First Regular Session
Seventy-fifth General Assembly
STATE OF COLORADO
REVISED
This Version Includes All Amendments Adopted
on Second Reading in the Second House
LLS NO. 25-0717.01 Chelsea Princell x4335
SENATE BILL 25-314
Senate Committees House Committees
Appropriations Appropriations
A BILL FOR AN ACT
C
ONCERNING CHANGES TO TH E RECOVERY AUDIT CONTRACTOR101
PROGRAM, AND, IN CONNECTION THEREWITH , MAKING AND102
REDUCING AN APPROPRIATION .103
Bill Summary
(Note: This summary applies to this bill as introduced and does
not reflect any amendments that may be subsequently adopted. If this bill
passes third reading in the house of introduction, a bill summary that
applies to the reengrossed version of this bill will be available at
http://leg.colorado.gov/
.)
Joint Budget Committee. The bill allows the department of health
care policy and financing (state department) to contract with a recovery
audit contractor (RAC) vendor to conduct RAC audits of medicaid
providers (providers) on behalf of the state department.
RAC audits may only review claims that are no more than 3 years
HOUSE
2nd Reading Unamended
May 1, 2025
SENATE
3rd Reading Unamended
April 30, 2025
SENATE
Amended 2nd Reading
April 29, 2025
SENATE SPONSORSHIP
Kirkmeyer and Bridges, Amabile, Catlin, Frizell, Lundeen, Mullica, Snyder
HOUSE SPONSORSHIP
Bird and Sirota, Taggart
Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.
Capital letters or bold & italic numbers indicate new material to be added to existing law.
Dashes through the words or numbers indicate deletions from existing law. past the date of the expiration of the timely filing period. The bill allows
the state department to review claims that fall outside of this 3-year time
frame only if required by a federal audit.
The bill limits the number of audits a provider may undergo each
year and limits the number of medical records that can be requested for
a given audit.
If the state department identifies preliminary findings during the
RAC audit, the state department must send the provider a report detailing
the preliminary findings, the rationale for the preliminary findings, and
the methodology for how any overpayments were calculated and
determined.
The bill allows a provider that received preliminary findings
following a complex audit to request an exit conference to discuss the
preliminary findings with the state department in an effort to resolve the
concerns detailed in the preliminary findings prior to undergoing an
informal reconsideration of the preliminary findings.
The bill requires a provider to participate in an informal
reconsideration before filing a formal appeal regarding the state
department's findings during a RAC audit.
The bill, in the department of health care policy and financing for
medical and long-term care services for medical-eligible individuals
budget, decreases the cash funds appropriation from recoveries and
recoupments by $20,900,588 and the cash funds appropriation from the
recovery audit contractor recoveries cash fund is increased by
$20,900,588.
Be it enacted by the General Assembly of the State of Colorado:1
SECTION 1. In Colorado Revised Statutes, 25.5-4-301, amend2
(3.5)(c); repeal (3)(a)(IX); and add (3.3) as follows:3
25.5-4-301. Recoveries - overpayments - penalties - interest -4
adjustments - liens - review or audit procedures - cash fund - rules -5
definitions - repeal. (3) (a) A review or audit of a provider is subject to6
the following procedures:7
(IX) For audits conducted pursuant to 42 CFR 455.506, at least
8
quarterly, the state department shall publish on its website an audit9
activity report detailing current and recently completed audits and reviews10
and summaries of the findings of such audits and reviews, including the11
314-2- number and amounts of overpayments and underpayments found, the1
number and results of appeals, the amounts collected, and the error rates2
