California spent $4B on Medi-Cal coverage for potentially ineligible people, audit finds

The California Department of Health Care Services spent at least $4 billion on "questionable" Medi-Cal payments between 2014 and 2017 because it did not ensure counties resolved discrepancies in data regarding eligibility of people who received benefits, a state audit found.

Medi-Cal, California's Medicaid program, covers nearly 13.2 million people, or about one-third of the state's population. About 80 percent of Medi-Cal beneficiaries were in managed care plans as of September, while the rest are under Medi-Cal's fee-for-service system.

The audit found various discrepancies in Medi-Cal eligibility data in the state and county systems. For instance, more than 453,000 of the 10.7 million beneficiary records from December 2017 were identified as eligible in the state system but not in the county system for at least several months and many persisted for years, the state auditor's office said.

In one case, a beneficiary died in December 2013, but the state continued to make monthly payments to the patient's Medi-Cal plan until August 2018. The state paid the plan $383,000 for a person who "was no longer in need of services," the audit said.

The audit found many of the 453,000 discrepancies (nearly 40 percent) were associated with people "who had been given temporary eligibility status but whose cases had exceeded the permissible period for resolving their eligibility."

Overall, the state auditor's office estimated at least $4 billion in questionable Medi-Cal payments, most of which were premiums paid to managed care plans.

But the office said the monetary effect could be greater than $4 billion because it only identified beneficiaries with discrepancies from December 2017 and because it did not look at people eligible for Medi-Cal via other entitlement programs.

Other than the Medi-Cal payments, the state auditor's office also identified more than 54,000 people who were not recorded as eligible for Medi-Cal in the state's system but were in the counties' records, said California Auditor Elaine Howle in a letter accompanying the audit.

Although the state "has established a process for notifying counties of beneficiary records that require follow-up, gaps in this process allowed the problems we identified to persist," she wrote.

Based on its findings, the state auditor's office recommended the state's department of healthcare services resolve discrepancies and recover erroneous payments where allowable by the end of June. The office also recommended the department implement procedures by the end of this year "to ensure the timely resolution of system discrepancies. These procedures should include Health Care Services regularly following up on recurring, unresolved system discrepancies with the responsible county."

Department officials told Becker's they agree with the recommendations in the audit and are making efforts to respond appropriately.

"The department works closely with counties to ensure that those eligible for Medi-Cal are enrolled and provided with the services for which they are eligible. DHCS, prior to the …audit, implemented additional quality control activities in an effort to expand and improve oversight of county agencies. These changes strengthen the department's internal control processes," department officials said.

"DHCS 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. Where appropriate, DHCS will recover erroneous payments. DHCS will report back to the…[state] by June 2019 on the department's progress."


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