A Medicaid fraud scheme targeting a free transportation program that shuttled patients to medical appointments cost an estimated $25 million, the state\u2019s Medicaid authority revealed Tuesday, more than two years after the fraud first came to light.<\/p>\n
The disclosure comes after The Denver Post reported in late 2023 that contract Medicaid drivers<\/a> had sidestepped state rules. They packed their cars with patients, some of whom were homeless, and drove them hundreds of miles to maximize their payouts.<\/p>\n On Tuesday, Medicaid officials confirmed that patients were offered cash and drugs by some drivers, and that they were recruited \u2014 \u201caggressively\u201d in some cases \u2014 by a wave of new companies jockeying for clients.<\/p>\n Medicaid provides free rides to medical appointments for its enrollees, with drivers paid for every mile. In a new statement, Department of Health Care Policy and Financing<\/a> spokesman Marc Williams said the agency reached its $25 million estimate by examining how the increase in the transportation program\u2019s costs changed after Medicaid officials froze 280 providers from the system. That is a total estimate, including both federal and state funds, he said.<\/p>\n After reviewing more than 30,000 claims filed by drivers, Williams said, the agency also blocked $24.5 million in additional funds from being paid out.<\/p>\n \u201cHCPF is committed to preventing, identifying, and rooting out fraud, and is using every tool available to take legal action against Medicaid providers who have defrauded taxpayers and participated in abusive business practices,\u201d he wrote. \u201cIn summer 2023, HCPF discovered that numerous newly enrolled (nonemergency medical transportation) providers began exhibiting unusual billing patterns in what seemed to be a coordinated manner.<\/p>\n \u201cWe immediately launched an investigation that revealed these providers had enrolled in early 2022 but remained dormant \u2026 before suddenly activating in April 2023.\u201d<\/p>\n He said that after the fraud was identified in 2023, the agency instituted a moratorium on new providers joining the program. The program was also classified as \u201chigh risk,\u201d he said, meaning that it requires additional screening and background checks. HCPF required all drivers to undergo a new credentialing process, including in-person inspections and drug screening. Trips stretching beyond 52 miles also required more documentation.<\/p>\n Since publishing the late 2023 story<\/a>, The Post has repeatedly requested the estimated cost impact of the fraud scheme. Williams told a reporter last week that he could provide an estimate, but he asked that The Post refrain from publishing the information until after a Medicaid hearing in front of the Joint Budget Committee that was set for Tuesday. The Post did not agree to that request.<\/p>\n Williams provided the information Tuesday morning, the day of the hearing. Williams said the details had needed a review for accuracy by the agency\u2019s lawyers before they could be released. He said that HCPF provided the information to one lawmaker on the budget committee prior to Tuesday\u2019s hearing, which did not touch upon the fraud allegations.<\/p>\n The $25 million loss estimate represents only part of a significant surge in spending on the transportation program in recent years.<\/p>\n According to a report presented to lawmakers earlier this month<\/a>, costs from the transportation program rose 436% between 2019 and 2025. The report also found that spending on the program nearly tripled in one year, from $93 million in 2022 to $270 million in 2023, when the fraud was most active.\t\t\t\t<\/p>\n Adela Flores-Brennan, Colorado\u2019s Medicaid director, told a panel last month<\/a> that the transportation program \u201csaw a lot of growth in the last couple of years as a result of some fraudulent activity.\u201d She said that Medicaid officials have worked to \u201ccontrol\u201d the increase.<\/p>\n \u201cWe have made really concerted efforts to go after those providers who defrauded us, and we\u2019ve been working with law enforcement, at both the state and national levels, to be able to do that,\u201d Flores-Brennan said.<\/p>\n As HCPF has worked to crack down on the program, the rapid increase in costs has leveled off. But the overall price tag has not declined. The program\u2019s cost reached $280 million in 2024 and $289 million last year, according to the legislative report.\n<\/p>\n In a follow-up statement Tuesday, Williams said the continued increases in costs were the result of an increase in the provider rate for drivers. That increase was recommended by an advisory committee and approved by the legislature in 2022, he said. Lawmakers then reduced it by 50% last summer.<\/p>\n The disclosure of the fraud\u2019s cost comes as lawmakers grapple with potential cuts to Medicaid amid another funding shortfall<\/a>. Though the driver program\u2019s costs have surged, they are still dwarfed by Medicaid\u2019s other services: It accounted for 1.9% of Medicaid spending in 2025, the legislative report said.\n<\/p>\n It remains unclear who was perpetrating the driver fraud scheme, how coordinated it was and how the problem providers were connected. No arrests or charges have been announced. Williams said HCPF referred the matter to law enforcement, though he declined to comment further.<\/p>\n Lawrence Pacheco, a spokesman for the attorney general\u2019s office, said Tuesday that the AG\u2019s Medicaid fraud unit had six to eight active investigations into Medicaid transportation fraud allegations.<\/p>\n Williams said HCPF was aware of drivers who \u201cspoke Amharic, which is the most common language spoken in Ethiopia.\u201d<\/p>\n In 2023, one driver told The Post that word of the program \u2014 which could net unscrupulous drivers thousands of dollars each day \u2014 was passed along by word of mouth. Many transportation companies were registered to the same address in Colorado Springs, The Post found, and drivers using it were charged $150 for a desk and a lockable filing cabinet \u2014 one of HCPF\u2019s requirements at the time.<\/p>\n The scheme targeted drug treatment clinics, providers running those facilities told The Post in 2023, though it also affected other parts of the Medicaid system. One homeless patient said he received cash for each trip he took from Pueblo to Aurora. Some rides billed to Medicaid were fabricated entirely, HCPF said.<\/p>\n Williams said that drivers offered drugs and cash to entice patients and that \u201corganized rings\u201d enrolled in the program simultaneously and \u201cbilled in coordinated waves.\u201d HCPF said there was open drug use in some vehicles, and drivers would \u201caggressively\u201d recruit patients inside medical clinics. Some would also keep patients\u2019 driver\u2019s licenses to ensure they didn\u2019t switch to a different transportation company, according to the department.<\/p>\n The state had previously been told by both state and federal auditors that the program was vulnerable to abuse. A 2021 state audit, conducted prior to the fraud, found that roughly 15% of driver payments in a seven-month period may not have been compliant with program rules.<\/p>\n HCPF had eased a geographic limitation on the service, and provider rates went up. HCPF previously had required on-site inspections, which one driver said consisted of a video call. That driver said the inspection consisted of him pointing his camera at his car, at the lockable filing cabinet he\u2019d rented and at his name on a building directory to show he met certain provider requirements.<\/p>\n HCPF\u2019s efforts to clamp down on the program prompted more criticism from some of the state\u2019s legitimate providers<\/a>. One of them, MedRide, sued HCPF last year after the agency accused the company of fraud and suspended it from Medicaid. MedRide denied the allegations.<\/p>\n