Colorado Medicaid builds systems for HR1 changes as commission reviews access and spending

Colorado Medicaid officials are building systems for a new federal work requirement and other eligibility changes, including a separate change that could end coverage for about 7,000 lawfully present immigrants on Oct. 1. The work requirement generally must be operating by Jan. 1, 2027, officials told the Commission on Medicaid in July.

The changes are part of the federal budget law known as HR1. The Centers for Medicare & Medicaid Services says states generally must implement the community-engagement requirement by Jan. 1, 2027. Covered adults generally must complete 80 hours a month of work, community service, an approved work program, education or a combination of those activities.

Colorado’s Department of Health Care Policy & Financing estimates the requirement will apply to about 375,000 members before exemptions. Children 18 and younger, adults 65 and older, American Indian and Alaska Native members, people in long-term services and supports or buy-in programs, and others who meet federal exemptions will not be subject to it. HCPF staff told commissioners that about 47,000 people in the affected population are expected to qualify for exemptions.

The state plans to use self-attestation during the first year while it develops audit trails and verification systems. HCPF is adding data connections to automate exemptions where possible; staff said the joint eligibility system already contains some SNAP and TANF information. The state also must identify people who are medically frail. Staff said federal rules require both a medically frail finding and a significant impairment that prevents a person from completing 80 hours of activity. Colorado is considering existing disability information and diagnoses to identify those exemptions.

County eligibility workers will need new training and procedures. HCPF said the materials were still being developed and that county funding was increased by $17 million over two years through an HR1 supplemental.

Immigrant coverage changes come first

A separate HR1 eligibility change is scheduled to take effect Oct. 1, according to HCPF. The department estimates about 7,000 lawfully present immigrants will lose Medicaid coverage, including people with refugee or asylum status, humanitarian parole and withholding of removal. HCPF said it had begun sending notices and planned additional formal notices and community outreach.

A community health center representative told commissioners that at least one-quarter and possibly one-half of the affected immigrants are already community health center patients or could seek care there if uninsured. The estimate was not accompanied by a public breakdown by clinic, county or hospital.

Commission reviews preliminary access concerns

At an Aug. 5 meeting, the Commission on Medicaid heard preliminary stakeholder feedback and planned follow-up reviews. The survey was not independently verified, and paid family caregivers made up 56.1% of respondents. Home- and community-based services ranked as the benefit respondents most wanted protected.

The presentation said 84% of respondents reported that a service benefit, authorized hours or payment rate had been cut or capped, while 60% reported being on a waiting list. Respondents also reported difficulty reaching staff who could answer questions, completing enrollment or renewals, getting help at home and navigating exception processes. They raised concerns about conflicting agency communications, upcoming work requirements and six-month renewals.

The figures describe the responses received so far, not verified conditions across Colorado’s Medicaid population. The commission planned additional structured in-person and virtual office hours and targeted issuing actionable recommendations by Dec. 11. The meeting record shows a planning deadline and follow-up commitments, not adopted recommendations or a policy vote.

HCPF’s director said the department is developing an access-monitoring strategy to assess whether recent required rate reductions, together with the federal changes, could compromise members’ access to care. Officials did not provide a completed framework, specific measures or a public reporting schedule.

Spending reviews seek explanations for outliers

The commission also reviewed Medicaid spending by member experience and asked HCPF for deeper analysis of apparent outliers. HCPF officials described about $4.6 billion in long-term services and supports spending, compared with more than $3.3 billion in combined hospital spending. Behavioral health was described as separately appropriated at about $1.58 billion in fiscal 2025-26, in addition to the roughly $14 billion medical-services-premiums line.

Commission members questioned increases in adult dental, behavioral health, children’s extensive supports and non-emergency medical transportation when utilization was flat or declining. Officials attributed spending growth to provider-rate and benefit changes, higher acuity, post-pandemic utilization, federal waivers and managed-care financing, and agreed to provide deeper analyses.

The requested review will account for inflation, utilization, policy and benefit changes, provider rates, federal changes and areas with historically higher fraud, waste and abuse risks. The record does not establish that the questioned categories represent fraud or waste, and it does not document a new spending cut.

Officials also discussed preliminary vendor figures. They associated Deloitte, the Colorado Benefits Management System vendor, with $389 million over 15 years, while cautioning that the figure was not annual and discussing uncertainty about how it related to the current procurement cycle. A separate current CBMS appropriation was described as about $97 million, including $12.8 million in General Fund. Officials also named Accentra Health in utilization management and MetImpact in pharmacy-claims administration, but the record does not establish the relevant contract amounts, durations or terms.

Financing changes will phase in

Colorado’s hospital provider fee is above the new federal safe-harbor limit, HCPF staff told commissioners. The Congressional Research Service’s summary of the law says the provider-tax threshold for expansion states will decline in stages, from 5.5% in fiscal 2028 to 3.5% in fiscal 2032 and later. Colorado legislative staff have described the state’s hospital fee as being phased down to 3.5% by fiscal 2031-32.

The change limits Colorado’s ability to use the hospital fee to draw federal Medicaid money. Commissioners and state staff warned that hospitals could face more uncompensated care and that costs could shift to private insurers. The public record reviewed for this story does not identify which facilities or counties would face the largest losses.

Colorado is also awaiting federal action on a state-directed-payment proposal, another financing tool discussed at the meeting. Officials described the Jan. 1 system as a minimum viable product, with more verification and audit capacity expected later.