State Made Billions in Questionable Medi-Cal Payments, Auditor Finds

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California’s Department of Health Care Services paid at least $4 billion in Medi-Cal payments and claims for people who may have been ineligible for the health insurance plan, according to a state audit released this week.

The auditor’s office examined state and county Medi-Cal eligibility records in Dec., 2017. Officials found more than 450,000 people marked as eligible for Medi-Cal in the state system but not in county systems. A majority had been eligible in the state system for more than two years. As a result, the state continued paying for these beneficiaries’ medical premiums and care, even though they may not have been entitled to it, the report stated.

Counties are usually responsible for determining if people are eligible for Medi-Cal, the state’s health insurance program for low-income residents. However, the Department of Health Care Services (DHCS) failed to follow up with counties to make sure discrepancies in eligibility information were addressed, the auditor found.

The report estimated the total cost of the problem over four years, between 2014 and 2017, could amount to over $4 billion.

“Many of these discrepancies resulted from Health Care Services failing to ensure that counties had evaluated the Medi-Cal eligibility of beneficiaries transitioning from other programs,” California State Auditor Elaine Howle wrote in a letter to Gov. Brown and legislative leaders. “One reason counties failed to complete those evaluations promptly was because of the implementation of the federal Patient Protection and Affordable Care Act which created a backlog of Medi-Cal applications and eligibility redeterminations.”

In about 40 percent of cases, beneficiaries had been given temporary eligibility for Medi-Cal, but this eligibility hadn’t been confirmed in over a year. In one case, DHCS paid a Medi-Cal managed care plan more than $383,000 for a person that had died, and whom the county had discontinued in its system four years prior, the report found.

On the flip side, about 54,000 people may have been denied Medi-Cal coverage they were entitled to. These people were designated eligible for Medi-Cal by counties, but this didn’t show up in the state system, according to the audit.

The auditor called on DHCS to resolve the discrepancies, recover erroneous payments and implement procedures to make sure eligibility problems are resolved and counties know how to address them.

In a letter responding to the audit, DHCS said it agreed with the findings and recommendations and had prepared a plan of action to correct the problems.

“The Department of Health Care Services (DHCS) agrees to review the discrepant records identified in the course of this audit. Due to the volume of records, DHCS cannot commit to resolving all discrepancies and recovering associated erroneous payments by June 2019, but does commit to demonstrating reasonable progress by this date,” the department stated.

Jen Flory, a policy advocate with the Western Center on Law and Poverty, said the findings were concerning but not a surprise. She recalled the challenges the state has had in implementing the Affordable Care Act, including a new computer system to determine eligibility that resulted in a backlog of more than 900,000 applications in 2014.

“I think we were all hoping that these problems would have been totally resolved by now, so shining a further light and getting more pressure on it is not necessarily a bad thing,” Flory said. “It is hard to see money spent where it shouldn’t be spent, but from a consumer advocacy perspective, when we consider that Medi-Cal is covering a third of the state’s health insurance, we’re glad that they were erring on the side of coverage.”

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