Colorado moves to cut home care firm paid $22M by Medicaid

Colorado Medicaid is terminating home care agency FreedomCare, paid nearly $22 million in 2026, after a survey found nine immediate jeopardy problems. A court order lets the company keep serving its 700-plus current clients until an Oct. 29-30 administrative hearing.

colorado · hcpf · home care · provider oversight · program integrity · medicaid

Direct Support News desk · October 7, 2026 · Updated October 9, 2026 · 4 min read

Colorado's Department of Health Care Policy and Financing has moved to end its Medicaid provider agreement with FreedomCare of Colorado, an in-home care agency whose Medicaid payments grew from about $1 million last year to nearly $22 million so far in 2026. The Colorado Sun reported the fight on Oct. 7, 2026. The department's Sept. 16 termination notice, signed by the director of its Fraud, Waste, and Abuse Division, lays out the reasons.

According to the Sun, the New York-based company has 732 caregivers and more than 700 Medicaid clients in Colorado, older adults and people with disabilities who get help with tasks such as meals, laundry and getting in and out of bed. The notice says those clients live in 17 counties.

What the state found

The notice says the Colorado Department of Public Health and Environment, which surveys home care agencies for the Medicaid program, tried twice to inspect the agency for relicensing and recertification. On April 29, 2025, and again on Oct. 13, 2025, surveyors were told the owner was out of the country and no backup administrator was available. The health department had accepted a plan of correction in between, on May 30, 2025.

A third survey ran from July 14 to Aug. 20, 2026. It produced 27 deficiency tags and nine immediate jeopardy calls. The notice lists failures to:

investigate, document and resolve complaints, and run an effective complaint process
have backup staff when a scheduled caregiver could not work
complete required skills validations for staff
run caregiver background checks
keep care plans and documentation

The notice adds that the agency was overseen from outside Colorado, and at times from outside the United States, with very few staff in the state. When regular caregivers were unavailable, it says, several members were put on hold and went without needed services, which the notice describes as circumstances of neglect. In its words, the agency "failed to maintain fundamental systems necessary to protect members and ensure continuity of care." The health department recommended decertification.

The department cited its good-cause termination rule, 10 CCR 2505-10, Section 8.076, including a pattern of abuse; one form of abuse the rule lists is failing to correct deficiencies under an accepted plan of correction. The notice was copied to the HHS Office of Inspector General, the state attorney general's office and the Medicaid Fraud, Abuse, and Neglect Unit. Its stated grounds are care and oversight failures, not a billing fraud finding, as Home Health Care News noted on Oct. 8. The Sun reported that the health department had received complaints about the agency, including four alleging fraudulent Medicaid billing.

What the order requires, and the court fight

The termination takes effect 60 days after the notice, which the Sun put at Nov. 15. The agency may not take new Medicaid clients, and the department said it would pay for existing clients' covered services for up to those 60 days. The notice also told the agency to give the department a list of its Medicaid members within 10 days and to notify each client and their case manager.

FreedomCare argued that a quick transfer would disrupt care for hundreds of people and won a preliminary injunction in Denver District Court that lets it keep serving current clients at least until its appeal is heard, the Sun reported. An administrative law judge has set a two-day hearing for Oct. 29-30. The state attorney general's office argued that Colorado should not keep paying the company $550,000 a week.

The company's lawyer told the court it fixed the problems almost immediately and sent a 36-person team that included 13 registered nurses. The Sun reported that the health department accepted the company's remediation plan in July; the lawyer said regulators never came back to verify the fixes. He also said FreedomCare serves 4% of enrollment in the state's home-based services program. Both sides declined to comment to the Sun while the case is pending. The case comes as Colorado faces a $1.6 billion budget shortfall, mostly from Medicaid, the Sun reported.

Why this matters for providers and DSPs

For provider agencies that deliver home and community-based services, the notice is a list of what surveyors check first: a working complaint process, backup coverage when a caregiver calls out, completed background checks and skills checks, current care plans, and a leader who can be reached in the state. An accepted plan of correction did not protect this agency; the department treated a repeat failure as grounds to end the contract. For frontline supervisors, the gaps named here, such as clients left on hold when a caregiver was out, are day-to-day scheduling and documentation work. For direct care workers and the people they support, the bigger risk is the transition itself: if the termination stands, more than 700 clients would need new agencies, and workers who want to keep serving them would need a new employer.