2003 Rosenstein Memo Recommended Changes to Oversight of Medi-Cal Claims Processing Contract

In response to an audit criticizing California's $230 million contract with Electronic Data Systems to process Medi-Cal claims, Deputy Director of Health Services Stan Rosenstein in December 2003 advised hiring more oversight personnel, the AP/Santa Rosa Press Democrat reports. Although Rosenstein defended the contract in an interview last week, the memo, a copy of which the Associated Press obtained Tuesday, conceded most of the audit's findings and recommendations, including a proposal that the Department of Health Services adopt annual spending plans for the contract and provide the administration with notice about proposed cost increases before enacting them (Chorneau, AP/Santa Rosa Press Democrat, 3/17). The audit criticized DHS' management of the EDS contract -- the value of which has more than doubled to $230 million annually, despite an increase of only 27% in the number of bills processed -- and the lack of records explaining the cost increase. Gov. Arnold Schwarzenegger's (R) office has asked DHS to submit a corrective plan within 30 days and explain what it has done to adopt the audit's recommendations (California Healthline, 3/16). In addition, Assembly Budget Committee Chair Darrel Steinberg (D-Sacramento) on Monday said that state managers will be asked to explain the increase in the value of the EDS contract at an oversight hearing March 24 (Chorneau, AP/Santa Rosa Press Democrat, 3/16).