DHCS Suspends Pay To 16 Providers

A recent merger of the Medi-Cal program overseeing alcohol and drug treatment for tens of thousands of beneficiaries into the Department of Health Care Services has led to a wide-ranging investigation into provider fraud.

Last week, the DHCS suspended Medi-Cal payments to 16 clinics, and has referred them to California Attorney General Kamala Harris's office for potential sanctions, including criminal prosecution. A spokesperson for Harris did not respond to a request seeking comment.

DHCS officials said that more providers remain under scrutiny.

“There have been reports of abuse and fraud in the Drug Medi-Cal program and we took action,” DHCS Director Toby Douglas said in a statement issued last week. 

According to DHCS spokesman Norman Williams, the merger of the program known as Drug Medi-Cal into the DHCS last year, along with the more recent absorption of the Department of Alcohol and Drug Programs into his agency, triggered “top-to-bottom reviews” of the programs. 

Medi-Cal provides substance abuse treatment to about 60,000 enrollees through 1,000 providers statewide. 

“We did a business process reengineering effort to determine how (the programs) would fit into the DHCS,” Williams said.

Patterns of claims submissions and anonymous tips led to 22 surprise site visits to clinics conducted earlier this month. The 16 clinics with suspended payments were among those visited, according to Williams.

As a result of the visits, DHCS officials discovered billing for services never rendered of medically unnecessary. Employees with felony or misdemeanor convictions connected to malfeasance involving government programs or patient abuse were also discovered on provider payrolls.

More unscheduled site visits are ongoing, according to Williams.

Personnel issues at drug treatment centers have been an ongoing problem in California. A report issued by the California Senate Office of Oversight and Outcomes in May concluded that at least 23 registered sex offenders had been hired as substance abuse counselors statewide in the past eight years, and “the number is undoubtedly much higher.” The report also noted another counselor convicted four times of theft who eventually stole $55,000 from a patient.

Because of the ongoing nature of the investigation, DHCS officials declined to name any of the providers, or attach a dollar figure to the alleged fraud. Sources have suggested many are methadone treatment centers, with the bulk located in the Los Angeles area.

Although the centers were not closed as a result of the DHCS investigation, that their Medi-Cal payments have been stopped may place them in financial peril. 

In New Mexico, recent suspensions of Medicaid payments to 14 mental health providers have pushed many near closing.

The payment suspensions and investigation could also potentially disrupt the care of the patients.

“We are not concerned with DHCS doing its jobs. We are concerned about the disruption of care – inasmuch as those clients and patients are not helped to get to a provider that isn't being investigated or sanctioned,” said David Peters, spokesperson for the California Association of Addiction Recovery Rescources, a trade group that represents substance abuse counselors. However, Peters noted that few of his organization's members counsel Medi-Cal patients.

The primary trade group that represents methadone clinics, California Opioid Maintenance Providers, did not respond to a request seeking comment.

Williams did not believe that care would be disrupted in any manner.

“The ultimate goal is to give people the program they deserve,” he said.