identified. At least quarterly, the state department shall conduct trainings3
for providers and hold stakeholder meetings regarding audits and reviews.4
In addition, when the state department enters into contracts pursuant to5
this subsection (3)(a), the state department shall publish on its website a6
copy of the contract, scope of work, and information regarding7
supervision of contractor deliverables.8
(3.3) (a) A
S USED IN THIS SUBSECTION (3.3), UNLESS THE CONTEXT9
OTHERWISE REQUIRES:10
(I) "A
UTOMATED AUDIT" MEANS A RAC AUDIT THAT REVIEWS A11
PROVIDER'S APPLICATION OF CODING RULES AND DOES NOT REQUIRE A12
PROVIDER TO SUBMIT MEDICAL RECORDS TO BE AUDITED .13
(II) "C
OMPLEX AUDIT" MEANS A RAC AUDIT THAT REQUIRES A14
PROVIDER TO SUBMIT MEDICAL RECORDS TO BE AUDITED , WHICH ARE15
INDIVIDUALLY REVIEWED BY A REPRESENTATIVE OF THE STATE16
DEPARTMENT OR THE STATE DEPARTMENT 'S RAC VENDOR.17
(III) "D
ENIAL RATE" MEANS THE PERCENTAGE OF REVIEWED18
CLAIMS ULTIMATELY DETERMINED TO INVOLVE IMPROPER PAYMENTS19
AFTER ALL ADMINISTRATIVE PROCESSES ARE COMPLETE , INCLUDING THE20
RESOLUTION OF AN APPEAL.21
(IV) "RAC
AUDIT" MEANS A RECOVERY AUDIT CONTRACTOR22
AUDIT CONDUCTED PURSUANT TO THE FEDERAL "SOCIAL SECURITY ACT",23
42
U.S.C. SEC. 1396a (a)(42)(B).24
(V) "RAC
VENDOR" MEANS A VENDOR WHO MEETS THE25
REQUIREMENTS OF 42 CFR 455.508 AND CONTRACTS WITH THE STATE26
DEPARTMENT TO PERFORM RECOVERY AUDIT CONTRACTOR AUDITS OF27
314
-3- PROVIDERS ON BEHALF OF THE STATE DEPARTMENT .1
(b) T
HE STATE DEPARTMENT MAY SOLICIT THE SERVICES OF A RAC2
VENDOR THR OUGH A CONTRACT ISSUED PURS UANT TO THE3
"P
ROCUREMENT CODE", ARTICLES 101 TO 112 OF TITLE 24, AND PURSUANT4
TO THE FEDERAL REQUIREMENTS DETAILED IN 42 CFR 455.508, FOR THE5
PURPOSE OF CONDUCTING RAC AUDITS OF PROVIDERS TO IDENTIFY6
POSSIBLE MEDICAID OVERPAYMENTS AND UNDERPAYMENTS .7
(c) (I) T
HE CONTRACT DESCRIBED IN SUBSECTION (3.3)(b) OF THIS8
SECTION MUST STATE THAT THE RAC VENDOR'S COMPENSATION IS9
CONTINGENT UPON THE AMOUNT OF OVERPAYMENTS THE STATE RECOVERS10
FROM A PROVIDER. AT THE EXPIRATION OF THE CURRENT CONTRACT11
BETWEEN THE STATE DEPARTMENT AND THE RAC VENDOR, THE STATE12
DEPARTMENT SHALL ESTABLISH CONTINGENCY FEE RATES BASED ON13
MARKET RATES DETERMINED BY THE RESULTS OF A COMPETITIVE14
PROCUREMENT PROCESS AND MAY NEGOTIATE LOWER RATES AS THE15
MARKET PROVIDES, WITH CONTINGENCY RATES NOT TO EXCEED SIXTEEN16
PERCENT OF RECOVERED PAYMENTS . THE STATE DEPARTMENT SHALL17
ENSURE THAT THE CONTINGENCY FEE REQUIREMENTS ARE ADHERED TO18
THROUGH EFFECTIVE MONITORING AND ENFORCEMENT OF THE RAC19
VENDOR'S PERFORMANCE. FOR CONTRACTS ENTERED INTO AFTER THE20
EXPIRATION OF THE CONTRACT THAT ESTABLISHED CONTINGENCY FEE21
RATES FOR RAC VENDOR PAYMENTS, THE STATE DEPARTMENT SHALL22
STRUCTURE THE RAC VENDOR COMPENSATION BASED ON A TIERED23
PAYMENT SYSTEM THAT CORRESPONDS TO THE REQUIRED WORK UNLESS24
DOING SO CONFLICTS WITH FEDERAL DIRECTIVES IN MEDICAID GUIDANCE25
PURSUANT TO 42 CFR 455, SUBPART F, OR RESULTS IN AN UNFAVORABLE26
IMPACT TO THE STATE'S GENERAL FUND.27
314
-4- (II) WHEN THE STATE DEPARTMENT ENTERS INTO A CONTRACT1
PURSUANT TO SUBSECTION (3.3)(b) OF THIS SECTION, THE STATE2
DEPARTMENT MUST PUBLISH ON ITS WEBSITE A COPY OF THE CONTRACT ,3
SCOPE OF THE WORK, AND INFORMATION REGARDING SUPERVISION OF4
CONTRACTOR DELIVERABLES .5
(III) T
HE CONTRACT DESCRIBED IN SUBSECTION (3.3)(b) OF THIS6
SECTION MUST REQUIRE THE RAC VENDOR TO:7
(A) C
ONDUCT INFORMAL CONFERENCES OR PHONE CALLS WITH8
PROVIDERS OR PROVIDER ASSOCIATIONS TO DISCUSS THE RAC PROGRAM,9
PROCESSES, AND FINDINGS;10
(B) C
ONDUCT PROVIDER OUTREACH AND EDUCATION ACTIVITIES ,11
INCLUDING NOTIFYING PROVIDERS OF AUDIT POLICIES , PROTOCOLS, AND12
COMMON BILLING ERRORS;13
(C) R
ESPOND TO PROVIDER QUESTIONS AND REQUESTS FOR14
INFORMATION WITHIN TWO BUSINESS DAYS AFTER RECEIVING THE15
QUESTION OR REQUEST FOR INFORMATION ;16
(D) R
