California: Review of Short/Doyle Medicaid Contract Rates for Fiscal Years 1985 through 1989

Short/Doyle is one component of the California Medicaid program. It is a special program serving the mentally ill, and is operated by the various counties in California which arrange for hospital and clinic services. In Fiscal Year (FY) 1985, the State began negotiating Short/Doyle contracts with selected counties. Initially, three counties received contracts. By FY 1988, 14 counties operated under this arrangement. Our audit disclosed that excessive Medicaid payments were made to these counties. The payments exceeded Medicaid limits by about $15 million ($7.5 million Federal share) over 5 years. We recommended that the State refund the $7.5 million and establish procedures to ensure that payments are properly limited in the future. State officials did not agree with our finding and recommendations. However, regional Health Care Financing Administration officials concurred.