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Second Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
REREVISED
This Version Includes All Amendments
Adopted in the Second House
LLS NO. 26-0978.01 Shelby Ross x4510 HOUSE BILL 26-1412
House Committees Senate Committees
Appropriations 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
SENATE
3rd Reading Unamended
April 16, 2026
SENATE
Amended 2nd Reading
April 15, 2026
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, Hinrichsen
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 THE PRINCIPLES, STANDARDS,16
AND METHODS APPROVED OR AUTHORIZED BY THE FEDERAL CENTERS FOR17
MEDICARE AND MEDICAID SERVICES OR THE OFFICE OF INSPECTOR18
GENERAL IN THE FEDERAL DEPARTMENT OF HEALTH AND HUMAN SERVICES19
FOR THE USE OF STATISTICAL SAMPLING AND EXTRAPOLATION IN AUDITING20
POTENTIAL OVERPAYMENT FOR HEALTH CARE SERVICES . THE STATE21
DEPARTMENT AND STATE AUDITOR SHALL NOT USE STATISTICAL SAMPLING22
OR EXTRAPOLATION TO DETERMINE OR RECOVER OVERPAYMENTS BASED23
ON DOCUMENTATION DEFICIENCIES OR TECHNICAL NONCOMPLIANCE THAT24
DO NOT DEMONSTRATE THAT SERVICES WERE NOT PROVIDED OR WERE NOT25
BILLABLE.26
(B) I F AN AUDIT C ONDUCTED PURS UANT TO SUBSECTION27
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(3)(a)(VI.5)(A) OF THIS SECTION IDENTIFIES A STATISTICALLY SIGNIFICANT1
PATTERN OF A L L E G E D OVERPAYMENTS TO A PROVIDER OF2
NONEMERGENCY MEDICAL TRANSPORTATION SERVICES OR PEDIATRIC3
BEHAVIORAL THERAPY, THE AUDITOR IS AUTHORIZED TO USE THE SAME4
STATISTICAL SAMPLING AND EXTRAPOLATION METHODS TO AUDIT5
SERVICES PROVIDED BY THE PROVIDER FROM JANUARY 1, 2024, THROUGH6
DECEMBER 31, 2025. FOR THE PURPOSES OF THIS SUBSECTION7
(3)(a)(VI.5)(B), "STATISTICALLY SIGNIFICANT PATTERN" MEANS A CLAIMS8
ERROR RATE IDENTIFIED THROUGH THE AUDIT THAT EXCEEDS TEN9
PERCENT.10
(C) IF AN AUDIT IDENTIFIES AN ALLEGED OVERPAYMENT, THE11
STATE DEPARTMENT SHALL ISSUE A NOTICE TO THE PROVIDER OF THE 12
ALLEGED OVERPAYMENT WITHIN SIXTY DAYS AFTER THE AL L EGED13
OVERPAYMENT IS IDENTIFIED . THE NOTICE OF THE A L L E G E D14
OVERPAYMENT MUST INCLUDE THE BASIS OF THE A L L E G E D15
OVERPAYMENT, THE RATIONALE FOR THE ALLEGED OVERPAYMENT, THE16
METHODOLOGY USED TO CALCULATE THE ALLEGED OVERPAYMENT,17
AND INFORMATION ON HOW THE STATE DEPARTMENT IDENTIFIED THE 18
ALLEGED OVERPAYMENT , INCLUDING CLAIMS SAMPLES USED ,19
CLAIM-LEVEL FINDINGS, AND OTHER DOCUMENTATION TO ENABLE THE20
PROVIDER TO FULLY EVALUATE AND REPLICATE THE AUDITOR'S ANALYSIS.21
PRIOR TO THE STATE DEPARTMENT IMPLEMENTING RECOVERY OF AN22
OVERPAYMENT, THE PROVIDER HAS THE RIGHT TO AN INFORMAL23
RECONSIDERATION IN ACCORDANCE WITH SUBSECTION (3)(a)(VII) OF THIS24
SECTION OR THE RIGHT TO A FORMAL APPEAL IN ACCORDANCE WITH25
SUBSECTION (3)(a)(VIII) OF THIS SECTION.26
(D) IF THE STATE DEPARTMENT ENTERS INTO A CONTRACT FOR THE27
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PURPOSE OF CONDUCTING AN AUDIT PURSUANT TO THIS SUBSECTION1
(3)(a)(VI.5), THE CONTRACT MUST NOT BE A CONTINGENCY -BASED2
CONTRACT BASED ON A PERCENTAGE OF THE AMOUNT OF RECOVERY3
COLLECTED FROM THE PROVIDER.4
(E) AFTER THE STATE DEPARTMENT COMPLETES AN AUDIT OF A5
PROVIDER PURSUANT TO THIS SUBSECTION (3)(a)(VI.5), THE STATE6