ETURN, WITHIN THIRTY DAYS, THE CONTINGENCY FEE17
ASSOCIATED WITH INACCURATE AUDIT SCENARIOS THAT RESULTED IN18
PROVIDER REFUNDS AS PRESCRIBED BY THE STATE DEPARTMENT ; AND19
(E) P
ROVIDE PRELIMINARY RAC AUDIT FINDINGS TO A PROVIDER
20
WITHIN A REASONABLE PERIOD FOLLOWING RECEIPT OF ANY REQUESTED21
MEDICAL RECORDS, AS DETERMINED BY THE STATE DEPARTMENT IN22
COLLABORATION WITH THE PROVIDER ADVISORY GROUP , CREATED IN23
SUBSECTION (3.5)(c)(I) OF THIS SECTION.24
(d) T
HE RAC CONTRACT DESCRIBED IN SUBSECTION (3.3)(b) OF25
THIS SECTION MAY INCLUDE AN OPTION TO PAY THE RAC VENDOR TO26
IDENTIFY UNDERPAYMENTS FOR CONSIDERATION IN FUTURE STATE27
314
-5- DEPARTMENT BUDGET REQUESTS .1
(e) (I) T
HE STATE DEPARTMENT SHALL IMPLEMENT A PROCESS TO2
VERIFY THAT THE RAC VENDOR'S STAFF WHO MAKE CLINICAL RAC AUDIT3
FINDINGS ARE APPROPRIATELY LICENSED PURSUANT TO INDUSTRY4
STANDARDS AND FEDERAL REQUIREMENTS , INCLUDING THAT THE RAC5
VENDOR HIRE QUALIFIED CODERS AND THAT THE RAC VENDOR'S STAFF6
WHO MAKE BILLING RAC AUDIT FINDINGS HAVE KNOWLEDGE OF MEDICAID7
BILLING AND CODING RULES AND GUIDANCE ADOPTED BY THE STATE8
DEPARTMENT.9
(II) T
HE STATE DEPARTMENT MUST ENSURE THAT QUALIFIED10
CODERS HAVE RELEVANT CREDENTIALS FOR THE TYPE OF MEDICAL11
SERVICES BEING REVIEWED, IN ACCORDANCE WITH INDUSTRY STANDARDS .12
(III) A
NY COMPLEX AUDIT THAT REQUIRES A REVIEW OF MEDICAL13
RECORDS MUST BE CONDUCTED BY LICENSED CLINICAL STAFF WITH14
TRAINING AND COMPETENCY IN THE SPECIFIC TYPE OF COMPLEX AUDIT15
BEING CONDUCTED, IN ACCORDANCE WITH INDUSTRY STANDARDS .16
P
ROVIDERS MUST MAKE ALL RELEVANT MEDICAL RECORDS AND17
INFORMATION RELATED TO CLAIMS REVIEWED DURING THE COMPLEX18
AUDIT AVAILABLE TO THE RAC VENDOR WITHIN THE TIME LIMITS19
SPECIFIED IN THE INITIAL MEDICAL RECORDS REQUEST .20
(IV) T
HE STATE DEPARTMENT SHALL FULLY INFORM THE RAC21
VENDOR OF ANY CHANGES TO THE STATE BILLING ST ANDARDS AND ENSURE22
THAT THE VENDOR ONLY APPLIES BILLING STANDARDS THAT WERE IN23
EFFECT AT THE SPECIFIED DATE OF SERVICE. THE STATE DEPARTMENT IS24
RESPONSIBLE FOR MONITORING COMPLIANCE WITH THIS REQUIREMENT25
AND TAKING APPROPRIATE ACTION TO ENSURE THE RAC VENDOR'S26
COMPLIANCE.27
314
-6- (V) THE STATE DEPARTMENT SHALL ENSURE THAT THE RAC1
VENDOR COMPLIES WITH THE CONTRACT REQUIREMENTS DESCRIBED IN2
SUBSECTION (3.3)(b) OF THIS SECTION AND CONDUCTS RAC AUDITS IN A3
FAIR AND CONSISTENT MANNER .4
(VI) T
HE STATE DEPARTMENT SHALL ENSURE THAT THE RAC5
VENDOR INCORPORATES INTO EACH AUDIT SCENARIO , WHETHER AN6
AUTOMATED AUDIT OR A COMPLEX AUDIT , THE FOLLOWING INFORMATION:7
(A) F
EDERAL STATUTES AND BILLING RULES AND STANDARDS8
THAT ARE APPLICABLE TO THE SPECIFIC PROVIDER DURING THE SPECIFIED9
DATES OF SERVICE FOR EACH AUDIT;10
(B) S
TATE STATUTES, BILLING RULES AND STANDARDS , AND11
POLICIES AS DOCUMENTED IN THE STATE DEPARTMENT 'S PROVIDER BILLING12
MANUALS AND PROVIDER BULLETINS , AS WELL AS IN PROGRAM GUIDANCE13
AND DIRECTIVES EFFECTIVE FOR THE SPECIFIC PROVIDER DURING THE14
SPECIFIED DATES OF SERVICE FOR EACH AUDIT; AND15
(C) I
NPUT FROM THE STATE DEPARTMENT 'S RAC STAFF AND16
MEDICAL DIRECTOR, AS WELL AS ANY OTHER NECESSARY STATE17
DEPARTMENT STAFF BASED ON THE STAFF 'S OR MEDICAL DIRECTOR'S18
REVIEW OF THE AUDIT SCENARIO.19
(VII) W
HEN AUDITING CLAIMS TO MAKE RAC AUDIT FINDINGS,20
THE STATE DEPARTMENT MUST ENSURE THAT THE RAC VENDOR FOLLOWS21
ALL RELEVANT AND APPROPRIATE FEDERAL BILLING GUIDELINES ,22
REQUIREMENTS SET BY THE MEDICAID BILLING MANUAL , STANDARD23
CLINICAL GUIDELINES, AND ANY OTHER APPLICABLE STATE OR FEDERAL24
RULES AND REGULATIONS.25
(f) T
HE STATE DEPARTMENT SHALL COMPREHENSIVELY REVIEW26
ALL AUDIT TYPES PROPOSED BY THE RAC VENDOR AND MUST APPROVE ,27
314
-7- ADJUST, OR REJECT EACH AUDIT TYPE BEFORE THE RAC VENDOR1
CONDUCTS THE RAC AUDIT. WITHIN EIGHTEEN MONTHS OF THE ROLLOUT2
OF A NEW AUDIT, IF THE STATE DEPARTMENT, IN COLLABORATION WITH3
PROVIDERS AND THE PROVIDER ADVISORY GROUP CREATED IN SUBSECTION4
