Review of the California Department of Health Services Reimbursement for Clinical Laboratory Services Under the Medicaid Program

This final audit report points out that the California Department of Health Services (State agency) does not have adequate edits in place to prevent the payment of unbundled or duplicated claims for certain clinical laboratory services. A statistical sample of 150 claims showed that 116 claims were not paid correctly. We estimate that the State agency overpaid and should recover from providers $4,013,490 (Federal share) for unbundled/duplicated laboratory tests for calendar years 1993 and 1994. In addition to financial adjustments, we recommended that the State agency implement additional edits to detect and prevent payments for unbundled or duplicate laboratory services, and notify providers of the proper billing procedures for the services identified in our audit.