JBC approves draft authorizing HCPF extrapolation audits after intensive debate on look-back and safeguards

The Joint Budget Committee unanimously approved introduction of LLS 0978, a bill draft to authorize the Colorado Department of Health Care Policy and Financing (HCPF) to use statistical-sampling extrapolation audits to pursue overpayments — subject to specified guardrails including a default two-year look-back and provider appeal protections.

Shelby Ross of Legislative Legal Services summarized the draft and the major changes, saying the bill would require that "the methods employed utilize a statistically valid sample and are designed and implemented in accordance with nationally national generally accepted statistical principle standards and methods." Committee members spent the bulk of the meeting arguing about the appropriate look-back period, whether the state should follow federal (RAC) three-year precedent, or limit reviews to two years that match the original cost estimates attached to the long bill.

Mr. Kurtz told the committee the long-bill funding was built around claim-by-claim reviews for two years, and that allowing extrapolation would let staff use the same money more efficiently: with a large enough sample the state could extrapolate improper payments across the last two years rather than reviewing every claim individually.

Some members pressed that the OIG audit identified widespread improper payments and bad actors and that the state needs tools to recover funds; others warned that the department previously gave unclear guidance to providers and that extending look-back periods or using extrapolation without explicit guardrails could lead to unfair clawbacks and litigation. Senator Kirkmeyer said the OIG report documented weak oversight and inconsistent rules and urged requiring the department to implement the audit office’s recommendations and demonstrate clear, public standards before recouping funds.

The committee agreed on a framework: set a two-year retrospective baseline tied to Oct. 1, 2023 (looking back to Oct. 1, 2021) for an initial extrapolation; if a statistically significant pattern of overpayment is identified for a specific provider, the department may be allowed to look further back for that provider. The bill will require defined statistical standards, claim- and methodology-level disclosure to providers, and appeal rights including the ability for providers to submit their own statistical experts and to pause recoupment during active appeals.

Vice Chair Bridges moved to introduce "LLS 0978 HIC puff statistical sampling and Extract Extrapolation as discussed and amended in all of the caveats." The motion passed on a unanimous 6-0 vote; sponsors and co-sponsors were recorded and the bill will run with the long bill.

The committee recessed following the vote.