What is Program Integrity?
Program Integrity means taxpayer dollars are spent the right way: on care for people who need it. DHCS oversees Medi-Cal, the largest Medicaid program in the nation, which serves more than 14 million Californians (more than one in three residents), and manages more than $200 billion each year.
To protect Medi-Cal, DHCS uses strong oversight, audits, fraud detection, investigations, cost recovery, and partnerships with law enforcement. Most providers and members follow the rules, but preventing fraud, waste, and abuse, and ensuring that Medi-Cal is the payer of last resort, is critical so every dollar goes where it should.
How DHCS Protects Medi-Cal
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Provider Enrollment: Before a provider can join Medi-Cal, DHCS closely screens applications to make sure they meet robust state and federal requirements:
- Screening: Checks against federal exclusion lists and termination databases.
- Licenses and certifications: Providers must maintain proper authorization to operate.
- Ownership and control: DHCS requires providers to disclose all owners and individuals with controlling interests and provide identifying details. Providers must also show they have a legitimate, fully operational business with proper facilities, staff, insurance, and a signed lease or proof of ownership to ensure transparency and compliance.
- Site visits and background checks: For high-risk providers, DHCS conducts in-person visits, fingerprinting, and administrative and criminal background checks.
- Enrollment freezes: DHCS can temporarily stop enrollment for provider types with higher fraud risk.
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Audits & Investigations: DHCS has a statewide team of auditors, sworn investigators, clinicians, and data scientists in field offices throughout the state. California is one of only two states in the nation where the Medicaid agency employs armed, sworn peace officers with the legal ability to execute search warrants.
- Audits: Reviews of medical, dental, and behavioral health plans and providers to confirm services and billing are correct.
- Fraud detection: Advanced data analytics identify suspicious claims before payment.
- Investigations: DHCS investigates complaints and fraud leads, stops payments and terminates providers when necessary, and recovers funds.
- Collaboration with Medi-Cal health plans: DHCS partners with each plan’s program integrity team to share data, coordinate investigations, and address program integrity as a shared priority across the state.
- Law enforcement collaboration: DHCS refers credible fraud cases to the California Department of Justice for criminal prosecution.
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Third Party Liability & Recovery: Medi-Cal is the payer of last resort. DHCS ensures other parties pay first and recovers funds when necessary from:
- Liable third parties: recovers money from settlements, judgments, or awards involving Medi-Cal members when a third party is liable for injuries, such as auto accidents, malpractice cases, workers’ compensation claims, and estates.
- Other health coverage: Avoids unnecessary Medi-Cal costs by confirming when members have other insurance that should pay first. DHCS may also pay premiums for members with certain medical conditions when it’s cost-effective, saving billions of dollars each year.
- Provider overpayments: Recovers funds from audits and retroactive adjustments.
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Medi-Cal Eligibility: DHCS confirms that only eligible Californians receive Medi-Cal
- Eligibility checks: Applicants are screened at enrollment and annually (starting January 2027, some adults will have eligibility checked every six months).
- Electronic data matching: Confirms income, identity, and other eligibility factors.
- Residency verification: Quarterly checks prevent enrollment in more than one state
- Compliance reviews: DHCS audits county case files and strengthens policies to reduce errors and improper payments.
