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Appropriations panel approves bill to change Medicaid recovery-audit rules, limit contingency fees and add provider protections
Summary
Senate Bill 314 was advanced by the House Appropriations Committee after sponsors said it implements recommendations from an audit of the Recovery Audit Contractor (RAC) program. The bill ties vendor compensation to recoveries, caps contingency fees, adds disclosure requirements and strengthens provider due-process protections.
A sponsor described Senate Bill 314 as legislation to implement audit recommendations and to clarify administrative processes in the state Medicaid recovery audit program. The sponsor told committee members the bill would limit RAC vendor contingent fees to a maximum of 16 percent of recoveries, tier subsequent audits based on prior work, and require earlier notification and improved disclosure when adverse actions are under consideration.
Rachel Entrekin, legal director for the Colorado Department of Health Care Policy and Financing, testified in support of the bill and said department staff had worked with providers and stakeholders to refine the program. Entrekin said the bill aims to balance the federally mandated purpose of recovery audits — to prevent waste, fraud and abuse — with “needed flexibilities to meet providers where they are” and to protect procedural rights from preliminary findings through appeal.
Sponsors said the measure places guardrails on audits, improves vendor oversight and requires the department to be timely in notifying providers about billing concerns so problems can be corrected earlier. Committee members asked no substantive questions during the sponsor presentation. No outside witnesses presented opposition in the record.
The committee moved Senate Bill 314 to the Committee of the Whole with a favorable recommendation; the motion passed on a recorded vote of 8 to 3.
