Colorado’s Medicaid agency moved to end its agreement with in-home care provider FreedomCare, ordering the company to stop accepting new clients immediately and to stop serving existing members by November 15. The decision came after payments to the New York-based company jumped from about $1 million last year to nearly $22 million this year, according to The Colorado Sun. The company sends caregivers to assist more than 700 Medicaid members across 17 counties, helping with daily tasks like meal preparation, laundry, and mobility.
State Allegations and Company Response
The termination letter came from the state’s Fraud, Waste, and Abuse Division, which alleges that FreedomCare “failed to maintain fundamental systems necessary to protect members and ensure continuity of care.” The letter claims the company did not investigate or document complaints, lacked an effective process for handling issues, and failed to provide backup staff when scheduled caregivers could not work. It also alleges incomplete skills validations, missing caregiver background checks, and poor record-keeping. State officials further accused the for-profit company of putting profits ahead of clients and targeting Medicaid recipients with television ads.
According to the Colorado Department of Health Care Policy and Financing, the company’s attorney disputed these findings. FreedomCare stated it responded “immediately and comprehensively” and sent a team of 36 people, including 13 registered nurses, to Colorado. The company has also sought an injunction against the state’s action. A two-day hearing before an administrative law judge is scheduled for October 29 and 30.
It is not uncommon for fiscal intermediaries to face scrutiny when rapid billing growth outpaces reported service volume, especially in programs that rely on provider self-reporting. In such systems, a focus on administrative efficiency can sometimes obscure whether the volume of care matches the intensity of billing claims.
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Lawmakers and Budget Pressures
The dispute has drawn attention as Colorado lawmakers examine a Medicaid program with an $18 billion budget facing a projected $1.6 billion gap for fiscal years 2027-2028. State Senator Judy Amabile, a Democrat who chairs the Medicaid commission, described the situation as companies “learning the rules and using them to increase billing,” characterizing it as “grift because it’s not necessarily fraud.” Representative Rick Taggart said he was unaware the dispute had reached legal action until he saw the $22 million figure, calling it startling. Senator Kyle Mullica, an emergency room nurse, questioned how the state could identify such problems earlier.
State officials have not released a transition plan for the 732 caregivers currently employed by the company or details on how affected members would be moved to another provider if the termination stands. Medicaid members who receive services through FreedomCare can contact their case manager to inquire about switching providers and confirm that authorized care hours will continue.
Legal Precedent and Future Oversight
FreedomCare has a history of disputes with state health departments. In New York, it was a major fiscal intermediary before the state consolidated that work. The company sued the New York State Department of Health over that selection process in 2024. A New York state court later upheld the bidding process, according to Home Health Care News. This precedent shows the company is willing to challenge administrative decisions in court.
