Medicaid Sustainability and Colorado's LTSS System

Medicaid Sustainability Framework     Long-Term Goals     Our Commitment     Current Projects and Resources

Colorado’s long-term services and supports (LTSS) system plays a critical role in ensuring that older adults and individuals with disabilities have access to care in the setting of their choice. Over the last several years, strategic investments have expanded access, improved equity, and strengthened the direct care workforce.

However, ongoing fiscal constraints—including new federal mandates and limits on state revenue growth—require the Department of Health Care Policy and Financing (HCPF) to reassess and align its policies to ensure long-term sustainability.

Current Fiscal Environment

• Federal Policy Changes: New federal legislation, H.R.1 (One Big Beautiful Bill Act), significantly alters Medicaid financing, administrative requirements, and eligibility processes, which increases state-level financial obligations.
   
• State Budget Constraints: Medicaid comprises over one-third of Colorado’s state budget. The growth of LTSS expenditures—driven by increasing utilization, demographic shifts, and rising labor costs—has outpaced available revenue.

As a result, the Governor’s Executive Order issued August 28, 2025, initiated $252 million in budget reductions across state agencies—including approximately $79 million in reductions to HCPF, reflective of the Department’s share of the state budget and its recent cost trends.

Medicaid Sustainability Framework

The Office of Community Living (OCL) is working on a plan to make sure LTSS Medicaid services remain strong, fair, and financially sustainable. Instead of making across-the-board cuts, the focus is on targeted changes guided by data. The approach includes four main parts:

1. Policy and Program Review - OCL will take a close look at current policies to make sure they match what the law requires, meet real health needs, and use funds responsibly.
2. Payment Reform - The way providers are paid will be reviewed to ensure payments are fair, but also affordable for the program in the long run.
3. Utilization Management - Tools will be used to make sure services are provided only when needed and in the most efficient way possible.
4. Collaboration with Stakeholders - OCL will keep working with providers, case managers, advocacy groups, Medicaid members, and other partners to guide the changes and look for ways to improve.

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Long-Term Goals

The overarching objective of these efforts is to ensure that:

• Individuals continue to receive high-quality care in the most appropriate settings;
• Provider networks remain strong and sustainable;
• Program operations align with national standards and best practices; and
• Public resources are managed responsibly to support long-term system viability. 

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Our Commitment

OCL remains committed to transparency, accountability, and partnership throughout this process. Sustainability is not a one-time goal but an ongoing responsibility—to the individuals served by the Medicaid program, to the providers who deliver care, and to the taxpayers who fund it.

Visit our Understanding the Impact of Federal Changes webpage for real-time updates, member messaging resources, and policy implementation timelines.

Stakeholders are encouraged to sign up for the At A Glance Newsletter for HCPF-wide updates and the OCL Digest for LTSS-specific updates. 

Questions can be submitted to HCPF_HR1@state.co.us  

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Current Projects and Resources

Current opportunities for stakeholder engagement for each of these projects can be found in the OCL Digest Newsletter and on the OCL Stakeholder Engagement Calendar. As new opportunities are announced, stakeholders will be informed through the OCL Digest Newsletter.

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