCING TO USE STATISTICAL SAMPLING AND102
EXTRAPOLATION TO RECOVER OVERPAYMENTS TO PROVIDERS103
FOR CERTAIN MEDICAID SERVICES , AND , IN CONNECTION104
THEREWITH, MAKING AND REDUCING AN APPROPRIATION.105
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov/.)
Joint Budget Committee. If an audit of a medicaid provider who
provides nonemergency medical transportation services or pediatric
HOUSE
3rd Reading Unamended
April 11, 2026
HOUSE
Amended 2nd Reading
April 9, 2026
HOUSE SPONSORSHIP
Sirota and Taggart, Brown, Woodrow
SENATE SPONSORSHIP
Bridges and Kirkmeyer, Amabile
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law.
behavioral therapy is initiated after July 1, 2026, for services provided
from January 1, 2022, thr ough December 31, 2023, the department of
health care policy and financing (state department) is authorized to
determine and recover overpayments to a provider using statistical
sampling and extrapolation. If an audit identifies a statistically significant
pattern of alleged overpayments to a provider, the auditor is authorized
to use the same statistical sampling and extrapolation methods to audit
services provided by the provider from January 1, 2024, through
December 31, 2025.
If the audit identifies an alleged overpayment, the state department
is required to issue a notice of the alleged overpayment within 60 days
after the alleged overpayment is identified. The notice of alleged
overpayment must include the basis of the alleged overpayment, the
rationale for the alleged overpayment, the methodology used to calculate
the alleged overpayment, and information on how the state department
identified the alleged overpayment.
If the state department enters into a contract for the purpose of
conducting an audit, the contract must not be a contingency-based
contract based on a percentage of the amount of recovery collected from
the provider.
After the state department completes an audit of a provider, the
state auditor's office is required to conduct an examination to determine
that proper statistical sampling and extrapolation methods were used by
the state department when determining whether overpayments were made
to a provider. The state auditor shall annually present a report of the
findings to the legislative audit committee and the joint budget
committee.
The bill reduces a general fund appropriation and increases a cash
fund appropriation to the state department.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. Legislative declaration. (1) The general assembly2
finds and declares that:3
(a) The federal centers for medicare and medicaid services, the4
office of inspector general in the federal department of health and human5
services, and other federal agencies regularly employ statistical sampling6
and extrapolation methodologies to identify and recover improper7
payments from the Colorado medicaid program administered by the8
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department of health care policy and financing, or HCPF;1
(b) Certain medicaid service areas, including nonemergency2
medical transportation and pediatric behavioral therapy, such as applied3
behavior analysis services, have been identified as having elevated rates4
of insuffi cient documentation, improper b illing, or fra ud, waste, and5
abuse, characterized by rapid outsized spending growth not explained or6
supported by a corresponding increase in the number of individuals7
served;8
(c) Requiring HCPF to individually audit each claim submitted for9
payment by a provider to determine the appropriate error rate and10
overpayment recovery imposes an unrealistic and unsustainable11
administrative burden;12
(d) The inability for HCPF to audit every claim submitted by a13
provider results in under-represented recoupments, recovery delays, and14
increased risk for federal disallowance, which the state is solely15
financially responsible for;16
(e) Statistical sampling and extrapolation methodologies, when17
applied consistently with recognized federal standards, provide a reliable18
and efficient basis for overpayment recovery; and19
(f) Using statistical sampling and extrapolation across providers20
treating medicaid members for services covered under the nonemergent21
medical transportation benefit and the pediatric behavioral therapy22
benefit, including applied behavioral analysis, will protect Colorado23
medicaid funds and the state general fund; deter fraud, waste, and abuse24
and related practices; and align state practices with established federal25
methodologies and standards.26
SECTION 2. In Colorado Revised Statutes, 25.5-4-301, add27
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(3)(a)(VI.5) as follows:1
25.5-4-301. Recoveries - overpayments - penalties - interest -2
adjustments - liens - review or audit procedures - cash fund - rules -3
definitions - repeal.4
(3) (a) A review or audit of a provider is subject to the following5
procedures:6
(VI.5) (A) I F AN AUDIT OF A PROVIDER WHO PROVIDES7
NONEMERGENCY MEDICAL TRANSPORTATION SERVICES OR PEDIATRIC8
BEHAVIORAL THERAPY, INCLUDING APPLIED BEHAVIORAL ANALYSIS , IS9
INITIATED AFTER JULY 1, 2026, FOR SERVICES PROVIDED FROM JANUARY10
1, 2022, THROUGH DECEMBER 31, 2023, THE STATE DEPARTMENT IS11
AUTHORIZED TO DETERMINE AND RECOVER AN OVERPAYMENT TO A12
PROVIDER USING A SAMPLING OF RECORDS AND EXTRAPOLATION OF THE13
RECORDS SO LONG AS THE SAMPLING AND EXTRAPOLATION METHODS14
