{"id":484482,"date":"2026-02-22T21:16:08","date_gmt":"2026-02-22T21:16:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/484482\/"},"modified":"2026-02-22T21:16:08","modified_gmt":"2026-02-22T21:16:08","slug":"flawed-analysis-helped-cause-colorado-medicaid-programs-costs-to-surge","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/484482\/","title":{"rendered":"Flawed analysis helped cause Colorado Medicaid program’s costs to surge"},"content":{"rendered":"

A Colorado Medicaid program was beset with explosive costs<\/a> and fraud after state officials relied on a flawed analysis and recommended the legislature nearly triple the program\u2019s reimbursement rate, The Denver Post has found.<\/p>\n

It took three years for the state to reverse course and cut the rate back down. By that point, spending on a vital transportation program had ballooned to over $300 million a year \u2014 more than quadruple the annual cost before the rate increase, according to legislative analysts. The program also began battling fraud and misuse, as scores of new providers signed up and some packed their cars with patients to maximize their mileage payout.<\/p>\n

In 2021, before the increase was approved, a state advisory panel<\/a> had warned that Colorado was underpaying the transportation companies that drove Medicaid patients to and from routine medical appointments. But the analysis that underpinned its recommendation for a higher rate<\/a> appeared to errantly compare Colorado\u2019s way of reimbursing mileage for routine visits with how the federal government and other states paid for ambulances.<\/p>\n

It appeared to set up a flawed equivalence that led state officials to pay for minivans and sedans as if they were emergency vehicles.<\/p>\n

The analysis established a mileage reimbursement benchmark, a target created by examining what Medicare \u2014 another government-run health insurance program \u2014 and several other states paid.<\/p>\n

But the Medicare code examined in the analysis is typically used to pay for ambulance mileage<\/a>. While program details vary, several of the studied states were paying less per mile for similar services than Colorado, even prior to the rate increase. Ohio, for instance, was paying $1 a mile for wheelchair vans<\/a>. The rate in Arizona was $1.53<\/a>. New Mexico in 2023 paid Medicaid taxis $1.76 for each mile; Nebraska paid the same in 2022. North Dakota\u2019s mileage rate topped<\/a> out at $2.33.<\/p>\n

By comparison, the legislature \u2014 acting on state Medicaid officials\u2019 recommendation<\/a> \u2014 increased Colorado\u2019s mileage rate to $6.10, an increase of nearly $4 that one transportation provider called \u201cshocking.\u201d<\/p>\n

\u201cThe problem \u2014 and this is what HCPF has not acknowledged \u2014 is that the root cause of the fraud was an overly generous rate that was so lucrative that people were willing to commit crimes to get that rate,\u201d the provider, Ross Peterson, said in an interview.<\/p>\n

HCPF is the state Department of Health Care Policy and Financing<\/a>, which in Colorado oversees Medicaid, the program that provides health insurance primarily to low-income people. Peterson wrote a lengthy memo to HCPF leaders last year warning them about the problem.<\/p>\n

In an initial statement to The Post for this story, HCPF spokesman Marc Williams acknowledged that the more expensive ambulance code had been used for routine and ambulance rides alike. As HCPF tried to get a handle on the fraud scheme, he said, it examined the mileage rates and found that they \u201cseemed to be high compared to other states and may have made Colorado an attractive target for fraud.\u201d<\/p>\n

\u201cThe 2022 rate adjustment was implemented during a period of significant disruption, including pandemic-related workforce shortages, rising fuel costs and access to care concerns,\u201d Williams said in a follow-up statement Friday. \u201cAt the time, the department\u2019s priority was ensuring members could continue to access critical medical services. As program utilization and expenditures grew beyond initial projections, HCPF conducted additional analysis and worked with legislative partners to reassess the rate structure. Once trends became clear, the department took steps to strengthen oversight and implement safeguards to better align the rates.\u201d<\/p>\n

The impact of the rate change was swift: In the 2022 fiscal year, the nonemergency medical transport program cost $70.5 million. The next year, after the rate increase took hold, the toll skyrocketed to $211.9 million, according to legislative analysts,<\/a> and then to $303 million in fiscal year 2024.<\/p>\n

Fraud followed, too, despite warnings that the program was vulnerable to such risks.<\/p>\n

A year into the new rates, state officials said that they were clamping down on the program because it had been targeted by what they have called an international fraud scheme<\/a>. At least $25 million was lost to that fraud, which was perpetrated by drivers who loaded their cars with patients and drove them across Colorado to maximize their mileage reimbursement.<\/p>\n

