Health & Welfare | Daily Report

A budget proposal to fund new Medi-Cal fraud staff that could bring in $51.5 million in savings met resistance during a state Assembly budget hearing yesterday.

Officials from the state Department of Health Care Services, which administers Medi-Cal, laid out a compelling case for additional fraud staff. Their number crunchers suspect there’s as much as $400 million in health care fraud in the system.

Erroneous billing for services, supplies and care that is not necessary or poorly documented accounts for an additional $600 million, the agency said. So a total of $1 billion, ideally, could be saved in the $16 billion program.

Officials sought to hire 38 new employees to fight fraud, promising to cover the costs of the positions and return the state a bounty of $51 million.

A representative from the Legislative Analyst’s Office, who was at the meeting, offered up a different and somewhat cheeky proposal: Bring us the millions, but do it with the staff you’ve got.

Wesley Chesbro, D-Eureka, concurred: “The question is do you need new positions to achieve the savings,” he said referring to the existing 712 positions, some vacant, already on Medi-Cal's audit and fraud staff.

The budget tug-of-war will continue and the ultimate decision was not made yesterday.

But what of the billion dollars in fraud? The parent agency of Medi-Cal issues an annual report on the topic after examining a sample of claims for services or medications. Based on the apparent fraud investigators pinpoint, the agency is able to estimate global amounts of fraud.

Some of the suspected fraud described in last year's report begs for a close look:

• This claim is for four different incontinence-related supplies. The physician whose signature is on the order for the supplies denies ordering the supplies and states the signature does not appear to be hers. The home health agency stated the patient was discharged a month before the date of service and they did not provide the billed services.
   
• This claim is for a month in a skilled nursing facility. Medical necessity was documented in the record for the first 18 days. The physician wrote an order to discharge the patient home on January 18, 2007; no orders or physician progress notes were written after this date. The documentation in the records, including the nurses notes, states that the patient was discharged home on January 29, 2007.
   
• This claim is for Ambien, a medication used for sleep. This is a Code 1 restricted drug limited to use in patients with insomnia. There is no documentation at the pharmacy, that the patient has insomnia. The medical records from the prescribing provider were not available. He has retired and moved out of state. Therefore, there were no records to review to support the need for the medication.