(3.5)
OF THIS SECTION, DETERMINES THAT THE AUDIT IS INACCURATE, THE5
STATE DEPARTMENT MUST REFUND PROVIDERS WHO SUBMITTED6
REPAYMENTS BASED ON INACCURATE AUDIT FINDINGS AND REQUIRE THE7
RAC
VENDOR TO RETURN THE CONTINGENCY FEE ASSOCIATED WITH THE8
PAYMENTS WITHIN THIRTY DAYS .9
(g) T
HE STATE DEPARTMENT SHALL REGULARLY REVIEW ACTIVE10
RAC
AUDITS TO ENSURE COMPLIANCE WITH FEDERAL AND STATE11
REGULATION CHANGES AND POLICY UPDATES AND DISCONTINUE A RAC12
AUDIT IF AND WHEN APPROPRIATE DUE TO A CHANGE IN FEDERAL OR STATE13
REGULATION OR POLICY UPDATES .14
(h) C
ONSISTENT WITH 42 CFR 455.508 (f), RAC AUDITS AND15
REVIEWS CONDUCTED PURSUANT TO THIS SECTION MUST NOT REVIEW16
CLAIMS MORE THAN THREE YEARS AFTER THE EXPIRATION OF THE TIMELY17
FILING PERIOD. THE STATE DEPARTMENT MAY CONDUCT A RAC AUDIT FOR18
A CLAIM FILED MORE THAN THREE YEARS AFTER THE EXPIRATION OF THE19
TIMELY FILING PERIOD IF REQUIRED BY A FEDERAL AUDIT THAT WOULD20
OTHERWISE RESULT IN COSTS TO THE GENERAL FUND OR , IF DIRECTED BY21
THE FEDERAL CENTERS FOR MEDICARE AND MEDICAID SERVICES , THE22
U
NITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES , OR ANY23
OTHER FEDERAL AGENCY. IF A RAC AUDIT IS INITIATED IN RESPONSE TO24
A FEDERAL DIRECTIVE, THE STATE DEPARTMENT MUST PROVIDE NOTICE TO25
AN IMPACTED PROVIDER AND INCLUDE THE REASON FOR THE RAC AUDIT26
AND ANY RELEVANT INFORMATION ABOUT THE FEDERAL REQUIREMENT IN27
314
-8- THE NOTICE.1
(i) (I) T
HE RAC VENDOR SHALL NOT REQUIRE A PROVIDER TO2
UNDERGO MORE THAN THREE COMPLEX AUDITS PER CALENDAR YEAR .3
H
OSPITALS MUST BE GROUPED FOR COMPLEX AUDITS BASED ON THEIR4
TOTAL MEDICAID REIMBURSEMENT IN THE PREVIOUS FISCAL YEAR , AND5
GROUPINGS MUST BE DETERMINED USING STATE DATA AND PUBLISHED6
ANNUALLY BY THE STATE DEPARTMENT .7
(II) T
HE MAXIMUM NUMBER OF MEDICAL RECORD REQUESTS A8
PROVIDER MAY RECEIVE EACH MONTH MUST BE CLEARLY COMMUNICATED9
TO PROVIDERS AND REVIEWED ANNUALLY BY THE STATE DEPARTMENT .10
T
HE RAC VENDOR SHALL NOT REQUEST MORE THAN THE FOLLOWING11
NUMBER OF MEDICAL RECORDS PER HOSPITAL PER MONTH :12
(A) S
IX HUNDRED FOR HOSPITALS WITH OVER TWO HUNDRED FIFTY13
MILLION DOLLARS IN MEDICAID REVENUE ;14
(B) F
OUR HUNDRED FOR HOSPITALS WITH BETWEEN SEVENTY15
MILLION DOLLARS AND TWO HUNDRED FORTY -NINE MILLION NINE16
HUNDRED NINETY-NINE THOUSAND NINE HUNDRED NINETY -NINE DOLLARS17
IN MEDICAID REVENUE;18
(C) T
WO HUNDRED FOR HOSPITALS WITH BETWEEN FORTY MILLION19
DOLLARS AND SIXTY -NINE MILLION NINE HUNDRED NINETY -NINE20
THOUSAND NINE HUNDRED NINETY -NINE DOLLARS IN MEDICAID REVENUE;21
(D) O
NE HUNDRED FOR HOSPITALS WITH BETWEEN TWENTY22
MILLION DOLLARS AND THIRTY-NINE MILLION NINE HUNDRED NINETY-NINE23
THOUSAND NINE HUNDRED NINETY -NINE DOLLARS IN MEDICAID REVENUE;24
(E) F
IFTY FOR HOSPITALS WITH BETWEEN TEN MILLION DOLLARS25
AND NINETEEN MILLION NINE HUNDRED NINETY -NINE THOUSAND NINE26
HUNDRED NINETY-NINE DOLLARS IN MEDICAID REVENUE ;27
314
-9- (F) TWENTY-FIVE FOR HOSPITALS WITH BETWEEN ONE MILLION1
DOLLARS AND NINE MILLION NINE HUNDRED NINETY -NINE THOUSAND NINE2
HUNDRED NINETY-NINE DOLLARS IN MEDICAID REVENUE ;3
(G) T
WENTY FOR HOSPITALS WITH UNDER ONE MILLION DOLLARS4
IN MEDICAID REVENUE; AND5
(H) T
EN FOR OUT-OF-STATE FACILITIES.6
(III) T
HE REQUIREMENTS OF THIS SUBSECTION (3.3)(i) DO NOT7
APPLY IF:8
(A) F
EDERAL MEDICAID DIRECTIVES REQUIRED PURSUANT TO 429
CFR
455, SUBPART F, REQUIRE A HIGHER LEVEL OF CLAIM AUDITS;10
(B) A
N AGENCY OF THE FEDERAL GOVERNMENT REQUIRES , IN11
WRITING, THE STATE DEPARTMENT TO INITIATE ADDITIONAL AUDIT12
ACTIVITY; OR13
(C) A
FEDERAL AUDIT IDENTIFIES ADDITIONAL PROVIDER FINDINGS14
THAT IMPACT THE STATE GENERAL FUND AND THAT SHOULD BE15
APPROPRIATELY RECOVERED FROM THAT PROVIDER THROUGH AN16
ADDITIONAL RAC AUDIT AND ITS RECOUPMENTS.17
(j) (I) T
HE RAC VENDOR SHALL NOT REQUIRE A PROVIDER TO18
UNDERGO MORE THAN FOUR AUTOMATED AUDITS PER CALENDAR YEAR .19
P
