Colorado Did Not Report and Refund the Correct Federal Share of Medicaid-Related Overpayments for Some Cases Identified by the State’s Program Integrity Section

Why OIG Did This Audit

This audit is one of a series of audits to determine whether States had recovered, and returned the correct Federal share of, improper provider claims amounts as well as any damages (when assessed). For this audit, we focused on Colorado’s actions related to the recoveries of Medicaid overpayments. Colorado is required to report these recoveries to the Centers for Medicare & Medicaid Services (CMS) and to refund the Federal share of those recoveries to the Federal Government.

Our objective was to determine whether Colorado reported and refunded the correct Federal share of Medicaid overpayments that its Program Integrity Section identified during the period October 1, 2014, through December 31, 2020.

How OIG Did This Audit

We reviewed 403 cases with Medicaid overpayments totaling $28.4 million during our audit period. We worked with Colorado to identify what portion of the $28.4 million it reported to CMS for the period October 1, 2014, through December 31, 2020. We obtained documentation related to Medicaid overpayments as well as Colorado’s documentation that supported its reporting of those overpayments to determine whether Colorado reported the correct Federal share.

What OIG Found

Colorado did not report and refund the correct Federal share of Medicaid overpayments that its Program Integrity Section identified during the period October 1, 2014, through December 31, 2020. Specifically, we determined that Colorado did not report $385,180 ($637,686 Federal share) in Medicaid overpayments for 80 of the 403 cases we reviewed. (The Federal share is greater than the total amount because there were some cases in which the State reported the entire total amount but not the entire Federal share portion that it should have reported.) In addition, Colorado did not report $12.7 million ($8.5 million Federal share) to CMS in a timely manner. Furthermore, the State did not correctly report Medicaid overpayments that either had been recovered or had not been recovered within regulatory timeframes. Although Colorado had policies and procedures for reporting Medicaid overpayments that its Program Integrity Section had identified, we concluded that these policies and procedures were not always adequate to ensure that Colorado reported and refunded all of the overpayments.

What OIG Recommends and Colorado Comments

We recommend that Colorado report and refund $385,180 ($673,686 Federal share) in unreported Medicaid overpayments that were related to paid claims that have been recovered and collected. We also recommend that Colorado determine the value of overpayments identified after our audit period that have been recovered and collected but not reported, report them to CMS, and refund the Federal share. We also recommend that Colorado work with CMS to determine the amount of interest, if any, on the Federal share owed, and report that amount; and we make procedural recommendations for the strengthening and updating of policies and procedures to ensure that overpayments are reported correctly and in a timely manner.

Colorado concurred with all of our recommendations and described corrective actions it had taken or planned to take. Colorado said that it would report and return any overpayments that were not already returned and added that it was tracking all provider overpayments to ensure that they are reported and returned in accordance with Federal requirements. Colorado also described corrective actions for the calculation and return of interest owed and said that it had revised its policies and procedures.