At least two drivers, who were indicted earlier this month, also allegedly billed for rides that never happened<\/a>, including for one patient who had already died.<\/p>\n

HCPF blames providers<\/p>\n

Still, Williams argued that the mileage rate wasn\u2019t the problem, nor was the underlying analysis \u201cfaulty,\u201d as The Post had contended. He said the ambulance billing code was \u201cimproperly used by providers and HCPF didn\u2019t have robust enough policies\/procedures in place to prevent the abuse at the volume it was occurring.\u201d<\/p>\n

But archived copies of Medicaid billing manuals,<\/a> published by the state in 2023 and 2024, show HCPF officials directed providers to use the ambulance code for more routine trips. The analysis that underpinned the rate increase recommendation<\/a> also repeatedly referenced that code for nonemergency transport.<\/p>\n

The state now directs providers to use a billing code<\/a> intended for routine \u2014 or ambulatory \u2014 rides, with a mileage rate set at $3.<\/p>\n

After The Post pointed out the previous guidance, Williams reiterated that providers had used the wrong code, which was intended for \u201cambulance and ambulatory\u201d rides, he said, not \u201ccommon vehicle\u201d rides. But there\u2019s no guidance in HCPF\u2019s current or recent manuals for a \u201ccommon vehicle\u201d code, and Williams did not provide one.<\/p>\n

Two providers who spoke with The Post on Friday both said that ambulatory trips are common rides, and both accused HCPF of confusing the words \u201cambulance\u201d and \u201cambulatory.\u201d<\/p>\n

Jason Brabson, who operates a transportation company in Fort Collins, said that providers in a nine-county region surrounding Denver don\u2019t even bill the state for their services. They work through a broker, Transdev, which handles billing with HCPF, he said.<\/p>\n

\u201cSo whose fault is it?\u201d Brabson said. \u201c(HCPF) are the ones who set the rate, they\u2019re the ones who do the rate review, they\u2019re the ones who get the bills from Transdev, they approve it, they give the money to Transdev, and Transdev pays us.\u201d<\/p>\n

Transportation providers had also previously noticed the high rate increase. Two told The Post that they\u2019d tried to flag the inflated rate to HCPF officials, including within a year of the increase. But the recommendation to reduce the rate wasn\u2019t brought to lawmakers until a year ago, and the rate reduction itself took effect July 1.<\/p>\n

\u201cMy alliance, the Colorado Transportation Alliance, did an entire market report and notified them probably in 2022 or 2023, saying: \u2018Hey, you\u2019re overpaying,\u2019 \u201d said Kelly Milan, who runs a Grand Junction-based company and founded his alliance several years ago. \u201cWe want to be good stewards of the program because if (unnecessary spending) depletes the program, it\u2019ll hurt all of us in the long run.<\/p>\n

\u201cWe literally alerted them, and they did nothing until about two years later.\u201d<\/p>\n

Peterson, who is a transportation provider in metro Denver, said he sent a 17-page memo outlining the issue to HCPF executive director Kim Bimestefer last year. He sent the memo both via email and through the mail. He said that HCPF appeared to have used the incorrect code before the analysis, which led to issues in the underlying analysis in 2022.<\/p>\n

Both he and Milan said they never received a reply from the agency.<\/p>\n

Bimestefer and other agency officials have said that the cost increase in the program was largely due to the fraud that plagued its services. Adela Flores-Brennan, Colorado\u2019s Medicaid director, told a panel late last year that the transportation program \u201csaw a lot of growth in the last couple of years as a result of some fraudulent activity.\u201d<\/p>\n

But the $25 million lost to fraud represents a fraction of the program\u2019s surging costs.<\/p>\n

Williams, HCPF\u2019s spokesman, said the growth in the program\u2019s costs was not solely attributable to the rate increase.<\/p>\n

\u201cMultiple factors contributed to increased costs during that period, including higher utilization, member access needs following the public health emergency, and program expansion,\u201d he wrote. \u201cFraud was one contributing factor, and the department has been clear that strengthening program integrity is a priority. HCPF has since taken steps to readjust rates, improve oversight and ensure the (Non-Emergency Medical Transport) program remains accessible to members.\u201d<\/p>\n

\"Bill<\/a>State Rep. Kyle Mullica speaks during a committee hearing at the Colorado State Capitol Building on Wednesday, March 16, 2022. (Photo by AAron Ontiveroz\/The Denver Post)
\nNot only problem identified in program<\/p>\n

