Colorado reviews Medicaid rates for IDD providers

Colorado is evaluating significant changes to its Medicaid reimbursement methodology that could alter funding for IDD providers. The state’s Medicaid Provider Rate Review Advisory Committee (MPRRAC) recently presented proposals to the Joint Budget Committee (JBC) aiming to move away from inflation-based rate adjustments under Health First Colorado. Instead, the committee recommends aligning reimbursement rates more closely with Medicare benchmarks.

Targeted rates aim to reflect service complexity

MPRRAC’s proposal sets provider rates at a minimum of 80% of Medicare benchmarks. For services considered high-need or labor-intensive, such as dental, neurological, and psychiatric care for individuals with disabilities, the plan suggests increasing reimbursements up to 150% of the Medicare benchmark. This differentiated approach is intended to better account for the higher costs associated with specialized IDD support.

Alternative approach could reduce funding

Opposing the committee’s targeted model is the state’s executive budget recommendation. This simpler option proposes a flat rate at 85% of Medicare across all service categories. While easier to administer, this model risks underfunding services that require greater resources, potentially pressuring providers that operate residential programs, day services, and specialized therapies.

Implications for providers and services

The Colorado legislature must finalize its decision by early December. Industry observers caution that adopting the uniform 85% reimbursement rate could squeeze margins and jeopardize service availability, especially in rural or underfunded regions. Such financial strain may compel some providers to reduce programs or consider closures, negatively impacting care access for people with intellectual and developmental disabilities.

This review comes at a critical juncture for IDD agencies reliant on Medicaid funding. Providers and stakeholders will need to carefully monitor developments as Colorado determines its reimbursement strategy moving forward.