Lack of Oversight leads to Fraud in Drug Medi-Cal Program

During my first year in the legislature I've experienced many unsettling actions. 

Most troubling to me is the lack of transparency on how the legislature conducts its business such as passing budget bills containing no language and circumventing the legislative process by “gutting & amending” bills on the last day of session to avoid public scrutiny.

So it should be no surprise that the legislature drops the ball in its role of conducting oversight of other government agencies.

Recently, the Assembly Health and Accountability & Administrative Review committees held a joint hearing to evaluate the Drug Medi-Cal Program and allegations of widespread fraud.

Similar to the catastrophe Governor Jerry Brown calls “prison realignment,” the state realigned $184 million for substance abuse treatment programs and moved funding control from the state to local governments in hope counties would benefit from controlling funding and directing resources.

The hearing came as a response to an investigation by the Center of Investigative Reporting (CIR) and CNN that uncovered over the prior two fiscal years, the Drug Medi-Cal Program paid $94 million to 56 drug and alcohol rehabilitation clinics in southern California that have shown signs of deceptive or questionable billing. The hearing focused on examining the provider certification, claims payment and auditing processes within the Drug Medi-Cal Program.

Shortly after the CIR and CNN investigation, the Department of Health Care Services (DHCS) called for the temporary suspensions of 48 alcohol and drug treatment programs at 132 sites where plausible allegations of fraud occurred.

A vast majority of the fraudulent Drug Medi-Cal program claims came out of Los Angeles County. The false claims ranged from billing for imprisoned or deceased patients, billing for patients who were not present in sessions and incentivizing patients with cash, food and cigarettes to attend counseling sessions. One of the most disturbing ways that the Drug Medi-Cal providers received money was by busing in foster teens to substance abuse treatment sessions, when most of the foster youth did not have any substance abuse problems.

The Department of Health Care Services (DHCS) requires each Drug Medi-Cal provider to have a licensed physician serve as medical director of the clinics and the medical director is responsible for overall care of the patients. Shockingly, there have been news reports of a convicted felon running a drug rehabilitation clinic, which is prohibited under state law. It's the sole responsibility of DHCS to certify providers and they failed to provide the necessary oversight of certifying clinics.

The state has failed to manage its current Medi-Cal system and yet we are adding nearly 1.4 million new Medi-Cal patients through the Affordable Care Act (ACA) as a result of the legislature and Governor Jerry Brown expanding eligibility. This new expansion is not a requirement of the federal law, but an optional program the ACA offers states. This expansion is projected to increase the Medi-Cal substance abuse program by 10 percent. 

If DHCS cannot adequately manage its clinics and its patients now, then how do we expect them to perform when they are responsible for an additional 10 percent caseload?

Governor Brown claims our state budget is balanced. There are two problems with his assessment:  First, Prop 30 which is projected to raise taxes $6 billion per year is in effect for only seven years; and, second, the State Auditor recently determined that state has a negative net worth of $127.2 billion!

The legislature needs to be more proactive at protecting taxpayer dollars. At the hearing, one of my colleagues asked the DHCS director if he had any plans to promote a whistle-blower program to prevent another travesty in the future; his answer was “we'll get back to you.”

It was clear to me the strategy of the DHCS officials was to apologize, take a verbal beating from legislators and then return to “business as usual.”  This is completely unacceptable.  The joint committees have asked the DHCS officials to report back within six months with an update on their progress in reforming the program.

I will continue to fight for greater transparency and accountability with the goal of achieving greater effectiveness and efficiency in state programs.  This benefits the clients who are served, as well as the taxpayers who pay the highest state income rate in the country.