Report 2013-119 Recommendation 3 Responses

Report 2013-119: California Department of Health Care Services: Its Failure to Properly Administer the Drug Medi-Cal Treatment Program Created Opportunities for Fraud (Release Date: August 2014)

Recommendation #3 To: Health Care Services, Department of

To ensure that the providers receive reimbursement for only valid services, Health Care Services should immediately direct its investigations division to determine whether it authorized any improper payments to program providers for deceased beneficiaries outside of our audit period. It should also determine whether it authorized such payments through its other Medi-Cal programs. Health Care Services should initiate efforts to recover such payments as appropriate.

Annual Follow-Up Agency Response From August 2017

Fiscal Management and Accountability Branch (FMAB) and EITSD determined that no further enhancement is needed to the Short-Doyle system to address this issue. All improper payments have been recouped, an edit in the Short-Doyle system was deployed to prevent future improper payments, Medi-Cal Eligibility Division improved their ability to provide rapid notification on beneficiary deaths; and a quarterly report from Short-Doyle is generated and reviewed by FMAB to review for potential dead beneficiary overpayments.

Status and Implementation Date: Fully Implemented, 7/18/2017.

  • Completion Date: July 2017

California State Auditor's Assessment of Annual Follow-Up Status: Pending

Although Health Care Services indicated that it has fully implemented this recommendation, it did not provide adequate documentation to support its assertion.


Annual Follow-Up Agency Response From October 2016

Program is currently waiting on the Enterprise Information Services Division to complete system enhancements on the Short Doyle Platform.

  • Estimated Completion Date: January 2017

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented


1-Year Agency Response

For the dead beneficiaries identified in the CSA report, FMAB has determined that providers were inappropriately paid for services provided to beneficiaries after their date of death. A total of $2,566.83 will be recovered in the FY 12-13 cost report settlement. Invoices are being prepared to recoup the remaining $3,257.67 in inappropriate payments (for services provided prior to FY 12-13). Anticipated completion is January 2016 (when the FY 12-13 cost reports are settled).

As stated in the six-month update, MCED developed a six-month work plan to reduce the lag time to improve identification of dead beneficiaries and prevent improper payments going forward via system edits within all Medi-Cal programs. Over the last year, MCED has identified and evaluated numerous federal, state, private, and direct reporting sources that help public assistance programs identify unreported beneficiary deaths. Based on this evaluation, DHCS forecasts that comprehensive improvements will be in place on or before June 30, 2016. This includes the acquisition, testing, and rollout of new death notification sources and the improvement of existing channels. These enhancements will be in place for the entire Medi-Cal population. In addition, FMAB developed queries to manually check for potential dead-beneficiary overpayments. Queries will complement the enhanced system edit capabilities with MCED's six-month work plan. FMAB also reviewed the DMC list of dead beneficiaries identified by CSA to confirm overpayments made. FMAB completed the analysis and will pursue DMC overpayment recoveries.

  • Estimated Completion Date: June 2016
  • Response Date: August 2015

California State Auditor's Assessment of 1-Year Status: Pending

Date of implementation is set for June 2016.


6-Month Agency Response

MCED confirmed improper payments were made due to deceased beneficiaries that were not identified timely. A&I worked with MCED and determined excessive lag time in updating deceased beneficiary information on Medi-Cal Eligibility Data System (MEDS). MCED developed a six month work plan to reduce the lag time to improve identification of dead beneficiaries and prevent improper payments going forward via system edits within all Medi-Cal programs.

In addition, FMAB is developing queries to manually check for potential dead-beneficiary overpayments. Queries will complement the enhanced system edit capabilities with MCED's six month work plan.

FMAB is reviewing the DMC list of dead beneficiaries identified by CSA to confirm overpayments made. Once analysis is completed, FMAB will pursue DMC overpayment recoveries.

DHCS is pursuing two remedies for the identification of dead beneficiary-related overpayments outside of DMC program and CSA's audit period:

1)A&I data analytics system now contains alerts to indicate when claim is paid for dead beneficiaries. A&I staff will continuously review the flags to determine if an investigation should be initiated. Currently, there is limitation to this process because data analytics contract only covers Short-Doyle Medi-Cal data. Therefore, alerts only apply to DMC and Mental Health claims. Once DHCS awards the data analytics contract in Spring 2016, alerts will be available for all Medi-Cal programs.

2)With remedy #1 limitations, DHCS is exploring options for Xerox to run necessary algorithms to identify dead beneficiary-related overpayments for past claims. Once overpayments are identified, recoveries will be pursued.

  • Estimated Completion Date: Spring 2016
  • Response Date: February 2015

California State Auditor's Assessment of 6-Month Status: Pending


60-Day Agency Response

A&I will coordinate with the Substance Use Disorder (SUD) division and develop an audit plan to identify overpayments for deceased beneficiaries outside CSA's audit period. If A&I confirms that improper payments were made, recovery of the overpayments will be pursued. Moreover, if A&I establishes a credible allegation of fraud, it will also refer the matter to the state DOJ as required.

In addition, the A&I received a comprehensive analysis of payment made for deceased beneficiaries from its contractor, and is in the process of analyzing the report for inappropriate payments made to deceased beneficiaries for SUD and other Medi-Cal programs. And, as seen in response to recommendation 15, DHCS has updated its procedures to include a search of the US Social Security Administration Death Master File.

  • Estimated Completion Date: January 2015
  • Response Date: October 2014

California State Auditor's Assessment of 60-Day Status: Pending

Health Care Services indicated that it will not implement this recommendation until January 2015.


All Recommendations in 2013-119

Agency responses received are posted verbatim.


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