Capitol Alert

Audit finds questionable billing by California drug rehab programs

Shoddy oversight led California to approve almost $1 million for potentially ineligible drug rehabilitation providers, including for services supposedly rendered to dead people, according to a new state audit.

The probe analyzed how the California Department of Health Care Services and the California Department of Alcohol and Drug Programs oversaw substance abuse treatment paid for by Medi-Cal, the state health care provider for poor Californians that draws federal dollars. Counties contracted out substance abuse programs to nearly 700 providers in 2012-13.

In examining outpatient drug rehabilitation providers who billed the state for millions, the audit found a pattern of incomplete patient data and questionable billing. Uneven standards led state administrators to do a poor job of vetting clinics who sought certification and sniffing out potential fraud, according to the audit.

“Neither Health Care Services nor ADP implemented an effective provider certification process during our audit period, nor did they enforce laws and regulations designed to prevent fraudulent provider applications from obtaining program certification,” the audit states.

The Department of Health Care Services has taken “very aggressive action” to crack down on bad actors, spokesman Norman Williams said. He said a targeted review has led the department to suspend more than 200 sites and refer their operators for criminal prosecution. As part of a sweeping recertification review, the department plans to visit every clinic in the state.

“We have significantly improved our ability to provide the oversight for this industry,” Williams said.

A lack of timely data allowed California to authorize nearly $1 million in “potentially improper” payments to providers that had lost their certification, the audit said. Some of those reimbursements went through because of gaps in the state’s records, according to the audit, with decertified operators able to continue reaping public funds.

Nineteen of the patients providers claimed to have treated were dead at the time, the audit found, accounting for $10,300 in billing. Once again, lags in record-keeping allowed the deception to proceed.

“Until Health Care Services develops robust procedures for promptly updating all records in its beneficiary eligibility system with available death information and ensuring that no inappropriate payments have already occurred, it risks reimbursing providers for services they did not render,” the audit says.

Beyond those instances of ineligible providers receiving funds, the audit flagged $93.7 million in payments that were “potentially indicative of fraudulent activity.” Red flags included providers billing for treatment on holidays or for more than five days a week. In some cases, multiple beneficiaries were listed as living at the same address.