The mistaken billing analysis is also only the latest in a string of problems in the troubled transportation program.<\/p>\n

Last month, legislative staffers told lawmakers that Medicaid officials had, for five years, overseen a separate billing error. In that case, Medicaid had paid a more lucrative ambulance rate to companies<\/a> that picked up patients who used larger wheelchairs.<\/p>\n

By 2025, the state was paying roughly 10 times the appropriate amount for every single pickup. Stopping that practice, lawmakers were told, would save the state millions of dollars annually.<\/p>\n

Before the pandemic, Peterson said, the state\u2019s mileage rate was mostly appropriate for Medicaid transports. Providers then needed a bump during and after the pandemic, he said, but the increase to $6.10 was \u201cshocking.\u201d It appeared that the state had been using the ambulance code before the 2021 analysis, he said, which led to the mismatched analysis comparison.<\/p>\n

After sending his February 2025 letter to Bimestefer, Peterson provided his memo to the legislature\u2019s Joint Budget Committee, which oversees state spending.<\/p>\n

The next month, HCPF and legislative staff recommended that the legislature cut the mileage rate. The budget committee\u2019s analysts wrote that the benchmark set by HCPF \u201cmay not be comparable.\u201d<\/p>\n

Legislative staff noted that the panel had reviewed the rates again in 2024. While the fraud issues clouded the analysis, the panel used Medicare payments as a benchmark, staff wrote, and again indicated that the state was still below the threshold.<\/p>\n

\u201cHowever, (HCPF) says Medicare mostly pays for ambulance trips,\u201d legislative staff wrote last year. \u201cThe operating costs for an ambulance are very different from a standard vehicle or even a wheelchair van.\u201d<\/p>\n

The repeated problems within the program come as lawmakers, facing a roughly $850 million budget deficit, are now debating how best to trim Medicaid\u2019s growing budget.<\/p>\n

Legislators on the Joint Budget Committee were sharply critical of the wheelchair mistake earlier this year. Sen. Judy Amabile, a Boulder Democrat, told reporters Tuesday that lawmakers were looking at broader reforms for HCPF and Medicaid\u2019s governance structure to get its overall costs under control.<\/p>\n

On Thursday, as the state Senate debated a supplemental funding bill for HCPF, Democratic Sen. Kyle Mullica castigated the department for its prior issues with the transportation program as legislators braced for painful Medicaid cuts. He accused the department of losing \u201chundreds of millions of dollars\u201d through \u201cfraud and incompetence.\u201d<\/p>\n

\u201cWe\u2019re talking about care for some of the most vulnerable people in our state. And the failure cannot be allowed to come out of this department any longer,\u201d he told fellow lawmakers. \u201cIt cannot happen when we are asked to cut care for vulnerable people in this state.\u201d<\/p>\n

Stay up-to-date with Colorado Politics by signing up for our weekly newsletter, The Spot.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"A Colorado Medicaid program was beset with explosive costs and fraud after state officials relied on a flawed…\n","protected":false},"author":2,"featured_media":484483,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[31271,1017,18881,150,1302,3832,9040,9045,66887,7043,1840,6884,4142,159,3262,71813,2420,60276,97,252,253,6270,2558,1341,1342,5871,26,2806,3828,3,2807,6454,9083,3590,111,836,720,6594,19508,6145,13533],"class_list":{"0":"post-484482","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-health-care","8":"tag-ambulance","9":"tag-arizona","10":"tag-boulder","11":"tag-budget","12":"tag-cars","13":"tag-colorado","14":"tag-colorado-department-of-health-care-policy-and-financing","15":"tag-colorado-news","16":"tag-colorado-politics","17":"tag-democrat","18":"tag-denver","19":"tag-fraud","20":"tag-front-range","21":"tag-funding","22":"tag-good","23":"tag-gov","24":"tag-government","25":"tag-grand-junction","26":"tag-health","27":"tag-health-care","28":"tag-healthcare","29":"tag-investigation","30":"tag-latest-headlines","31":"tag-medicaid","32":"tag-medicare","33":"tag-metro","34":"tag-mexico","35":"tag-nebraska","36":"tag-new-mexico","37":"tag-news","38":"tag-north-dakota","39":"tag-ohio","40":"tag-one","41":"tag-people","42":"tag-politics","43":"tag-schedule","44":"tag-senate","45":"tag-target","46":"tag-the-denver-post","47":"tag-transportation","48":"tag-vehicles"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/484482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=484482"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/484482\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/484483"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=484482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=484482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=484482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}