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State auditor warns CDPHE licensing funds rising despite planned fee hikes, urges better data and a spending plan
Summary
The Office of the State Auditor told the Joint Health Committee its Smart Act performance audit found the Health Facilities Division lacks aggregate workload data and a written plan to spend growing fee balances, even while statutory and board actions will raise license fees by roughly 39% through 2029.
The Office of the State Auditor told the Joint Health Committee that Colorado’s Health Facilities Division has collected roughly $7 million a year in licensing fees from about 2,500 facilities but lacks the data and planning needed to justify recent and proposed funding increases.
“Each year these fees have totaled about $7,000,000 from roughly 2,500 facilities,” Deputy State Auditor Vicki Heller said in opening the audit overview, summarizing a Smart Act performance audit the office completed last fall.
The audit identified four principal findings. Heller said the division has not produced reliable, aggregated workload data that would show how much staffing or other resources are needed for licensing work, and it has no written plan to spend down fee balances in three related cash funds. The audit showed a $2.4 million surplus at the end of fiscal 2024 that the office reports rose to $5.5 million by the end of fiscal 2025. At the same time, statutory changes and board actions will increase facility fees, which Heller said will result in roughly a 39% increase in fees between fiscal 2024 and 2029.
“Without better data and a written plan, our audit reports that there is a risk the cash fund balances will keep increasing,” Heller said, recommending the division improve its data systems and adopt a comprehensive spending plan that accounts for TABOR limits.
The audit listed 12 recommendations to the Health Facilities Division; the division agreed with 11 and partially agreed with 1. The State Auditor’s office said two of its recommendations — better workload data and a written plan for spending down balances — are policy considerations for the Legislature if the division does not implement the changes.
Committee members pressed auditors about related high‑priority items for Health Care Policy & Financing (HCPCF), notably a 2021 audit recommendation on non‑emergent medical transportation (NEMT). Jenny Page, who presented the annual recommendations report, said HCPCF still has 11 outstanding recommendations from that five‑year window and that the NEMT audit found about one‑quarter of rides in the audit period were not timely. The audit recommended stronger contract monitoring and that the department require contractors to document reasons for late rides; the department says a new contract with additional documentation requirements is expected to take effect on 2026‑01‑31.
Representative Bradley asked whether the lack of data left the state unable to prevent recent Medicaid losses alleged in the news; Page responded that auditors had repeatedly raised similar recommendations since 2021 and that investigations and recoveries are ongoing and involve law enforcement and HCPCF. The auditors emphasized that implementation dates are set by the agencies and that the Auditor’s office follows up annually on progress.
The audit will feed into oversight of the affected agencies later in the year, and the Auditor’s office said it expects CDPHE and other agencies to report back on implementation progress at future legislative audit committee meetings.
