An own goal by Atletico captain Diego Godin on the stroke of half-time set Espanyol on their way and a Borja Iglesias double in the second half ensured the visitors' four-match winning streak ended with a heavy loss.
Atletico need a point from either of their final two fixtures against Sevilla and Levante to make sure they finish second in La Liga, and Simeone rejected the suggestion that his players failed to show enough urgency at RCDE Stadium.
"I don't think it was a lack of intensity," said Simeone.
"The match was a hard-fought one and it was competitive.
"Both teams were in it until the 60th minute, then that's when things didn't happen for us.
"Although we started the second half well with a good chance for [Alvaro] Morata, Espanyol improved and deserved the win."
Atletico's failure to take the title race down to the wire disappointed their fans, but Simeone defended his side's performance in a division he described as "fantastic".
A runner-up finish would be Atletico's second in as many seasons – something the coach said is a point of pride for his team.
"The Spanish league is fantastic," he said. "So we will try to finish in the best possible position.
"We need one more point to finish second and it's on us to earn it.
"Being in the fight for second is positive and a thing we have to value."
The run-in won’t be easy for Simeon’s side, who still have two matches to play in their league season.
Sevilla are up next on May 12, with the club closing out the campaign against Levante a week later.