The facts
California State Auditor Report 2025-605 finds that the Department of Health Care Services (DHCS), the federally designated single state agency that administers Medi-Cal, the state's Medicaid program, is at "substantial risk of making inappropriate payments to Medi‑Cal providers", and the auditor has updated the state high-risk agency list accordingly. DHCS was first put on the high-risk list in 2007; it was retained in December 2025 over problems with Medi-Cal eligibility determinations. This report adds a new reason: insufficient oversight of payments to providers.
The headline number: one of DHCS's own risk-assessment tools identified approximately 28,000 providers as being in the top 10 percent of risk scores for inappropriate billing, because they submit an unreasonably high number of claims, serve a large number of beneficiaries, or take other actions that can indicate fraud. "Health Care Services has not researched or investigated 26,000 of these providers", who accounted for at least $12 billion in Medi-Cal services in fiscal year 2024-25. The report notes that not all of them necessarily engaged in fraud, waste, or abuse, but says the amount underscores the opportunities for enhanced scrutiny.
The anecdotes are not subtle. DHCS closed an investigative referral from a managed care plan in 2023 even though the plan concluded some payments were inappropriate and the provider was nonresponsive during the investigation. The provider went on to bill more than $5.5 million in Medi-Cal services in fiscal year 2024-25 before DHCS finally referred it to the California Department of Justice for possible criminal investigation and prosecution in April 2026. As of July 2026, DOJ had not filed charges. Two other providers collectively billed nearly $1.6 million in fiscal year 2024-25 despite having become ineligible for the program before or during fiscal year 2021-22. Transportation providers overcharged almost $31 million by billing mileage at the rate meant for nonemergency ambulance trips on claims for taxicabs and wheelchair vans.
The report also cites a May 2025 HHS Office of Inspector General inspection finding that fraud referrals to DOJ were low for a program of California's size, and that the primary factor influencing the number of fraud referrals was "a shift in Health Care Services’ leadership priorities, which caused staff to focus their resources on activities other than fraud investigations."
DHCS disagrees with the high-risk designation. Its response calls the report "incomplete analysis" while ignoring system-wide data showing effective controls. The department says it dedicates "20 percent of staff to program integrity efforts, the highest among any large Medicaid program in the country", and notes the scale of the program: nearly 14 million members, hundreds of thousands of enrolled providers, and about $200 billion in annual payments.
Our take
Let’s get one thing straight: the California Department of Health Care Services isn’t just a high-risk agency. It’s a fucking open-air bazaar for grifters, and the state auditor just caught the managers asleep at the goddamn cash register. Their own machine spat out 28,000 red flags for providers in the top 10% of risk for fraudulent billing. And what did these bureaucratic cunts do? They ignored 26,000 of them. That’s $12 billion in services that got a free pass because someone decided hitting the 'snooze' button on a multi-billion-dollar fraud detector was a solid career move. This isn’t an oversight; it’s a fucking invitation. The machine worked. The humans couldn’t be assed to read the printout. Fuck me sideways, that’s some world-class negligence right there. The HHS inspector general nailed it: a 'shift in leadership priorities' meant staff stopped focusing on fraud investigations. In translation, the bosses decided catching thieves was less important than whatever bullshit paperwork they were jerking off to. So one provider, already flagged by a managed care plan, got its case closed in 2023 and then merrily billed another $5.5 million before anyone thought to maybe call the cops. That’s not a loophole; that’s a fucking welcome mat. And let’s talk about the taxi companies billing ambulance rates for wheelchair van trips, skimming an extra $31 million. That’s not a clever hack; it’s a neon sign screaming 'STEALING IN PROGRESS,' and DHCS looked right past it because fraud-fighting wasn’t 'a priority.' What the fuck were the priorities? Office potlucks? Fucking webinar attendance? The department’s response is a masterpiece of bureaucratic shit-smearing. They call the report 'incomplete analysis' while boasting that 20% of their staff is dedicated to program integrity - the highest rate in the country! Congratulations, you useless pricks. You’ve achieved the gold medal in 'Looking Busy While Letting Billions Walk Out the Door.' If this is the best in the nation, then every other state’s fraud unit must be run by a stoned hamster. You can’t claim your controls are effective while simultaneously ignoring 26,000 alerts from your own goddamn controls. That’s like bragging about your home security system as burglars carry your TV out the front door. The scale they cite - 14 million members, $200 billion in payments - isn’t an excuse; it’s a fucking indictment. It means their lazy, priority-shifting assholery has a bigger price tag. They’ve been on the high-risk list since 2007. At this point, they’re not a department; they’re a fucking fiduciary crime scene with a parking permit. Somebody needs to go to jail, but judging by the DOJ’s pace, that’ll be another 'priority' for never. Fuck these clowns.
