By Jose E. Navarro, MBA
October 18, 2026
SACRAMENTO, Calif. Medi-Cal pays about $200 billion a year to serve roughly 14 million Californians. This week, the State Auditor reported that the department running it had not begun investigating 26,000 of the 28,000 providers it ranks as most likely to commit fraud or abuse. That is about 93 percent of its own highest-risk list.
State Auditor Grant Parks concluded that the Department of Health Care Services (DHCS) is poorly equipped to prevent widespread abuse. The report describes a long history of concern about the department’s oversight of providers and keeps it on the state’s high-risk list, a designation it has carried since 2007.
The auditor’s examples are specific. Two providers billed almost $1.6 million in 2024-25 even though they had been ruled ineligible years earlier. A transportation provider received more than $11 million that year after claiming to have driven 35 people in a single day, nine of them on trips longer than 340 miles. By the auditor’s arithmetic, those nine trips alone would require more than 3,000 miles behind the wheel of one vehicle in one day.
Those two examples total roughly $12.6 million, a small fraction of a $200 billion program. DHCS makes essentially that point. In its written response, the department said the report omits critical information and context and relies on isolated anecdotes while ignoring system-wide data that it says show effective controls.
Proportion deserves a careful look in both directions. One percent of $200 billion is $2 billion, so even a small error rate carries substantial dollars. Yet examples alone cannot establish how typical they are.
DHCS has published its own numbers. It says it verifies more than 300,000 enrolled providers, monitors about 4.5 million services a day, completed more than 26,000 audits and investigations in the past five years, and suspended more than 5,000 providers for suspected fraud. It reports saving over $2 billion and collecting over $4 billion in that period, and says one in five staff members works on program integrity. Those figures are significant and deserve to be read beside the auditor’s. Recoveries of $4 billion over five years average about $800 million a year, roughly 0.4 percent of one year’s payments. The reporting I reviewed offered no estimate of what the department may be missing. The two 26,000 figures also measure different things: completed work over five years, and a list the auditor says was left unopened.
The concern is not new. In a December 2025 update of its high-risk list, the auditor found that DHCS had suspended certain county-oversight processes during early implementation of the Affordable Care Act and had only recently reinstated them. Earlier audits identified at least $4 billion in questionable payments tied to eligibility discrepancies, and a 2021 audit estimated about $1.9 billion. Those findings concern eligibility, not provider fraud, and should not be added to the figures above. They do show a pattern: the same department, the same oversight question, across nearly two decades.
The stakes are fiscal and practical. Medi-Cal is financed with state and federal money, so both levels of government bear the cost when payments reach providers who should not be paid. Every dollar misdirected is also a dollar unavailable for the patients the program exists to serve, in a state that is weighing how much it can afford to spend on health coverage.
Four questions would resolve much of the dispute. First, how many of the 26,000 uninvestigated providers have been opened for review since the audit period, and on what timeline will the rest be examined? Second, how much money does DHCS actually recover each year from fraud investigations? Third, how do the department’s published figures overlap with the auditor’s list of 28,000, and what is its own estimate of undetected losses? Fourth, how did providers ruled ineligible continue to bill, and have those claims been recovered?
Both readings are plausible. The auditor’s examples may be outliers in a program that processes an enormous volume of claims, and DHCS’s controls may be working at scale. Or the examples may be visible symptoms of a screening process that has left most of its highest-risk list unexamined. The answer lies in data, not adjectives.
The Legislature, which appropriates Medi-Cal’s funding, is well placed to ask for it. A public accounting would list investigations opened by risk tier, dollars recovered each year, the status of every provider the auditor flagged, and the method the department uses to estimate losses it has not found. That would give taxpayers and patients something firmer than dueling descriptions. Until then, 26,000 unexamined providers is a number the state should be able to explain.
Jose E. Navarro, MBA, is a financial and operations professional and the publisher of The Navarro Report, which examines government spending and institutional accountability.
Sources: CalMatters (Jocelyn Wiener), republished by Jefferson Public Radio and The Business Journal; California State Auditor, report 2025-601; DHCS, “10 Ways DHCS Protects Medi-Cal.”