Colorado Cut Peer Addiction Recovery Contracts
State agencies terminated service contracts amid efforts to address a projected $1 billion Medicaid budget shortfall.
Updated on Sept. 28, 2026 in Substance Abuse
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As of September 2026, regional Medicaid agencies in Colorado began terminating contracts for peer addiction recovery services to manage rising costs. The move follows concerns from lawmakers regarding a lack of clinical oversight and explosive spending growth in the sector.
Why it matters
State Medicaid spending is projected to exceed its budget by nearly $1 billion next year, forcing officials to reevaluate the sustainability of programs created by 2021 legislation. Lawmakers are specifically scrutinizing peer support services due to the absence of licensed clinical requirements for providers.
Peer services spending surged 286% between 2022 and 2024, with costs for a single billing code reaching $51.8 million last year. The recent termination of the Abundance Foundation contract leaves 230 clients and 11 recovery coaches without state-backed support.
The players
Abundance Foundation
A nonprofit organization that is closing three sober living houses following the termination of its Medicaid contract.
Jefferson Center Mental Health
A mental health provider that shuttered its adult residential recovery program in August 2026.
The details
Regional accountable entities are now tasked with prioritizing providers that demonstrate improved health outcomes as the state attempts to curb rapid spending. In addition to contract cuts, the Abundance Foundation will close three sober living houses, mirroring a broader retreat from peer-led residential programs.
Timeline
2021: The state legislature passed a law authorizing Medicaid coverage for peer support.
2022-2024: Spending on peer and self-help services grew by 286%.
August 2026: The Jefferson Center closed its adult residential recovery program.
September 7, 2026: The Abundance Foundation received a 90-day contract termination notice.
2027: The state projects a $1 billion Medicaid budget overrun.
The Big Picture
This contraction represents a pivot away from the rapid expansion authorized by the 2021 Colorado peer support Medicaid coverage law. State officials are now prioritizing clinical oversight, marking a reversal of the legislative optimism that originally pegged implementation costs at $35,000.
Approximately 230 clients at the Abundance Foundation must now transition to new care providers as their current support services wind down. Residents in recovery may face fewer available options for state-funded sober living as regional agencies consolidate their service networks.
The takeaway
The rapid rise in peer service spending highlights the challenges of scaling unlicensed support models within state healthcare systems. Residents currently utilizing these services should contact their regional accountable entities to confirm if their specific recovery programs remain funded.
Further reading
Learn more about local programs and policy changes on the Substance Abuse page.
Source note: This article includes information reported by The Colorado Sun.
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