Medi-Cal Overpaid for Medical Equipment, Department of Health Services Audit Says

The Department of Health Services could have "saved the state millions of dollars" if it had "shopped around" for the lowest prices on medical equipment and supplies for Medi-Cal beneficiaries, according to an audit released yesterday, the AP/Contra Costa Times reports. The audit, by state Auditor Elaine Howle, found that the department took no measures to ensure that it was not being overcharged for medical equipment and supplies under Medi-Cal. The department, which is supposed to "survey the market" for products every 60 days and set price caps based on the lowest prices, spent $356 million in state and federal funds in 2001 on medical supplies, equipment and hearing aids for Medi-Cal patients. The report found that the health department "has not updated the prices for many of its medical supplies for more than 15 years" and is "paying whatever price the seller is charging." The AP/Times reports that it is not clear how much the state would have saved if the department had sought the best prices on medical equipment. The audit comes after Gov. Gray Davis (D) last week proposed cutting Medi-Cal services, including optional benefits such as medical supplies, as part of a plan to cut $10 billion in spending over the next 18 months. State lawmakers advocating the cuts say the audit's findings are the "perfect example" of why the state "needs to clamp down on spending," the AP/Times reports. Lawmakers are expected to consider a proposal to altogether stop covering medical supplies, one of the "most expensive" Medi-Cal benefits (Brice, AP/Contra Costa Times, 12/13).