ROVIDERS MUST BE GROUPED FOR AUTOMATED AUDITS BASED ON THEIR20
TOTAL MEDICAID REIMBURSEMENT IN THE PREVIOUS FISCAL YEAR , AND21
GROUPINGS MUST BE DETERMINED USING STATE DATA AND PUBLISHED22
ANNUALLY.23
(II) T
HE MAXIMUM NUMBER OF PROVIDER CLAIMS ACROSS ALL OF24
A PROVIDER'S LOCATIONS FOR A GIVEN CALENDAR YEAR THAT UNDERGO25
AUTOMATED AUDITS MUST NOT EXCEED :26
(A) 2.92
PERCENT FOR PROVIDERS WITH OVER TEN MILLION27
314
-10- DOLLARS IN MEDICAID REVENUE ;1
(B) 2.50
PERCENT FOR PROVIDERS WITH BETWEEN FOUR MILLION2
DOLLARS AND TEN MILLION DOLLARS IN MEDICAID REVENUE ;3
(C) 2.08
PERCENT FOR PROVIDERS WITH BETWEEN ONE MILLION4
DOLLARS AND THREE MILLION NINE HUNDRED NINETY -NINE THOUSAND5
NINE HUNDRED NINETY-NINE DOLLARS IN MEDICAID REVENUE ; AND6
(D) 1.67
PERCENT FOR PROVIDERS WITH LESS THAN ONE MILLION7
DOLLARS IN MEDICAID REVENUE .8
(III) A
FTER THE ADMINISTRATIVE PROCESS IS EXHAUSTED , IF THE9
STATE DEPARTMENT IDENTIFIES A DENIAL RATE OF FORTY PERCENT OR10
HIGHER FOR A SPECIFIC PROVIDER ON A SPECIFIC AUDIT TYPE , THE STATE11
DEPARTMENT SHALL AUDIT NO MORE THAN AN ADDITIONAL TWENTY -FIVE12
PERCENT OF THE CLAIM PERCENTAGES STATED IN SUBSECTION (3.3)(j)(II)13
OF THIS SECTION ASSOCIATED WITH THAT AUDIT TYPE .14
(IV) T
HE REQUIREMENTS OF THIS SUBSECTION (3.3)(j) DO NOT15
APPLY IF:16
(A) F
EDERAL MEDICAID DIRECTIVES REQUIRED PURSUANT TO 4217
CFR
455, SUBPART F, REQUIRE A HIGHER LEVEL OF CLAIM AUDITS;18
(B) A
N AGENCY OF THE FEDERAL GOVERNMENT REQUIRES , IN19
WRITING, THE STATE DEPARTMENT TO INITIATE ADDITIONAL AUDIT20
ACTIVITY; OR21
(C) A
FEDERAL AUDIT IDENTIFIES ADDITIONAL PROVIDER FINDINGS22
THAT IMPACT THE STATE GENERAL FUND AND THAT S HOULD BE23
APPROPRIATELY RECOVERED FROM THAT PROVIDER THROUGH AN24
ADDITIONAL RAC AUDIT AND ITS RECOUPMENTS.25
(k) W
HEN CONDUCTING AUDITS, THE RAC VENDOR MUST:26
(I) R
EQUEST PROVIDER RECORDS THAT ARE RELEVANT TO THE27
314
-11- CLAIMS BEING AUDITED AND THAT DO NOT DUPLICATE INFORMATION1
ALREADY PROVIDED;2
(II) N
OT AUDIT THE VALIDITY OF A PROVIDER 'S PRIOR3
AUTHORIZATION RECEIVED FROM THE STATE DEPARTMENT ; AND4
(III) F
OR A COMPLEX AUDIT, NOT AUDIT CLAIMS THAT ARE ON THE5
FEDERAL CENTERS FOR MEDICARE AND MEDICAID SERVICES6
INPATIENT-ONLY LIST AT THE DATE OF SERVICE FOR A LEVEL -OF-CARE7
DETERMINATION.8
9
(l) (I) I
F THE RAC VENDOR IDENTIFIES PRELIMINARY FINDINGS
10
DURING THE RAC AUDIT, THE RAC VENDOR MUST SEND THE PROVIDER A11
NOTICE OF PRELIMINARY AUDIT FINDINGS DETAILING THE PRELIMINARY12
FINDINGS, THE RATIONALE FOR THE PRELIMINARY FINDINGS , AND THE13
METHODOLOGY FOR HOW THE DOLLAR AM OUNTS ASSOCIATED WITH THE14
PRELIMINARY FINDINGS WERE CALCULATED AND DETERMINED .15
(II) F
OR A COMPLEX AUDIT, A PROVIDER MAY REQUEST AN EXIT
16
CONFERENCE TO DISCUSS THE PRELIMINARY FINDINGS WITH THE RAC17
VENDOR AND THE STATE DEPARTMENT MEDICAL DIRECTOR , OR THE STATE18
DEPARTMENT MEDICAL DIRECTOR 'S DESIGNEE, PRIOR TO PARTICIPATING IN19
AN INFORMAL RECONSIDERATION . THE PROVIDER MAY PROVIDE20
ADDITIONAL INFORMATION SUPPORTING THE PROVIDER 'S CLAIMS AT THE21
EXIT CONFERENCE. A PROVIDER MUST REQUEST AN EXIT CONFERENCE NO22
LATER THAN THIRTY DAYS AFTER THE PROVIDER RECEIVES A NOTICE OF23
PRELIMINARY AUDIT FINDINGS FROM THE RAC VENDOR, AND IF AN EXIT24
CONFERENCE IS REQUESTED , THE STATE DEPARTMENT OR THE RAC25
VENDOR MUST SCHEDULE THE EXIT CONFERENCE WITHIN SIXTY DAYS OF26
RECEIVING THE REQUEST AND ON A MUTUALLY AGREED UPON DATE AND27
314
-12- TIME.1
(III) W
ITHIN THIRTY DAYS OF THE EXIT CONFERENCE , THE STATE
2
DEPARTMENT MUST NOTIFY THE PROVIDER ON WHETHER THE STATE3
DEPARTMENT WILL DISMISS THE PRELIMINARY FINDINGS OR WILL ISSUE A4
NOTICE OF INFORMAL RECONSIDERATION . THE NOTICE OF INFORMAL5
RECONSIDERATION MUST INCLUDE DETAILS ON THE PRELIMINARY6
FINDINGS, THE RATIONALE FOR THE PRELIMINARY FINDINGS , AND THE7
METHODOLOGY FOR HOW THE DOLLAR AMOUNT ASSOCIATED WITH THE8
PRELIMINARY FINDINGS WERE CALCULATED AND DETERMINED . IF AN EXIT9
