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Audit (A-09-11-02016)

04-15-2013
California Made Unallowable Medicaid Payments for Items and Services Furnished, Ordered, or Prescribed by Excluded Providers

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Summary

The California Department of Health Care Services (State agency) made unallowable Medicaid payments of $1.9 million ($1.2 million Federal share) for items and services furnished, ordered, or prescribed by excluded providers. The State agency made these payments because it did not have policies and procedures to (1) ensure that all agencies within California responsible for enrolling providers or processing Medicaid claims for reimbursement performed monthly reviews to identify excluded providers and (2) identify whether any furnishing, ordering, or prescribing providers listed on a claim were excluded. Although the amount of unallowable payments is small when compared with the $31.5 billion in claims paid by the State agency, no Medicaid payments may be made for items or services furnished, ordered, or prescribed by excluded providers.

In addition, the State agency paid $1.1 million ($699,000 Federal share) for additional items or services that may have been furnished, ordered, or prescribed by excluded providers and therefore may have been unallowable. Because the exclusion status of some providers could not be verified and some providers may have been acting only as referring physicians and may not have ordered or prescribed the items or services claimed (in which case Medicaid payments to non-excluded providers would have been allowable), we set aside the Federal share of $699,000 for resolution by CMS and the State agency.

We recommended that the State agency (1) refund $1.2 million to the Federal Government for unallowable Medicaid payments for items and services furnished, ordered, or prescribed by excluded providers; (2) work with CMS to resolve the $699,000 that we set aside and refund any payments for items or services furnished, ordered, or prescribed by excluded providers; and (3) develop and implement policies and procedures to ensure that it does not pay for items or services furnished, ordered, or prescribed by excluded providers. The State agency partially agreed with our first and second recommendations and fully agreed with our third recommendation.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

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