California to Launch Competitive Bidding Demonstration Project

Project Manager Louise Kamikawa could not say precisely where it would take place, or when, or which HCPCS codes or categories of products would be included, at press time.

But the cash-strapped state of California intends to launch a DME assessment & competitive bidding demonstration project in an effort to reduce costs incurred by Medi-Cal, the state's Medicaid program.

On May 26, California's Department of Health Care Services, Medi-Cal Benefits, Waiver Analysis and Rates Division (BWARD) held several stakeholder meetings to discuss its demonstration project intentions.

Several days later, California's Department of Health Care Services (DHCS) released its fourth annual Medi-Cal Payment Error Study (MPES).

In a news release, DHCS said it found that 93.44 percent of 2007 Medi-Cal payments to fee-for-service Medi-Cal providers were billed and paid correctly. While DHCS reported that percentage was an improvement over 2006's correct-payment rate of 92.73 percent, the agency said it wants to become even more aggressive against fraud.

"DHCS has a strong, proactive monitoring system to alert us of efforts to defraud the Medi-Cal program," said DHCS Director David Maxwell-Jolly. "The MPES targets areas at greatest risk of provider payment errors, helping to focus our anti-fraud efforts where they are needed most."

Governor Arnold Schwarzenegger's revised 2009-2010 budget, DHCS said, includes $3.4 million in funding to pay for "a new Medi-Cal initiative. It will more aggressively target fraud in adult health-care centers, pharmacies, physicians, transportation services and durable medical equipment transactions."

DHCS expects that initiative to eventually save California "$87 million in future years."

At the DHCS Medi-Cal stakeholders meetings, program officials indicated that for certain affected product categories, which reportedly includes adult manual chairs, they would agree to fund only a handful of products from a handful of DME manufacturers, thereby severely limiting physician, clinician, provider and beneficiary choice and input.

California's Medicaid program serves more than 6.8 million low-income beneficiaries, including people with disabilities. Medi-Cal has a yearly budget of nearly $41 billion. California's severe budget crisis continues to make news this year.

This article originally appeared in the July 1, 2009 issue of Mobility Management.

About the Author

Laurie Watanabe is the editor of Mobility Management. She can be reached at

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