California Paid $4B in ‘Questionable’ Medi-Cal Claims, Audit Finds

SACRAMENTO, Calif. (CN) – Blaming meager state and local oversight, a numbing audit released Tuesday says California cut doctors and insurers “questionable” Medi-Cal checks worth $4 billion between 2014 and 2017, including $383,000 in premiums for a dead person.

The state auditor combed through nearly 11 million Medi-Cal beneficiary records and red-flagged 453,000 as eligible in the state’s database but not in the actual counties where the beneficiaries reside. Furthermore, the report found 57 percent of the discovered discrepancies had gone unfixed for over two years.

“The key reason for these questionable payments is that Health Care Services failed to ensure that the counties resolved discrepancies between the state and county Medi-Cal eligibility systems,” State Auditor Elaine Howle wrote in the 47-page audit.

California has over 13 million residents enrolled in its government-funded health program known as Medi-Cal. In 2017-2018, the state spent over $19 billion of its general fund budget on Medi-Cal, while the federal government picked up most of the remaining $88 billion.

While the costly program is overseen at the state level by the California Department of Health Care Services, individual counties process applications, determine eligibility and operate their own electronic records systems that report to the state database. When a beneficiary is no longer eligible for benefits or dies, the county system and state system are supposed to be updated as medical providers use the state system to authorize Medi-Cal treatments.

But according to Howle, massive discrepancies are slipping through the cracks, with people ineligible at the county level but still eligible according to Health Care Services’ records. As a result, the state made what Howle considers over $4 billion in “questionable” payments to insurers and providers.

The most glaring example came from Los Angeles where county officials discontinued benefits for a person that died in June 2014, but the beneficiary’s case remained active until the state auditor found the error nearly four years later. Auditors say the county missed several alerts to fix the mistake but the state never stepped in.

“In total, Health Care Services paid the managed care plan more than $383,000 for a beneficiary whom it should have known was no longer in need of services,” the audit states.

The state and counties do a particularly poor job at closing cases on people given brief Medi-Cal eligibility: Temporary cases make up nearly 40 percent of the identified discrepancies.

“Because Health Care Services does not actively follow up on counties’ efforts to complete these eligibility determinations, it continues to make Medi‑Cal payments related to these individuals without knowing whether they are eligible for program benefits,” the report continues.

Howle’s office has classified Health Care Services as a “high-risk agency” for over five years, concerned with among other things its ability to confirm and track Medi-Cal enrollee eligibility. Federal auditors also sounded the alarm on the agency in a February 2018 report, finding it was making Medicaid payments on behalf of people who did not meet eligibility requirements.

The good news for taxpayers is that California can still try to fix the eligibility snafus and recoup Medi-Cal reimbursements. Howle recommends that the agency resolve the discrepancies and recover erroneous payments by June 2019, and implement stricter procedures to better prevent and fix future mistakes.

Health Care Services agreed with each of the audit’s five recommendations but said it can’t make all of the changes within Howle’s timelines. Spokesman Tony Cava said the agency is already ramping up quality control measures to improve oversight of California’s 58 counties.

“Health Care Services is also implementing a quality control process that will identify system discrepancies, and will work to ensure that counties have the resources and technology needed to appropriately resolve discrepancies,” Cava said in an email.

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