​​​​​​California's Investment to Protect the Medi-Cal Program

Background​

Prior to 1999, Medi-Cal fraud was widespread and considerably unchecked.  Through Governor Gray Davis’ Medi-Cal Fraud Taskforce, the DHCS Anti-Fraud Program was created as a comprehensive and versatile anti-fraud effort that focuses on prevention while balancing public health, access to care and financial loss. 

The accomplishments achieved by the DHCS Anti-Fraud Program were due in considerable part to the fraud control strategies recommended by Malcolm Sparrow. These strategies include:

§  Prepayment review of claims

§  Every claim faces some risk of review

§  Clear designation of fraud control responsibilities

§  Commitment to routine systematic measurement

§  Adoption of problem solving approach to fraud control

§  Deliberate focus on early detection of new types of fraud

§  Resource allocation for controls based upon an assessment of the seriousness of the problem

By 2003, DHCS strategically transformed the way it approaches fraud detection and deterrence in the Medi-Cal Program by reengineering its operations and evaluating all levels of health care fraud.  The initial successes of the Program led the way for Chapter 157, Statutes of 2003 (AB 1765, Oropeza), which provided the California Department of Health Services (now DHCS) additional resources to address fraud in the Medi-Cal program.

The DHCS Anti-Fraud Program of today routinely measures the Medi-Cal program to determine the magnitude of fraud and abuse, uses technology and analytic analysis for the early detection of new fraud schemes, and continually increases deterrence of fraudulent or abusive behavior through cost effective strategically planned programs.

Return on Investment

The increased resources have lead to positive results.  The number of reviews and actions has varied over the years, but the return of investment consistently shows that every $1 dollar spent in production results in a savings of over $10.

The following table illustrates the Return on Investment (ROI) from Medical Review Branch (MRB) activities from July 1, 2008 through October 31, 2009.  "Cost Savings" occur as a result of the antifraud effort when providers already enrolled in the program are found to be engaging in fraud or abuse and their activities are stopped.  "Cost avoidance" results primarily when applicants who are potentially fraudulent are prevented from becoming Medi-Cal providers.