AUDITOR OR A PERSON AUTHORIZED BY THE STATE AUDITOR SHALL7
CONDUCT AN EXAMINATION IN ACCORDANCE WITH SECTION 2-3-103 TO8
DETERMINE WHETHER THE STATE DEPARTMENT USED PROPER STATISTICAL9
SAMPLING AND EXTRAPOLATION METHODS WHEN DETERMINING WHETHER10
OVERPAYMENTS WERE MADE TO A PROVIDER. THE STATE AUDITOR SHALL11
ANNUALLY PRESENT A REPORT OF THE FINDINGS MADE PURSUANT TO THIS12
SUBSECTION (3)(a)(VI.5)(E) TO THE LEGISLATIVE AUDIT COMMITTEE AND13
THE JOINT BUDGET COMMITTEE UNTIL THE AUDITS ARE COMPLETE.14
SECTION 3. Appropriation - adjustments to 2026 long bill.15
(1) Except as provided in subsection (3) of this section, to implement this16
act, the appropriation made in the annual general appropriation act for the17
2026-27 state fiscal year to the department of health care policy and18
financing for medical and long-term care services for Medicaid-eligible19
individuals is adjusted as follows:20
(a) The general fund appropr iation is decreased by $6,861,775,21
which amount is subject to the "(M)" notation as defined in the annual22
general appropriation act for the same fiscal year; and23
(b) The cash funds appropriation from recoveries and24
recoupments is increased by $13,723,550.25
(2) For the 2026-27 state fiscal year, the general assembly26
anticipates that the federal funds received by the department of health27
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care policy and financing for medical and long-term care services for1
Medicaid-eligible individuals will decrease by $6,861,775. The2
appropriation in subsection (1)(a) of this section is based on the3
assumption that the department will not receive this amount of federal4
funds.5
(3) Subsection (1)(a) of this section does not require a reduction6
of an appropriation in the annual general appropriation act for the7
2026-27 state fiscal year if:8
(a) The amount of the general fund appropriation made in the9
annual general appropriation act for the 2026-27 state fiscal year to the10
department of health care policy and financing for medical and long-term11
care services for Medicaid-eligible individuals is less than the amount of12
the adjustment required in subsection (1)(a) of this section; or13
(b) The annual general appropriation act for the 2026-27 state14
fiscal year does not include an appropriation to the department of health15
care policy and financing for medical and long-term care services for16
Medicaid-eligible individuals.17
SECTION 4. Effective date. This act takes effect upon passage;18
except that section 3 of this act takes effect only if the annual general19
appropriation act for the 2026-27 state fiscal year becomes law, in which20
case section 3 of this act takes effect upon the effective date of this act or21
of the annual general appropriation act for state fiscal year 2026-27,22
whichever is later.23
SECTION 5. Safety clause. The general assembly finds,24
determines, and declares that this act is necessary for the immediate25
preservation of the public peace, health, or safety or for appropriations for26
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the support and maintenance of the departments of the state and state1
institutions.2
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