August 20, 2014 / 1:20 AM / 6 years ago

California may have paid millions for fraudulent drug treatment -audit

(Reuters) - A California program that covers addiction treatments for the poor may have paid $93.7 million in fraudulent claims, a state audit showed.

The report released Tuesday by the California State Auditor showed that the state’s Drug Medi-Cal program may have paid more than 300 claims for patients who were actually dead, and found serious deficiencies in the agency’s records for 30 drug treatment program providers.

“It is a very troubling audit,” said State Senator Ted Lieu, a Southern California Democrat who requested the audit along with another lawmaker. “It shows that there is significant fraud in California’s Drug Medi-Cal system, and that this fraud has been ongoing for many years.”

The audit was spurred by a 2013 investigation by The Center For Investigative Reporting and CNN, which found questionable billing practices at drug-treatment clinics in Southern California. The program is a division of the state’s healthcare program for the poor, known as Medi-Cal.

Norman Williams, a spokesman for the California Department of Health Care Services, which administers the program, said 237 Drug Medi-Cal clinics were suspended following an investigation that began last year.

“We actually welcome and we appreciate this report,” Williams said.

The state has begun the process of re-certifying the roughly 650 clinics that participate in the program, requiring their owners to undergo fingerprint and background checks, he said.

The audit found that the state did not follow proper certification processes for substance abuse clinics, and only took corrective action following federal government intervention.

The audit’s review of the files of 30 program provider applicants found that five files were completely missing, and identified deficiencies in every one that was present, including 24 with inadequate disclosure statements. The audit states that the files “demonstrated the State’s certification process was woefully inadequate.”

It recommends that the California Department of Health Care Services coordinate with county governments to recover inappropriate payments and more thoroughly screen substance abuse care providers’ eligibility.

Lieu, who is running to replace Democrat Henry Waxman for Congress in a district that includes parts of Los Angeles and Beverly Hills, said that the audit showed “a phenomenal lack of leadership and training.”

(This story corrects claims paid in second paragraph from $3 million to 300 claims)

Editing by Sharon Bernstein and Eric Walsh

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