CONFERENCE OCCURRED , THE NOTICE MUST INCLUDE INFORMATION ON10
WHY THE STATE DEPARTMENT DID NOT AGREE WITH THE PROVIDER 'S11
APPROACH.12
(IV) U
NLESS THE PRELIMINARY FINDINGS ARE ACCEPTED BY THE
13
PROVIDER, DISMISSED BY THE STATE DEPARTMENT FOLLOWING AN EXIT14
CONFERENCE, OR THE PERIOD FOR A PROVIDER TO REQUEST AN EXIT15
CONFERENCE HAS EXPIRED , A PROVIDER WHO RECEIVES A NOTICE OF16
PRELIMINARY FINDINGS, THE STATE DEPARTMENT, AND THE RAC VENDOR17
MUST PARTICIPATE IN AN INFORMAL RECONSIDERATION BEFORE THE18
PROVIDER MAY FORMALLY APPEAL THE STATE DEPARTMENT 'S19
DETERMINATION. TO PARTICIPATE IN AN INFORMAL CONSIDERATION , THE20
FOLLOWING REQUIREMENTS MUST BE SATISFIED :21
(A) W
ITHIN SIXTY DAYS OF RECEIVING THE NOTICE OF INFORMAL
22
RECONSIDERATION, THE PROVIDER MUST SUBMIT ALL MEDICAL RECORDS23
RELEVANT TO THE CLAIMS AND THE REASONING FOR THE PROVIDER 'S24
DISAGREEMENT CONCERNING THE PRELIMINARY AUDIT FINDINGS . THE25
MEDICAL RECORDS MUST SUBSTANTIATE THE PROVIDER 'S ARGUMENT TO26
DISPUTE ANY PRELIMINARY FINDINGS TO ALLOW THE STATE DEPARTMENT27
314
-13- AND THE RAC VENDOR TO RECONSIDER THE FINDINGS , AND THE1
DEPARTMENT AND THE RAC VENDOR MUST REVIEW MEDICAL RECORDS2
PRIOR TO THE INFORMAL RECONSIDERATION MEETING ;3
(B) T
HE STATE DEPARTMENT MUST SCHEDULE AN INFORMAL
4
RECONSIDERATION MEETING BETWEEN MUTUALLY AGREED UPON5
PARTICIPANTS FROM THE STATE DEPARTMENT , RAC VENDOR, AND6
PROVIDER REPRESENTATIVES AT A MUTUALLY AGREED UPON DATE AND7
TIME WITHIN NINETY DAYS OF ISSUING THE NOTICE OF INFORMAL8
RECONSIDERATION, ALTHOUGH EITHER PARTY MAY REQUEST A SIXTY -DAY9
EXTENSION; AND10
(C) A
LL AGREED UPON ATTENDEES MUST PARTICIPATE IN THE
11
INFORMAL RECONSIDERATION MEETING IN GOOD FAITH IN AN EFFORT TO12
RESOLVE THE DISPUTE.13
(V) I
F A CLAIM REMAINS IN DISPUTE AFTER THE INFORMAL
14
RECONSIDERATION MEETING , THE STATE DEPARTMENT MUST ISSUE A15
NOTICE OF ADVERSE ACTION WITHIN SIXTY DAYS OF THE INFORMAL16
RECONSIDERATION MEETING . THE NOTICE OF ADVERSE ACTION MUST17
INCLUDE THE BASIS OF THE ALLEGED OVERPAYMENT , THE RATIONALE FOR18
THE ALLEGED OVERPAYMENT , THE METHODOLOGY USED TO CALCULATE19
THE ALLEGED OVERPAYMENT , AND INFORMATION ON WHY THE STATE20
DEPARTMENT DID NOT AGREE WITH THE PROVIDER 'S APPROACH.21
(VI) W
ITHIN THIRTY DAYS OF RECEIVING A NOTICE OF ADVERSE
22
ACTION, THE PROVIDER MAY REQUEST A FORMAL APPEAL , WHICH MUST23
INCLUDE AN EXPLANATION OF THE BASIS OF THE APPEAL IN ACCORDANCE24
WITH RULES ADOPTED BY THE STATE DEPARTMENT .25
(VII) T
HE STATE DEPARTMENT MUST NOT RECOVER AN
26
OVERPAYMENT IDENTIFIED IN THE PRELIMINARY FINDINGS FROM A27
314
-14- PROVIDER UNTIL THE INFORMAL RECONSIDERATION PROCESS , AND1
SUBSEQUENT FORMAL APPEAL , IF FILED, ARE COMPLETE.2
(VIII) I
F THE STATE DEPARTMENT HAS NOT ISSUED A NOTICE OF
3
ADVERSE ACTION ONE HUNDRED TWENTY DAYS FOLLOWING THE INFORMAL4
RECONSIDERATION MEETING , THE STATE DEPARTMENT WAIVES ITS RIGHT5
TO RECOVER THE STATE SHARE OF THE OVERPAYMENT .6
(m) PROVIDERS ARE SUBJECT TO ALL STATE AND FEDERAL7
MEDICAID FRAUD, WASTE, AND ABUSE LAWS AND MUST COMPLY WITH ALL8
APPLICABLE PROGRAM INTEGRITY REQUIREMENTS . FAILURE TO COMPLY9
MAY RESULT IN REMOVAL FROM THE STATE MEDICAL ASSISTANCE10
PROGRAM, FINANCIAL PENALTIES, CIVIL LAWSUITS, OR CRIMINAL11
PROSECUTION PURSUANT TO 42 U.S.C. SEC. 1320a-7k(d), 42 U.S.C. SEC.12
1320a-7, 31
U.S.C. SECS. 3729-3733, SECTIONS 24-31-808, 25.5-4-301,13
25.5-4-303.5
TO 25.5-4-310, AND 10 CCR 2505-10, SEC. 8.076. BY14
PARTICIPATING IN THE MEDICAL ASSISTANCE PROGRAM , PROVIDERS15
ACKNOWLEDGE AND ACCEPT THEIR OBLIGATION TO ADHERE TO ALL STATE16
AND FEDERAL LAWS GOVERNING MEDICAID FRAUD , WASTE, AND ABUSE,17
AND PROGRAM INTEGRITY.18
(n)
(I) THE STATE DEPARTMENT SHALL PUBLISH AND MAINTAIN ON19
ITS WEBSITE A RAC AUDIT ACTIVITY REPORT FOR EACH RAC AUDIT AND20
REVIEW COMPLETED IN THE PRECEDING YEAR SUMMARIZING THE FINDINGS21
OF THOSE RAC AUDITS AND REVIEWS. THE INFORMATION POSTED ON THE22
