Review ordered of rehab rip-offs

An investigative series that revealed corruption in the rehab industry has prompted state and county probes.

Faced with reports of rampant fraud in California’s taxpayer-funded alcohol and drug programs for the poor, the Board of Supervisors on Tuesday ordered an examination of whether “regulatory conflict and confusion” between the state and county may have opened the door to unscrupulous operators.

The board’s action, based on a motion by Supervisor Zev Yaroslavsky, comes in the wake of a year-long investigation by CNN and the Center for Investigative Reporting, which found that during the past two fiscal years in California, $94 million in public funds had been paid to clinics showing “signs of deception or questionable billing.”

Among other things, the “Rehab Racket” series revealed that clinics allegedly submitted bills for fake clients, paid people to sign up for treatment that would be reimbursed by taxpayers and pressured staffers to forge paperwork.

The Drug Medi-Cal program—now the target of a state investigation—is funded through federal and state monies that, in Los Angeles County, are mostly controlled by the Public Health Department’s Substance Abuse Prevention and Control division. The program is jointly administered by the state and county.

During the last fiscal year, L.A. County contracted with 143 providers serving 30,000 clients.  Earlier this month, as part of the state’s renewed scrutiny of the Drug Medi-Cal program, funding was cut to nearly 50 agencies statewide that had been suspended from doing business, many of them in Los Angeles County, home to the largest number of these treatment clinics.

Yaroslavsky’s motion aims to sort out the shifting and unclear responsibilities between the state and county that for years have plagued administration and oversight of the program, which is expected to grow as more individuals qualify for Medi-Cal under federal health care reform.

“It is simply unacceptable for a program of such financial magnitude and critical importance to the public’s health to be undermined by bureaucratic confusion and left vulnerable to scammers,” Yaroslavsky said after Tuesday’s board meeting.

To that end, Yaroslavsky’s motion directs the auditor-controller and county counsel to determine, among other things, the county’s legal authority to audit and terminate contracts with Drug Medi-Cal providers, as well provide an analysis of the state’s responsibilities. The board also approved an amendment by Supervisor Mark Ridley-Thomas ordering the public health department and county lawyers to create a plan that helps patients avoid harmful disruptions in their care as the result of recent clinic suspensions.

Posted 8/14/13