MEDI-CAL: Officials Ignored Fraud Warnings
Even though the Medi-Cal system was "rife with fraud," state officials left the situation "unchecked for years until the FBI swept in with massive arrests," the Los Angeles Times reports. Despite warnings of fraud in 1996 from Controller Kathleen Connell's office, the Department of Health Services, headed by then-director Kimberly Belshe, took little action to combat the problem, choosing to focus on preventing providers from leaving the program due to cuts in reimbursement. According to Connell, between 1996 and 1998, the controller's office submitted more than 100 audits that suggested Medi-Cal billing abuses, particularly in the Los Angeles area. During that time, only three audits resulted in criminal charges. In March 1996, the controller's office sent a report to the health services department indicating "significant Medi-Cal accounting and payment control deficiencies which allow for financial abuse, waste and fraud." The controller's office followed up on the initial warning twice over the next year, charging health services department with failure to act on their recommendations. Connell said, "We could not understand why there was this deafening silence ... in what we thought was a growing and significant epidemic of illegal activity in the Medi-Cal program." Belshe did respond to the 1996 audit, writing to Connell that the department had to balance "the need for sensitivity to provider concerns about the ... intrusiveness of audits, with the need to protect Medi-Cal funds." Finally, frustrated by the health services department's lack of activity, Connell sent the audits to the FBI, which started a thorough investigation, leading to 75 charges and 36 guilty pleas. Currently, there are 300 cases pending. FBI officials estimate that the price tag for Medi-Cal fraud could total $1 billion.
Who's to Blame?
Some blame the inaction on staffing shortages and lack of resources. Most of the suspected Medi-Cal fraud took place during former Gov. Pete Wilson's (R) administration. The Times notes that Wilson and then state Attorney General Dan Lungren (R) were focused on violent crime and welfare abuse, pouring most of the resources into programs devised to fight those problems, leaving little for Medi-Cal fraud. Collin Wong, the new head of Medi-Cal Fraud and Elder Abuse under Attorney General Bill Lockyer (D), said that Lungren's office was understaffed and overburdened. The Medi-Cal program doubled in size over the last decade, while the staff dedicated to investigating fraud did not add a single position. Wong said, "The bureau really was the victim of benign neglect. It was just overwhelmed." However, a spokesman for Wilson said that evidence of Medi-Cal fraud never reached the former governor. Lockyer has vowed to hire additional staff. Wong said, "My (instructions) are very clear: to improve the performance and productivity of the bureau" (Ellis, 12/20).