For five years, the Joint Budget Committee said transportation companies using vans for extra large wheelchairs were billing the state for a specialty ambulance.

DENVER — If you ran a lemonade stand, and sold drinks for $1 per cup, you’d expect someone to pay you $1 for each cup. But if the customer gave you $10 for the cup, and kept coming back, and back, and back, $10 in hand for five years, you’d probably think you were running a successful and likely profitable business. Perhaps you’d tell your friends to try it, too.

That hypothetical scenario is not far off from how the State of Colorado just learned it was wasting millions of dollars through its Medicaid program over the last five years.

Colorado’s Medicaid program overpaid transportation providers tens of millions of dollars over five years after state officials instructed its transportation broker to tell companies to use an incorrect billing code for transporting patients in extra-large wheelchairs, state lawmakers learned this week.

The Department of Health Care Policy and Financing (HCPF), responsible for the state’s Medicaid program, said it told Denver metro-area providers to bill XL wheelchair van rides using the code for the more expensive, specialty ambulance rides. At the time, HCPF said the price was $232.44 and usage of the code was relatively low until 2023. 

But it didn’t stay low. When the state later raised prices for specialty ambulances to be more on par with nationwide rates, the state did not account for, or later catch, that providers were still using the specialty ambulance coding for XL wheelchair transports.

The error resulted in the state paying up to $668.93 per pickup instead of $65, according to a presentation to the Joint Budget Committee. HCPF said the rate increase inadvertently exacerbated the spending problem.  

“They told these providers to bill a certain code, and that code was 10 times higher than what they told other providers to bill,” said Sen. Judy Amabile, a Boulder Democrat and a member of the state’s Joint Budget Committee, who heard the report this week.

JBC analysts expect correcting the mistake will save approximately $90 million over approximately the next year and a half. The fix, implemented in November, is projected to save $60.5 million in the 2026-27 fiscal year alone.

Lawmakers expressed shock at the scope of the error during Tuesday’s budget committee hearing.

“I don’t even know if it’s waste so much as it’s some kind of incompetence,” Amabile said.

HCPF said utilization of the higher rate remained low until 2023, when it started to spike. The increased spending coincided with other rate increases and the emergence of fraud issues in the non-emergency medical transportation (NEMT) program.

“The growth in utilization of this code coincided with other NEMT rate increases and the emergence of wider NEMT fraud issues,” HCPF said in response to questions from 9NEWS. “Unfortunately, the increased utilization of the new specialty ambulance rate was overshadowed by other rate increases and the fraud claims.”

The guidance affected multiple companies providing non-emergency medical transportation services in the metro area. Those providers capitalized on what they thought was an accurate, but high payment for a business using vans that can accommodate people with extra-large wheelchairs, not specialty ambulances.

Adam Burg, a lobbyist representing the Metro NEMT Providers Association, said the association has around 40 providers ranging from small mom-and-pop operations with three to four vehicles to larger companies with up to 30 vehicles.

“You have to remember this rate was in effect for five years, so you had people who entered this space in 2021 understanding this was kind of the business model,” Burg said. “They used that large payment to subsidize some of the services.”

Burg said providers used the higher payments to help cover costs for other lower-rate services and built their business models around those rates.

But in November, the state implemented a $65 rate for the service, which he says is far too low, and a drastic drop for business owners who built their companies around the previous payment amount. He says he believes the $65 is HCPF’s way of trying to crawl back the money given to providers.

Because HCPF instructed providers to use the specialty ambulance code, the state cannot automatically recoup the overpayments. Budget committee staff told lawmakers that providers were following the department’s guidance.

However, HCPF said it is investigating whether some providers engaged in upcoding or other abusive practices that magnified expenditures.

“The Department is evaluating the costs associated with the expenditures and will be investigating whether NEMT provider upcoding or other abusive practices have occurred that magnified this expenditure,” HCPF said. “The Department is evaluating outlier provider billings for further action, including post payment reviews and payment recoupments.”

HCPF expressed concern that many trips billed under the code were neither ambulance services nor extra-large bariatric wheelchair transports. The department said it could recoup overpayments from providers by withholding future payments if its investigation finds upcoding occurred. Cases involving suspected fraud would be referred to the Attorney General’s Medicaid Fraud and Neglect Unit.

Burg said the industry has bad actors engaged in abuse, but said his metro area clients did not improperly bill for services. They did what they were instructed to do.

“You heard straight from the (JBC) staffer’s mouth in the hearing this week, the providers are not to blame,” Burg said. “HCPF is to blame.”

Amabile said she did not believe providers or the department acted with ill intent.

“I don’t think there’s any malfeasance involved,” she said. “I don’t think the providers were trying to pull a fast one. I don’t think the department did it on purpose, obviously. They just made a mistake.”

The error raises concerns about oversight of state programs, particularly as Colorado faces an $850 million budget shortfall.

“It does make you wonder what else are we missing?” Amabile said. “And not just at HCPF, but in all the agencies.”