Evaluation Of The Colorado Recovery Audit Contractor Program
Learn how the AI-generated research projects were createdOverall Conclusion
HCPF’s Medicaid Recovery Audit Contractor program generally adheres to federal and state requirements but requires stronger contract oversight and program management to ensure efficient operation, reduce overpayments, and improve provider billing and education.
Source Document
Audit Scope
This performance evaluation examined the Colorado Department of Health Care Policy & Financing’s Medicaid Recovery Audit Contractor (RAC) program, administered by HMS, to determine compliance with federal (CMS 42 CFR Part 455) and Colorado state requirements (Section 25.5-4-301, C.R.S.) and to assess program effectiveness, efficiency, and governance. The scope includes: review of the RAC process from planning to reporting for 31 approved audit scenarios (25 automated and 6 complex) and the related provider outreach/education activities; in-depth analysis of three scenarios (Radiology Duplicates, Level of Care, Initial Inpatient Visits) with case review and data supporting their finding letters; evaluation of oversight roles among HCPF divisions, the RAC vendor, and CMS communications; analysis of lookback periods (up to seven years per SPA, with a three-year federal limit), the contingency-fee structure (up to 18%), and contract transmittal practices; examination of lookback policy changes and the handling of appeals, informal reconsiderations, and settlements; the data range for claims audited (January 2018 – June 2023) and recoveries (FY 2019–2023) as reported by HCPF; engagement included interviews with HCPF staff, HMS staff, provider associations, provider surveys (115 responses), reviews of 11,000+ documents, and comparisons with eight to seventeen other states.
Key Findings Summary
Finding 1 – Audit Scenario Investigation: Our high-level review of 31 RAC audit scenarios revealed that 3 in-depth audits contained inconsistent, unclear, or outdated policies leading to inaccurate findings and rescissions; Radiology Duplicates (2015–2020 lookback with policy change in 2018) resulted in $13.5 million in overpayments to 17,000 providers; Leve…
Finding 2 – Application of Contingency Fee: HCPF pays the RAC contingency fee based on identified overpayments, even if not recovered, contrary to federal/state requirements and potentially incentivizing aggressive audits; contract allows up to 18% vs CMS 12.5%.
Finding 3 – Use of Contract Transmittals: Transmittals are used for official direction, but issues include one transmittal increasing compensation without a contract amendment; six of nine transmittals predate the 2021 contract; some guidance given outside transmittal; recommendation to define purpose and update processes.
View the Findings tab to see all 7 findings
AI-Assisted
AI Scope Summary
The audit aimed to assess Colorado's Medicaid RAC program’s compliance with CMS requirements and state law, evaluate the effectiveness of the payment model and lookback periods, examine governance and oversight processes (including credentialing, communications, and appeals), and assess effects on provider burden and beneficiary access to care.
AI-Generated Insight
This evaluation highlights governance and operational gaps in Colorado's Medicaid Recovery Audit Contractor program, including misalignment of contingent payment structures with federal rules, inconsistent scenario design, weak credential verification, and gaps in provider outreach. The findings point to substantial opportunities to strengthen program integrity, reduce provider burden, and ensure CMS expectations are met, with concrete steps including clarifying approvals, updating contracts and transmittals, and enhancing oversight. The implications extend to CMS oversight risk, budget impact, and the balance between accountability and access to care in Colorado.