In $18M Settlement, Colorado to Restore Medicaid to Those Wrongly Denied Coverage

To settle a class action lawsuit, Colorado will spend $18 million to restore Medicaid coverage to more than 40,000 residents whose coverage was "wrongly cut off" three years ago, the Denver Rocky Mountain News reports. Five pro-bono attorneys filed the suit, along with a "thick settlement agreement they had spent about 10 months negotiating with state officials," on Dec. 4 in Denver U.S. District Court. State Department of Health Care Policy and Financing Manager Diana Maiden "blamed" the erroneous loss of coverage on "old programming in a state computer" that failed to be updated in 1996 when national welfare reform changed federal laws. Welfare reform permitted those who became ineligible for welfare benefits to retain Medicaid coverage; before that, Medicaid benefits automatically were tied to welfare eligibility. Colorado's DHS computer "automatically made those [former] cut-offs," but "couldn't handle" the change in laws, Maiden said. Rather than reprogramming the "aged" computer, state officials tried to "work around the problem by training social services to keep people from wrongly losing Medicaid coverage." However, this plan "failed," and many Medicaid-eligible residents lost benefits. Although Maiden maintains that "[the state does] not think that people went without medical coverage when they truly needed it," the lawsuit contends otherwise. Under the settlement agreement, pending judge approval, Colorado must notify all the residents who lost Medicaid coverage and pay their outstanding medical bills or reimburse them for out-of-pocket medical expenses. The federal government will help the state by paying half of the estimated $18 million expenditure (Abbott, Denver Rocky Mountain News, 12/7).