Report 2013-119 Recommendation 4 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 #4 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 should recover any overpayments for the high-risk payments we identified in Table 7 on page 28 and Appendix A beginning on page 63. It should also take the appropriate disciplinary action against the affected providers, such as suspension or termination.

Agency Response*

All of the overpayments for services at unauthorized rates have been recovered.

  • Response Type†: Annual Follow Up
  • Completion Date: April 2016
  • Response Date: October 2016

California State Auditor's Assessment of Status: Fully Implemented

Health Care Services provided a county-level summary of the payments it recouped from counties/providers that had been overpaid for DMC services or paid for inappropriate services.


Agency Response*

The FMAB reviewed the claims data to determine if payments were made at unauthorized rates. Based on FMAB's review, it was determined that claims were initially approved at unauthorized rates (or multiple units were billed inappropriately) but payments were subsequently returned as part of the Department's cost report settlement process for most of the claims ($61,385.90). There were some claims identified in which recovery of payments is required ($2,955.00).

  • Response Type†: 1-Year
  • Estimated Completion Date: End of 2015
  • Response Date: August 2015

California State Auditor's Assessment of Status: Pending

Date of implementation is set for the end of 2015.


Agency Response*

The FMAB reviewed the claims data to determine if payments were made at unauthorized rates. Based on FMAB's review, it was determined that claims were initially approved at unauthorized rates (or multiple units were billed inappropriately) but payments were subsequently returned as part of the Department's cost report settlement process for most of the claims ($61,385.90). There were some claims identified in which recovery of payments is required ($2,955.00). The data and documentation will be provided to A&I by February 2015 for review and confirmation.

  • Response Type†: 6-Month
  • Estimated Completion Date: February 28, 2015
  • Response Date: February 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The Department of Health Care Services submitted a Public Record Act request to the CSA in order to obtain the claims detail data for the high risk payments identified in the CSA audit report. Once the requested information is received, the A&I will coordinate with the Substance Use Disorder Services Division and develop an audit plan to identify overpayments and indicators of fraud. 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.

  • Response Type†: 60-Day
  • Estimated Completion Date: February 2015
  • Response Date: October 2014

California State Auditor's Assessment of Status: Pending

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


All Recommendations in 2013-119

†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


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