Colorado failed to follow federal and state requirements for certain Medicaid personal care service payments, according to a report from the U.S. Department of Health and Human Services inspector general, which is now seeking an $8 million repayment from the state.

Additionally, HHS is restricting another $45.7 million in federal payments while the state and the Centers for Medicare and Medicaid Services review those payments to determine allowability.

The Colorado Department of Health Care Policy and Financing, which administers Medicaid, said it disagrees with most of the audit findings.

State health officials said Tuesday that they view audits as a chance to strengthen oversight and engage constructively with federal partners. But they also argue Colorado was treated differently than other states.

The Inspector General’s approach to fiscal findings across states, “including differing treatment of similar issues in other audits,” raised concerns “about the equitable application of federal oversight standards.”

State officials also claimed most of the audit’s findings were “isolated documentation issues, not evidence that services were not delivered or that caregivers were ineligible to provide care.”

The audit did not show payments for services that were not authorized and rendered, nor did it identify fraud or intentional misuse of Medicaid funds, state health officials said in a statement, adding that it is working with its federal partners to “address the findings and reduce any associated financial implications.”

The audit looked at Colorado’s compliance with the federal Electronic Visit Verification system, which verifies that an attendant has provided personal care services to a Medicaid enrollee in the enrollee’s home and as part of the federal Home and Community-Based Services program. That program allows enrollees to stay in the community and avoid institutionalization. 

The audit looked at a subset of the community-based program that provides services to elderly, blind and disabled Medicaid enrollees.

The EVV system came out of the 21st Century Cures Act, which was signed into law in 2016 to look for weaknesses in the personal care services program that could lead to “improper payments, questionable quality of care and notable amounts of fraud.”

The audit looked at whether Colorado had implemented the EVV system in accordance with federal and state requirements.

State health officials noted that it was an early adopter of the EVV system, and its implementation was identified by CMS as a leader and used as a model for other states.

The audit examined whether Colorado implemented its EVV system in line with federal and state requirements. State health officials said Colorado was an early adopter and that CMS had identified its rollout as a model for other states. The audit acknowledged the system was in place but said some personal care service visits were not fully recorded or verified.

In the EVV system, the audit said attendants can log visits through mobile verification, telephone verification, manual entry by the provider or other approved methods.

When an attendant arrives, they are expected to check in using a mobile app or by calling the EVV system. GPS or caller ID confirms the enrollee and the authorized service. At the end of the visit, the attendant checks out and the system records the visit.

The audit reviewed these processes for the period from July 1, 2023, through June 30, 2024.

The sample began with 1.3 million PCS claims of $25 or more, totaling $152.8 million in federal reimbursements.

From the 1.3 million claims, auditors pulled a stratified random sample of 160. Of those, 62 were manually entered into the EVV system, 17 were not entered at all, 18 lacked location information and another 18 had GPS exceptions that were never reviewed.

Extrapolating the 160-claim sample to the full set, auditors concluded that 682,947 claims failed to meet federal and state requirements.

Colorado health officials dispute that conclusion, arguing that using such a small sample to infer hundreds of thousands of errors “may overstate the prevalence of issues when applied broadly across a diverse provider population delivering millions of services annually,” the department said.

The audit also found excessive payments and failure to document background screenings for some attendants. 

That’s much of what led to the demand for repayment of the $8 million.

While HCPF had policies in place for background screenings, the agency did not always confirm that providers maintained the required documentation. 

The errors related to excessive units and excessive rates paid occurred primarily because the state system lacked system edits to verify that the services paid matched those approved.

In some cases, the average personal care services claimed exceeded 24 hours per day, the audit said. On one claim, the provider billed 3,876 units of service across eight service dates, averaging 121 hours per day. But the corresponding time sheets documented only five hours per day for 161 service units on those same eight dates.

Still, state health officials say they had already implemented system and policy improvements to address issues identified in the audit.

It pledged to work with CMS to “ensure accurate interpretation of program requirements and appropriate resolution of the audit findings.”