Gallagher Demands Accountability Following Audit Exposing Billions in Questionable Medi-Cal Billing

WASHINGTON, D.C. — Congressman James Gallagher (CA-01) joined Congressman Jay Obernolte (CA-23) and fellow members of California's congressional delegation in demanding answers from the California Department of Health Care Services (DHCS) following a troubling state audit that revealed significant failures in oversight of the state's Medi-Cal program.

In a letter to DHCS Director Michelle Baass, the lawmakers raised serious concerns about California's failure to investigate thousands of providers flagged for potentially improper billing and recover hundreds of millions of dollars in overpayments. The findings raise questions about the state's management of taxpayer funds intended to provide health care to millions of vulnerable Californians.

According to an October 15 report from the California State Auditor, DHCS identified approximately 28,000 Medi-Cal providers as high risk for potentially improper billing during fiscal year 2024–2025. Despite these warning signs, the department had not initiated referrals or investigations for more than 26,000 of those providers, which collectively accounted for at least $12 billion in Medi-Cal services.

The audit also found that DHCS identified more than $2 billion in provider overpayments between fiscal years 2020 and 2025, approximately $300 million of which remain unrecovered.

“California taxpayers are pouring billions of dollars into Medi-Cal, and they deserve to know that money is being spent responsibly, not lost to fraud, waste, and bad oversight,” said Congressman Gallagher. “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. We cannot afford to ignore these warning signs. Period. Medi-Cal must protect the vulnerable Californians who depend on it, and that starts with holding the system accountable, rooting out fraud, and ensuring taxpayer dollars go toward legitimate patient care.”

The audit's findings come as California faces additional federal scrutiny over its management of Medi-Cal. On October 20, the Centers for Medicare & Medicaid Services (CMS) announced it would defer an additional $1.2 billion in federal Medicaid payments to California over concerns about documentation supporting certain program expenditures.

The lawmakers are requesting information about DHCS's efforts to strengthen oversight of Medi-Cal, investigate potentially fraudulent billing practices, and recover improper payments.

“Medi-Cal provides critical care to millions of Californians, and every dollar lost to fraud is a dollar that is not available to help our most vulnerable citizens access the care they need,” said Congressman Obernolte. “California taxpayers deserve to know that their money is being used wisely and appropriately. Stronger oversight is necessary to prevent fraud, waste, and abuse while protecting the patients who depend on this critical program.”

Gallagher joined Representatives Ken Calvert (CA-41), Tom McClintock (CA-05), David Valadao (CA-22), Young Kim (CA-40), and Vince Fong (CA-20) in signing the letter led by Obernolte.

The lawmakers are calling for greater transparency and stronger accountability to protect taxpayer dollars while preserving access to care for Californians who rely on Medi-Cal.

Read the full letter HERE.

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Rep. James Gallagher | 408 Cannon House Office Building | Washington, DC 20515 US

Congressman James Gallagher proudly represents California’s First Congressional District in the U.S. House of Representatives. He serves on the House Committee on Foreign Affairs, the House Committee on Transportation and Infrastructure, and the House Committee on Science, Space, and Technology.