The California Department of Health Care Services identified approximately 28,000 Medi-Cal providers as high risk for potentially improper billing during the 2024-25 fiscal year. Designed by Magnific

SACRAMENTO, CA (MPG) - A state audit identifying billions of dollars in potentially improper Medi-Cal billing and hundreds of millions in unrecovered overpayments has prompted California lawmakers to demand answers about the state's oversight of its health care program.

According to an Oct. 15 report from the California State Auditor, the California Department of Health Care Services identified approximately 28,000 Medi-Cal providers as high risk for potentially improper billing during the 2024-25 fiscal year.

Despite those findings, the department had not initiated referrals or investigations involving more than 26,000 of those providers, which collectively billed at least $12 billion in Medi-Cal services during that period.

The audit also found that the department identified more than $2 billion in provider overpayments between fiscal years 2020 and 2025, with approximately $300 million remaining unrecovered.

The findings do not establish that the $12 billion in services involved fraudulent billing. Rather, the providers' billing patterns raised concerns that warranted further review.

The department uses risk scores to identify potentially improper billing. Factors include unusually high claim volumes, the number of patients served, telehealth claims, claims involving deceased beneficiaries and billing by previously sanctioned providers.

The audit also identified concerns about how the department handled referrals involving suspected improper payments.

In one case, the department closed a 2023 investigative referral from a Medi-Cal managed care plan despite the plan identifying inappropriate payments and a provider's failure to cooperate with its investigation.

The provider subsequently billed more than $5.5 million in Medi-Cal services during the 2024-25 fiscal year before the department referred the case to the California Department of Justice in April 2026.

The findings have drawn attention from California's congressional delegation.

In an Oct. 29 letter to Department of Health Care Services Director Michelle Baass, seven Republican members of Congress requested explanations for the department's oversight practices and its failure to investigate thousands of providers identified as high risk.

Rep. Jay Obernolte led the letter, which Reps. James Gallagher, Ken Calvert, Tom McClintock, David Valadao, Young Kim and Vince Fong also signed.

The lawmakers questioned why the department had investigated only about 2,000 of the approximately 28,000 providers identified as high risk.

They also requested information about the department's procedures for investigating suspicious billing, recovering overpayments and referring providers for potential enforcement action.

The letter follows additional federal scrutiny of California's Medi-Cal program.

On Oct. 20, the Centers for Medicare & Medicaid Services announced it would defer an additional $1.2 billion in federal Medicaid payments to California over concerns about documentation supporting certain program expenditures.

The congressional letter cited the federal action as another reason to examine the state's financial oversight.

Medi-Cal provides health coverage to nearly 14.5 million Californians. According to figures cited in the lawmakers' letter, total Medicaid spending in California reaches approximately $196.7 billion, with the federal government covering more than 60% of those costs.

Gallagher, whose congressional district includes parts of Northern California, said the audit raises concerns about the state's handling of public funds.

"The State Auditor's findings raise serious questions about why thousands of high-risk providers went without further investigation and why hundreds of millions of dollars in overpayments remain unrecovered," Gallagher said in a statement.

The lawmakers also requested an explanation of the department's efforts to address federal documentation requirements and strengthen its fraud detection procedures.

The letter urged the department to take corrective action to improve accountability and protect funding for Californians who depend on Medi-Cal.