Summary#

HB 26-1412, the Department of Health Care Policy & Financing Statistical Sampling & Extrapolation bill, amends Colorado’s existing law on Medicaid provider overpayment reviews and audits. It authorizes the Department of Health Care Policy and Financing (HCPF) to use statistical sampling and extrapolation (using a sample to estimate overpayments across a larger set of records) for certain audits. The bill says its goal is to improve recovery of improper Medicaid payments and protect state funds.

• For audits started after July 1, 2026, HCPF may use this method for nonemergency medical transportation and pediatric behavioral therapy, including applied behavior analysis, for services from January 1, 2022, through December 31, 2023.
• If that audit finds a claims error rate above 10%, the auditor may use the same methods to audit the provider’s services from January 1, 2024, through December 31, 2025.
• The sample must be statistically valid, and the methods must follow nationally recognized, generally accepted statistical principles and methods.
• If an audit identifies an alleged overpayment, HCPF must notify the provider within 60 days. The notice must explain the calculation and include information, such as sampled claims and claim-level findings, to let the provider evaluate and replicate the analysis.
• Before HCPF recovers an overpayment, the provider may seek informal reconsideration or make a formal appeal. Audit contracts cannot pay the auditor a percentage of amounts recovered. The State Auditor must examine the methods used and report findings annually until the audits are complete.

What it means for you#

• Providers of the named services: HCPF may estimate overpayments from a valid sample rather than individually audit every claim in the covered periods. An error rate above 10% in the first period allows, but does not require, an audit of the provider’s 2024–2025 services using the same methods.
• Providers facing an alleged overpayment: They must receive the specified audit information within 60 days of identification and have a reconsideration or appeal option before recovery. The bill does not itself set out the full rules for those existing review options.
• Medicaid members and the public: The bill does not directly change eligibility, covered benefits, or member payments. It changes HCPF’s authority to audit and recover certain provider overpayments.

Money#

The bill makes budget adjustments for state fiscal year 2026–27, but the amounts recovered through these audits are not guaranteed.

• It increases the Medicaid appropriation from cash funds drawn from recoveries and recoupments by $13,723,550.
• It decreases the General Fund appropriation by $6,861,775 and anticipates $6,861,775 less in federal funds for the specified Medicaid services.
• These budget changes apply only if the 2026–27 annual appropriation act becomes law; the General Fund reduction also need not be made if the relevant appropriation is smaller than the reduction or is not included.
• The bill gives no estimate of audit or State Auditor costs, staffing needs, or actual recoveries.

What is unclear#

• The bill does not specify how HCPF will choose providers for audit or give detailed sample-size and calculation rules beyond the required statistical standards.
• It does not define “pediatric behavioral therapy” in the text supplied.
• The bill refers to existing reconsideration and appeal procedures, but the existing statute was not supplied, so their deadlines and details cannot be verified here.
• The text does not explain how these audits will coordinate with other reviews or audits of the same claims.

Case for#

• The bill’s findings say that some named service areas have had elevated rates of insufficient documentation, improper billing, or fraud, waste, and abuse.
• Sampling may let HCPF assess more claims than it could by individually reviewing every claim, while still requiring a statistically valid method.
• Required audit details, a chance to seek reconsideration or appeal before recovery, and independent examination by the State Auditor provide checks on the process.

Case against#

• Extrapolation means an estimate from sampled records can affect the amount alleged across a larger set of claims, even though not every claim was individually reviewed.
• The bill does not set detailed rules for selecting providers or designing samples, leaving important parts of the method to HCPF and auditors.
• The audit periods reach back to services from 2022–2025, and the bill does not explain how providers will be notified in advance or how records from those periods will be handled.
• The bill authorizes additional audits and requires State Auditor examinations, but provides no cost estimate for that work.