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Committee pauses on Recovery Audit Contractor bill after fiscal and design concerns
Summary
The committee reviewed a Recovery Audit Contractor (RAC) draft that HCPF says could cost $14.4 million and where the Colorado Hospital Association and HCPF disagree on provisions; members raised vendor-fee and liability concerns and the committee declined to introduce the bill pending further work.
The Joint Budget Committee considered a draft Recovery Audit Contractor (RAC) bill but declined to introduce it at this meeting after members and staff identified significant drafting and fiscal concerns.
Mister Kurtz told the committee that Health Care Policy and Financing (HCPF) and the Colorado Hospital Association remain in disagreement about provisions in the draft and that HCPF’s preliminary estimate of fiscal impact is $14,400,000 to the general fund if the bill were introduced as written.
Representative Brooke Serota urged the committee to preserve a federally required audit program while warning against provisions that could single out specific hospital systems or create excessive liability for the state. She said some language in the draft could impose state liability even where findings might later be shown incorrect.
Senator Kirkmeyer raised concerns about auditor compensation and incentives, noting the draft used an 18% vendor payment while the committee was told a federal guideline is 12.5%, which he said could create perverse incentives for auditors. Senator Kirkmeyer and others urged staff to reconcile payment formulas, vendor terms and federal compliance before any introduction.
Outcome and next steps: Committee members agreed more work was needed and did not introduce the RAC bill today. Staff and interested parties will continue negotiations and return with revised drafting and updated fiscal analysis before committee action.
