Medicaid contractor stops trying to recoup payments from mental health providers

MM Curator summary

[ MM Curator Summary]: Colorado will no longer recoup payments from providers who say they submitted them correctly in the first place.


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The announcement came two days after The Colorado Sun reported that mental health providers would no longer accept Medicaid patients because of the debacle.



The logo for the Colorado Department of Health Care Policy and Financing, which administers Medicaid in the state, on a sign in the department’s offices on Feb. 26, 2019. (John Ingold, The Colorado Sun)

Colorado mental health therapists will no longer have to pay back money they received for seeing Medicaid patients after a state contractor that had threatened to “recoup” the payments reversed course Wednesday. 

Mental health counselors at practices in eight Front Range counties received emails from Colorado Community Health Alliance — the contractor that processes their Medicaid claims — notifying them it was “stopping the current recoupment project.” This comes after the health alliance sent letters asking therapists to return thousands of dollars in payments they had already received, a financial debacle blamed on a software error.  

This week’s reversal by the state contractor came after reports in The Colorado Sun and 9News exposing the claims fiasco. Several mental health counselors and therapists working in small group practices told The Sun they would no longer accept Medicaid patients because of the paperwork headache and the latest fight with the state contractor. 


For some, the reversal is too little, too late.

Carla D’Agostino-Vigil, one of the only specialists in obsessive-compulsive disorder who accepted Medicaid in Colorado, was among those who decided she would no longer see Medicaid patients because of the latest hassle. While she welcomed the health alliance’s announcement, D’Agostino-Vigil said Wednesday she had no plans to change her mind about accepting Medicaid clients. 

“I am cautiously optimistic this will result in a timely correction,” said D’Agostino-Vigil, who runs Ignite Counseling in Westminster. 

The licensed counselor already was suffering from a 20% rate cut for Medicaid patients that the health alliance put in place in January 2020. And D’Agostino-Vigil is still in the midst of an unrelated dispute with the health alliance over claims that were denied due to an alliance software issue, she said. 

Therapists who already paid a recoupment fee to the health alliance will get a refund, the alliance said.

The recoupment letters, copies of which were reviewed by The Sun, told providers they had 60 days to return the money or Colorado Community Health Alliance could withhold future payments. The health alliance, which is owned by insurance giant Anthem, is essentially the middle man between the providers and the state Medicaid department and is responsible for processing claims and dispensing payment. 

The therapists were not overpaid — they were asked to return money for services they provided during prior years because claims were missing a provider identification number. 



Mental health professionals said they included the provider identification number on their claims. It was the computer system used by the health alliance that scrubbed the identification numbers — required by state and federal law — from its claims. The contractor realized the mistake in July 2019 and fixed its software system in October 2020, said spokeswoman Colleen Daywalt. Mental health providers have been warned of the issue via email and in meetings since March 2020, but many said they were caught off guard when they received the recoupment notifications requesting payment this fall. 

Colorado Community Health Alliance is the payer for 1,175 behavioral health providers in Boulder, Broomfield, Clear Creek, El Paso, Gilpin, Jefferson, Park and Teller counties. About 200 providers who did not resubmit claims received the recoupment letters, which asked for amounts up to $18,000.

The health alliance said Wednesday that it was taking back the recoupment action “in light of recent feedback from behavioral health practices.” 

Instead of requiring therapists to pay up or resubmit claims, the health alliance is making plans to contact each counseling practice to retrieve the needed provider identification numbers, Daywalt said in an email to The Sun. “We plan to work with providers to collect the data to ensure we have proper documentation without requiring the providers to resubmit the claims,” she said. 


She said the alliance is “dedicated to ensuring access” to mental health care in Colorado, noting there are now 3,514 practitioners in the network.

The billing issue comes as Colorado has tried to expand the number of mental health professionals who accept Medicaid, a government insurance program for low-income residents and those with disabilities. The Colorado Department of Health Care Policy and Financing, which runs the Medicaid program and contracts with the health alliance to disperse payments to the providers, said the number of providers statewide taking Medicaid reached 8,371 in June, compared with 6,029 in April 2020.

The department said Wednesday that it was pleased the state and its contractor “identified an easier way” to collect the required claim information. The process “was never intended to be about recouping payments from providers but rather to have accurate and compliant claims,” department spokesman Marc Williams said in an email to The Sun.

“While 84% of providers were able to comply with the claim data request during the 20-plus months of time provided, we understand that this issue presented a heavier administrative burden for the remainder of the providers.”

Williams added that the resolution “enables all our behavioral health providers to continue to deliver care to our Medicaid members — especially during this time of increased demand for such services due to the impacts of COVID-19.”


Christia Young, a Brighton therapist who received a recoupment notice for $7,200, was skeptical that the announcement meant things with the alliance would improve. 

“It’s good news, but I already paid an attorney, drafted a letter, and spent a large chunk of my time faxing them all of the corrected claims,” said Young, who sees patients with chronic suicidal thoughts at Badass Therapy. “It also doesn’t fix all of the other issues providers have with them. I already had so many issues with billing prior to this.”

Young has stopped taking Medicaid patients through the health alliance. 

“My Medicaid clients are some of my favorites to work with,” she said. “It has been heartbreaking to have to prioritize my mental health and financial well-being because it is so difficult to work with Medicaid.” 


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