Assembly Budget Committee Questions Medi-Cal Claims Processing Contract
Assembly Budget Committee members gained "little insight" into the rising value of the state's contract with Electronic Data Systems to process Medi-Cal claims at a hearing on the issue Wednesday, the AP/San Francisco Chronicle reports (Chorneau, AP/San Francisco Chronicle, 3/24). An audit criticized the Department of Health Services' 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 (California Healthline, 3/18). At the hearing, officials from DHS and the Department of Finance defended their management of the contract, but finance department officials "appeared initially to back away from several of the key questions raised by their own audit," the AP/Chronicle reports. For example, Sam Hull, who oversaw the audit, told the committee that auditors did not find "any indication of fraud," although they did question why EDS received payments of more than $100 million for contract changes and why the company was paid $19 million from a fund that was supposed to be used to encourage other companies to compete for the Medi-Cal contract. Stan Rosenstein, deputy director of health services, defended the EDS contract but agreed with parts of the audit, such as concerns raised about the department's recordkeeping and amounts EDS is paid for certain services. Committee members closed the meeting and asked state officials to return in a month with "more definitive answers," the AP/Chronicle reports. Committee Chair Darrell Steinberg (D-Sacramento) said, "We need to assure the public that $230 million is justified," adding, "I can't sit here today and say that it is and I can't claim that it isn't. We just don't know" (AP/San Francisco Chronicle, 3/24).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.