California Gov. Gray Davis on Wednesday signed legislation to hire 160 new Medicaid fraud investigators and make it easier for the state to remove physicians and other providers from its Medicaid program, called Medi-Cal.
With Medi-Cal fraud estimated by sponsors of SB 857 to cost the state at least $2.9 billion annually, the measure is expected to save significant funds for the cash-strapped state.
New investigators at the California Department of Health Services will expand its investigative unit by one-third and will increase on-site reviews of designated "high risk providers" and conduct an "error rate study," among other things, according to the bill's chief sponsor, Democratic state Sen. Jackie Speier.
By making it easier to remove providers from the program, the new law will shorten a dismissal process that costs about $250,000 and takes several years to complete, Speier says in a release.
Speier also says the new law will:
- create provisional provider status for new applicants, making it easier to remove them if problems are found;
- allow the state to issue warning notices for patterns of improper billing or cost computations and institute monetary penalties for repeat offenses; and
- require the signature of recipients or their representatives for receipt of drugs and devices and a signature of the prescriber for devices.
"This bill gives our Department of Health Services the tool it needs to better and more quickly resolve fraud cases," Davis says in a release.
The department estimates that current anti-fraud efforts save the state $854 million per year in addition to "cost avoidance" savings of $458 million.