EMPLOYED UTILIZE A STATISTICALLY VALID SAMPLE AND ARE DESIGNED15
AND IMPLEMENTED IN ACCORDANCE WITH NATIONALLY RECOGNIZED ,16
GENERALLY ACCEPTED STATISTICAL PRINCIPLES , STANDARDS , AND17
METHODS.18
(B) I F AN AUDIT CONDUCTED PURSUANT TO SUBSECTION19
(3)(a)(VI.5)(A) OF THIS SECTION IDENTIFIES A STATISTICALLY SIGNIFICANT20
PATTERN OF OVERPAYMENTS TO A PROVIDER OF NONEMERGENCY21
MEDICAL TRANSPORTATION SERVICES OR PEDIATRIC BEHAVIORAL22
THERAPY, THE AUDITOR IS AUTHORIZED TO USE THE SAME STATISTICAL23
SAMPLING AND EXTRAPOLATION METHODS TO AUDIT SERVICES PROVIDED24
BY THE PROVIDER FROM JANUARY 1, 2024, THROUGH DECEMBER 31, 2025.25
FOR THE PURPOSES OF THIS SUBSECTION (3)(a)(VI.5)(B), "STATISTICALLY26
SIGNIFICANT PATTERN " MEANS A CLAIMS ERROR RATE IDENTIFIED27
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THROUGH THE AUDIT THAT EXCEEDS TEN PERCENT.1
(C) I F AN AUDIT IDENTIFIES AN OVERPAYMENT , THE STATE2
DEPARTMENT SHALL ISSUE A NOTICE TO THE PROVIDER OF THE 3
OVERPAYMENT WITHIN SIXTY DAYS AFTER THE O V E R P A Y M E N T I S4
IDENTIFIED. THE NOTICE OF THE OVERPAYMENT MUST INCLUDE THE5
BASIS OF THE O V E R P A Y M E N T, THE RATIONALE FOR THE 6
OVERPAYMENT, THE METHODOLOGY USED TO CALCULATE THE 7
OVERPAYMENT, AND INFORMATION ON HOW THE STATE DEPARTMENT8
IDENTIFIED THE OVERPAYMENT , INCLUDING CLAIMS SAMPLES USED ,9
CLAIM-LEVEL FINDINGS, AND OTHER DOCUMENTATION TO ENABLE THE10
PROVIDER TO FULLY EVALUATE AND REPLICATE THE AUDITOR'S ANALYSIS.11
PRIOR TO THE STATE DEPARTMENT IMPLEMENTING RECOVERY OF AN12
OVERPAYMENT, THE PROVIDER HAS THE RIGHT TO AN INFORMAL13
RECONSIDERATION IN ACCORDANCE WITH SUBSECTION (3)(a)(VII) OF THIS14
SECTION OR THE RIGHT TO A FORMAL APPEAL IN ACCORDANCE WITH15
SUBSECTION (3)(a)(VIII) OF THIS SECTION.16
(D) IF THE STATE DEPARTMENT ENTERS INTO A CONTRACT FOR THE17
PURPOSE OF CONDUCTING AN AUDIT PURSUANT TO THIS SUBSECTION18
(3)(a)(VI.5), THE CONTRACT MUST NOT BE A CONTINGENCY -BASED19
CONTRACT BASED ON A PERCENTAGE OF THE AMOUNT OF RECOVERY20
COLLECTED FROM THE PROVIDER.21
(E) AFTER THE STATE DEPARTMENT COMPLETES AN AUDIT OF A22
PROVIDER PURSUANT TO THIS SUBSECTION (3)(a)(VI.5), THE STATE23
AUDITOR OR A PERSON AUTHORIZED BY THE STATE AUDITOR SHALL24
CONDUCT AN EXAMINATION IN ACCORDANCE WITH SECTION 2-3-103 TO25
DETERMINE WHETHER THE STATE DEPARTMENT USED PROPER STATISTICAL26
SAMPLING AND EXTRAPOLATION METHODS WHEN DETERMINING WHETHER27
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OVERPAYMENTS WERE MADE TO A PROVIDER. THE STATE AUDITOR SHALL1
ANNUALLY PRESENT A REPORT OF THE FINDINGS MADE PURSUANT TO THIS2
SUBSECTION (3)(a)(VI.5)(E) TO THE LEGISLATIVE AUDIT COMMITTEE AND3
THE JOINT BUDGET COMMITTEE UNTIL THE AUDITS ARE COMPLETE.4
SECTION 3. Appropriation - adjustments to 2026 long bill.5
(1) Except as provided in subsection (3) of this section, to implement this6
act, the appropriation made in the annual general appropriation act for the7
2026-27 state fiscal year to the department of health care policy and8
financing for medical and long-term care services for Medicaid-eligible9
individuals is adjusted as follows:10
(a) The general fund appropriation is decreased by $6,861,775,11
which amount is subject to the "(M)" notation as defined in the annual12
general appropriation act for the same fiscal year; and13
(b) The cash funds appropriation from recoveries and14
recoupments is increased by $13,723,550.15
(2) For the 2026-27 state fiscal year, the general assembly16
anticipates that the fede ral funds receive d by the department of health17
care policy and financing for medical and long-term care services for18
Medicaid-eligible individuals will decrease by $6,861,775. The19
appropriation in subsection (1)(a) of this section is based on the20
assumption that the department will not receive this amount of federal21
funds.22
(3) Subsection (1)(a) of this section does not require a reduction23
of an appropriation in the annual general appropriation act for the24
2026-27 state fiscal year if:25
(a) The amount of the general fund appropriation made in the26
annual general appropriation act for the 2026-27 state fiscal year to the27
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department of health care policy and financing for medical and long-term1
care services for Medicaid-eligible individuals is less than the amount of2
the adjustment required in subsection (1)(a) of this section; or3
(b) The annual general appropriation act for the 2026-27 state4
fiscal year does not include an appropriation to the department of health5
care policy and financing for medical and long-term care services for6
Medicaid-eligible individuals.7
SECTION 4. Effective date. This act takes effect upon passage;8
except that section 3 of this act takes effect only if the annual general9
appropriation act for the 2026-27 state fiscal year becomes law, in which10
case section 3 of this act takes effect upon the effective date of this act or11
of the annual general appropriation act for state fiscal year 2026-27,12
whichever is later.13
SECTION 5. Safety clause. The general assembly finds,14
determines, and declares that this act is necessary for the immediate15
preservation of the public peace, health, or safety or for appropriations for16
the support and maintenance of the departments of the state and state17
institutions.18
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