STATE DEPARTMENT'S WEBSITE CONCERNING EACH RAC AUDIT MUST23
INCLUDE THE FOLLOWING INFORMATION :24
(A) A
SUMMARY OF THE AUDIT SCENARIO , THE STATE25
DEPARTMENT'S BILLING PRACTICES, AND POLICY GUIDELINES BEING26
REVIEWED BY THE RAC VENDOR;27
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-15- (B) THE ERROR RATES IDENTIFIED DURING THE RAC VENDOR'S1
REVIEW;2
(C) T
HE NUMBER AND AMOUNTS OF OVERPAYMENTS AND3
UNDERPAYMENTS IDENTIFIED BY THE RAC VENDOR;4
(D) T
HE RECOVERIES COLLECTED BY THE STATE DEPARTMENT ON5
IDENTIFIED OVERPAYMENTS;6
(E) T
HE NUMBER OF CLAIMS APPEALED AS A RESULT OF THE AUDIT ;7
AND8
(F) D
ETAILS ON THE AUDIT SCENARIOS AND BILLING STANDARDS9
USED BY THE RAC VENDOR AND POLICY GUIDANCE ON PROPER BILLING10
PRACTICES.11
(II) I
N ADDITION TO THE INFORMATION REQUIRED BY SUBSECTION12
(3.3)(n)(I)
OF THIS SECTION, THE STATE DEPARTMENT SHALL PUBLISH AND13
MAINTAIN ON ITS WEBSITE INFORMATION ON THE NUMBER OF INFORMAL14
RECONSIDERATION MEETINGS THE STATE DEPARTMENT PARTICIPATED IN15
AND THE ASSOCIATED PERCENTAGE OF FINDINGS THAT WERE UPHELD , THE16
NUMBER OF APPEALS, AND CORRESPONDING DETERMINATIONS .17
(o) ON OR BEFORE JANUARY 1, 2026, THE STATE DEPARTMENT18
SHALL PUBLISH ON ITS WEBSITE PROVIDER EDUCATION INFORMATION ;19
RESOURCES TO ASSIST PROVIDERS IN UNDERSTANDING THE STATE20
DEPARTMENT'S MEDICAID BILLING MANUAL AND RULES; AND PROCEDURES21
RELATED TO RAC AUDITS, INCLUDING DOCUMENTATION REQUIREMENTS22
AND THE PROCESS FOR RESOLVING DISPUTES .23
(p) AT LEAST QUARTERLY, THE STATE DEPARTMENT SHALL :24
(I) C
ONDUCT MEDICAID BILLING TRAINING FOR PROVIDERS AND25
HOLD MEETINGS WITH PROVIDERS TO GATHER FEEDBACK ON THE RAC26
AUDIT PROCESS. THE STATE DEPARTMENT SHALL PUBLISH MEETING DATES27
314
-16- AND TIMES ON THE STATE DEPARTMENT 'S WEBSITE AT LEAST TWO WEEKS1
PRIOR TO THE MEETINGS.2
(II) C
ONDUCT TRAININGS FOR PROVIDERS AND HOLD3
STAKEHOLDER MEETINGS REGARDING AUDITS AND REVIEWS , DURING4
WHICH THE STATE DEPARTMENT AND RAC VENDOR MUST IDENTIFY5
COMMON BILLING ERRORS IDENTIFIED BY THE RAC VENDOR IN THE6
PREVIOUS QUARTER AND PROVIDE CLARIFICATION ON THE BILLING ERRORS .7
(q)
THE STATE DEPARTMENT SHALL WORK WITH SMALL OR RURAL8
PROVIDERS IN ORDER TO IDENTIFY AND IMPLEMENT OPPORTUNITIES TO9
REDUCE ADMINISTRATIVE BURDENS AND BETTER SUPPORT COMPLIANCE10
WITH MEDICAID BILLING PRACTICES , AS ADOPTED IN THE STATE11
DEPARTMENT'S MEDICAID BILLING MANUAL, AND EXPERIENCE WITH RAC12
AUDITS.13
(r) THE STATE DEPARTMENT MUST SUBMIT AN ANNUAL REPORT TO14
THE JOINT BUDGET COMMITTEE THAT INCLUDES A DESCRIPTION OF THE15
FOLLOWING:16
(I) T
HE DIVISIONS OF THE STATE DEPARTMENT THAT ARE17
INCLUDED IN THE REVIEW AND APPROVAL OF RAC AUDIT SCENARIOS AND18
THE ROLES AND RESPONSIBILITIES OF EACH DIVISION;19
(II) T
HE RAC VENDOR'S COMPLIANCE WITH THE RESPONSE20
REQUIREMENT DESCRIBED IN SUBSECTION (3.3)(c)(III)(C) OF THIS21
SECTION;22
(III) T
HE STATE DEPARTMENT'S OVERSIGHT AND ENFORCEMENT OF23
THE CONTRACTUAL REQUIREMENT THAT THE RAC VENDOR CONDUCT24
INFORMAL CONFERENCES OR PHONE CALLS WITH PROVIDERS OR PROVIDER25
ASSOCIATIONS TO DISCUSS THE RAC PROGRAM, APPEAL PROCESSES, AND26
FINDINGS;27
314
-17- (IV) THE TRAINING MATERIALS PREPARED BY THE RAC VENDOR1
AFTER EACH RAC AUDIT THAT IDENTIFY AND ADDRESS THE COMMON2
ERRORS AND ISSUES IDENTIFIED DURING THE AUDIT AND THE CONTENT3
AND MATERIALS THE RAC VENDOR USED TO EDUCATE PROVIDERS TO4
PREVENT ERRORS IN THE FUTURE;5
(V) A
SUMMARY OF THE RAC VENDOR'S OUTREACH AND6
EDUCATION ACTIVITIES;7
(VI) A
SUMMARY OF THE STATE DEPARTMENT 'S WRITTEN POLICIES,8
PROCEDURES, AND GUIDANCE THAT ESTABLISH PROCESSES FOR THE STATE9
DEPARTMENT TO LOG PROVIDER COMMUNICATIONS , PROVIDE DIRECTION10
ON HOW STATE DEPARTMENT STAFF MUST RESPOND TO COMMUNICATIONS11
IN A TIMELY AND RELEVANT MANNER , AND HOW THE STATE DEPARTMENT12
INSTITUTED ROUTINE ANALYSIS OF PROVIDER COMMUNICATIONS TO13
INFORM DECISIONS ON PROGRAM IMPROVEMENTS ; AND14
(VII) T
