A recent audit found California did not log or return the proper federal share of overpayments determined by the state’s Medicaid Fraud Control Unit for fiscal 2023.
A report from HHS’ Office of Inspector General, published Sept. 8, said California should have reported $231.2 million in MFCU-identified Medicaid overpayments for 26 cases throughout the reviewed period, spanning Oct. 1, 2022, through Sept. 30, 2023. The federal share was $99.3 million.
In 14 of the 26 reviewed cases, the California Department of Health Care Services did not report and return Medicaid overpayments through the appropriate documentation for paid claim amounts totaling $113.3 million with a $47.8 million federal share. This resulted from the agency waiting until it got payments from the MFCU, instead of recording the full amount owed after the final judgment.
The agency did not have procedures in place to ensure timely reporting in accordance with federal standards, nor did it have a protocol to address the calculation of the federal share of overpayments, the report said. By relying on the MFCU’s own calculations and input — commonly based on state, rather than federal, regulations — the share was not always derived from the full recovery amount.
Additionally, DHCS did not report and return a collected court-ordered award, totaling $27,515 with an $11,006 federal share. These awards must be reported immediately after the end of a yearlong period, according to a federal regulation cited in the report.
Timeliness was another issue. In 14 of 26 cases, DHCS was late to report and return $74.9 million — with a $32.1 million federal share — of MFCU-determined Medicaid overpayments. With some payments made in installments, full amounts were not reported within the called-for window. Other delays were due to the state agency not getting restitution or settlement information from the MFCU in a timely manner.
OIG advised DHCS to report and return the federal share of Medicaid overpayments for the 14 cases that totaled $113.3 million, as well as the share of the collected court-ordered award. OIG also recommended the agency revise its memorandum of understanding notification timeline and build out policies to align with federal requirements. The agency agreed with three recommendations but not the call to report and return the federal share for the $113.3M cases.
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