EXECUTIVE SUMMARY:
This review conducted by the California State Auditor (CSA), as part of the OIG's partnership efforts with State Auditors to expand audit coverage of the Medicaid program, points out that the California Department of Health Services (DOHS) overpays hospitals about $1.6 million annually for outpatient claims because its automated payment system lacks certain edits necessary for the administration of the contracting program the State has with hospitals. Among other things, the State Auditor recommended that DOHS: (1) examine hospital contracts to identify all provisions affecting the eligibility of outpatient claims, (2) develop an accurate database for identifying procedures covered under each hospital's contract, (3) improve the accuracy of diagnosis codes used to determine the eligibility of outpatient claims, and (4) analyze, refine, and test claims processing edits to address special situations regarding claim eligibility identified by the audit. The DOHS generally concurred with the State Auditor's recommendations.