On July 26, 2024, the California Department of Healthcare Services (“DHCS”) – which administers California’s Medicaid program – sent Notices of Medi-Cal Desk-Audit (“Audit”) to numerous California pharmacies. It appears that pharmacies that bill expensive specialty medications to Medi-Cal are subjects of these audits.
The Audit requests an overwhelming amount of information: from business ownership/ affiliations to detailed general ledgers for the last three years. It also requests dispensing data encompassing non-Medi-Cal patients. Any pushback from the pharmacies is met with the DHCS’s threats of immediate suspension for non-compliance. Many independent pharmacies are already struggling with financial resources and these audits add just another hurdle in pharmacy operations.
On the other hand, on June 27, 2024, the Justice Department announced its prosecution of a Southern California pharmacy that billed over 300 million in allegedly fraudulent Medi-Cal claims. In its press release, the Justice Department alleges that the pharmacy billed for medically unnecessary medications, which were often not provided to patients or “obtained through the payments of tens of millions of dollars in illegal kickbacks.” This prosecution explains a more aggressive stance that the DHCS is taking regarding the Audit and pharmacy compliance.
It is unclear whether there will be another wave of such audits but we recommend that pharmacies review compliance, policies and procedures, billing practices and other operational aspects in preparation for potential Medi-Cal audits.