Colorado legislators are set to give new anti-fraud powers to state Medicaid authorities, months after regulators uncovered an unprecedented, multimillion-dollar scheme allegedly perpetrated by a group of medical transportation providers.
Legislators introduced a bill this week that would allow the state Department of Health Care Policy and Financing to temporarily suspend Medicaid providers if regulators believe they have engaged in organized fraud and if they meet other risk factors.
The legislation was drafted in direct response to a scheme uncovered by state officials late last summer and first reported by The Denver Post in December. Dozens of drivers newly approved to provide transportation for Medicaid programs allegedly packed their cars with patients, taking them on lucrative round trips of 200 miles or more between southern Colorado and unwitting methadone clinics in metro Denver.
Medicaid officials requested the bill, HB24-1146, and legislative leaders are fast-tracking it. The measure would give state officials the ability to stop paying a provider, without fully removing them from the program, while fraud allegations are investigated.
“We needed to be able to shut that down,” Sen. Rachel Zenzinger, an Arvada Democrat and a co-sponsor of the bill, said Tuesday. “Medicaid dollars are public tax dollars, so we needed to be sure that people who need Medicaid are getting Medicaid and that these fraudulent activities are not permitted to happen.”
In the transportation scheme, officials believe that a large group of drivers illegally paid the patients to seek care in Denver, in violation of state law; many of them were homeless and had substance use disorders.
Each trip could net a driver thousands of dollars, on a per-patient and per-mile basis, while exploiting vulnerable patients and methadone clinics.
After they became aware of the scale of the fraud, Medicaid officials closed enrollment to the driver program and began systematically reviewing thousands of claims in a bid to determine which were fraudulent and which were real. That’s created a backlog of thousands of trips that must be reviewed. The Health Care Policy and Financing Department has requested — and is set to receive — an emergency infusion of cash from the legislature to expedite that process.
The review must be completed before state Medicaid officials can identify the full scale of the fraud and before some legitimate providers can be paid for months of work. Officials believe the scheme bilked the state out of millions of dollars, and it’s being investigated by state and federal officials, including the FBI and the Colorado Attorney General’s Office.
The bill would allow state officials to more deftly handle similar investigations into organized fraud schemes and to suspend multiple providers for up to six months while regulators review claims.
As it stands, Medicaid officials who suspect fraud have two options, said Marc Williams, spokesman for the health care policy department: terminate a provider’s contract, which can result in litigation or time-consuming reapplications; or review all of a provider’s claims before approving and paying for them.
In the latter case, providers continue working and submitting claims for payment, adding to a backlog that state regulators must continue to wade through — as is happening now with Medicaid drivers.
The legislation “gives the department the opportunity to do a review and make sure these are legit claims and that there really isn’t organized crime or organized fraud going on,” said Rep. Shannon Bird, a Westminster Democrat who’s also co-sponsoring the bill.
The state’s ongoing review of past transportation claims has shut the door on any new drivers who might bilk the transportation program, which is intended to provide access to care for low-income Coloradans who receive Medicaid benefits. But it’s also left legitimate drivers — some of whom haven’t been paid while regulators sort through thousands of old claims — trapped in limbo.
Andrew Smith, the CEO of Colorado Springs-based transportation company Beo Mobility, said he had not received a payment from Medicaid since state officials announced their investigation in early September. Until The Post reported on the fraud scheme last month, Smith didn’t know the details of the scheme that triggered the delay.
With no payments coming in, he said, he’s had to lay off 90% of his staff. He has received little guidance from state Medicaid authorities, other than being told that they are in the midst of a broad review and have 12 months to pay him.
Williams, the Medicaid spokesman, said the agency was aware that legitimate providers were caught up in the review process. The delay was why state officials requested more money from the legislature to expedite the work, he said.
Smith believes he has enough financial runway to cover one more payroll period for his remaining employees before he has to close his business entirely.
“I’m not bashing (Medicaid officials) — I know they’re doing the best that they can,” Smith said. “I would just hope that they would hear the pleas of the legitimate companies and try to work with them. But how do they know who’s legit and who’s not?”
Staff writer Nick Coltrain contributed to this story.
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