HE TOTAL AMOUNT OF ALLEGED OVERPAYMENTS15
IDENTIFIED BY THE RAC VENDOR, THE PROPORTION OF THOSE16
OVERPAYMENTS THAT WERE RECOVERED , AND THE TOTAL AMOUNT PAID17
TO THE RAC VENDOR.18
(s)
ALL RECOVERIES COLLECTED BY THE STATE DEPARTMENT ON19
IDENTIFIED OVERPAYMENTS PURSUANT TO THIS SUBSECTION (3.3) MUST BE20
TRANSMITTED TO THE STATE TREASURER , WHO SHALL CREDIT THE SAME21
TO THE RECOVERY AUDIT CONTRACTOR RECOVERIES CASH FUND , WHICH22
FUND IS CREATED IN THE STATE TREASURY AND REFERRED TO IN THIS23
SUBSECTION (3.3)(s) AS THE "CASH FUND". THE CASH FUND CONSISTS OF24
MONEY CREDITED TO THE CASH FUND PURSUANT TO THIS SUBSECTION (3.3)25
AND ANY OTHER MONEY THAT THE GENERAL ASSEMBLY MAY APPROPRIATE26
OR TRANSFER TO THE CASH FUND. SUBJECT TO ANNUAL APPROPRIATION BY27
314
-18- THE GENERAL ASSEMBLY, THE STATE DEPARTMENT MAY EXPEND MONEY1
FROM THE CASH FUND TO OFFSET THE NEED FOR APPROPRIATIONS FOR2
MEDICAL SERVICES AND TO PAY THE RAC VENDOR. THE STATE3
TREASURER SHALL CREDIT ALL INTEREST AND INCOME DERIVED FROM THE4
DEPOSIT AND INVESTMENT OF MONEY IN THE RECOVERY AUDIT5
CONTRACTOR RECOVERIES CASH FUND TO THE CASH FUND .6
(t) THE STATE DEPARTMENT MAY ADOPT RULES , AS NECESSARY, TO7
IMPLEMENT THE REQUIREMENTS OF THIS SUBSECTION (3.3).8
(3.5) (c) (I) The state department shall create a provider advisory9
group for recovery audits consisting of employees of the state department10
and members from different provider groups TYPES, including physicians,11
hospitals, and any other provider types directly impacted by audits12
conducted pursuant to this section, appointed by the executive director.13
The provider advisory group shall meet at least quarterly to review14
quarterly activity reports required by subsection (3)(a)(IX) SUBSECTION15
(3.3)(n) of this section and advise the state department on issues providers16
experience with audits of the recovery audit contractors program.17
(II) T
HE STATE DEPARTMENT AND THE RAC VENDOR SHALL18
PROVIDE THE PROVIDER ADVISORY GROUP WITH THE OPPORTUNITY TO19
REVIEW RAC AUDIT SCENARIOS DURING THE PROVIDER ADVISORY GROUP 'S20
QUARTERLY MEETINGS.21
(III) T
HE STATE DEPARTMENT SHALL GIVE PROVIDERS THE22
OPPORTUNITY TO ANONYMOUSLY DESCRIBE RAC AUDIT SCENARIOS THEY23
ARE EXPERIENCING AND ASK QUESTIONS ABOUT BILLING PRACTICES . THE24
STATE DEPARTMENT SHALL INCLUDE RAC VENDOR STAFF AND THE25
RELEVANT STATE DEPARTMENT DIVISION STAFF IN THESE DISCUSSIONS . IF26
THE DISCUSSIONS LEAD THE STATE DEPARTMENT TO DETERMINE THAT AN27
314
-19- AUDIT SCENARIO WAS INACCURATE , THE STATE DEPARTMENT MUST WORK1
WITH THE RAC VENDOR TO RESCIND THE RAC AUDIT.2
SECTION 2. Appropriation adjustments to 2025 long bill.3
(1) To implement this act, appropriations made in the annual general4
appropriation act for the 2025-26 state fiscal year to the department of5
health care policy and financing for medical and long-term care services6
for medical-eligible individuals are adjusted as follows:7
(a) The cash funds appropriation from recoveries and recoupments8
is decreased by $20,900,588;9
(b) The cash funds appropriation from the recovery audit10
contractor recoveries cash fund created in section 25.5-4-301 (3.3)(s),11
C.R.S., is increased by $20,900,588.12
SECTION 3. Act subject to petition - effective date. This act13
takes effect at 12:01 a.m. on the day following the expiration of the14
ninety-day period after final adjournment of the general assembly; except15
that, if a referendum petition is filed pursuant to section 1 (3) of article V16
of the state constitution against this act or an item, section, or part of this17
act within such period, then the act, item, section, or part will not take18
effect unless approved by the people at the general election to be held in19
November 2026 and, in such case, will take effect on the date of the20
official declaration of the vote thereon by the governor.21
314
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