Agency Spent $103,300 in Healthcare Funds on Coffee for Employees

A managed care plan in San Joaquin County uses more than $22,400 per year in taxpayer funds to provide coffee for its employees, the state auditor reported April 4.

All totaled, the plan spent $103,300 on employee coffee from 2015 to 2018, the auditor found. The expense, approved by the plan’s board, was one of several “questionable expenditures” that were uncovered.

When supervising managed health care plans contracted to serve Medi-Cal beneficiaries, the Department of Health Care Services “does not provide some important oversight and guidance to health plans, such as guidance concerning which administrative expenses are reasonable and necessary,” the auditor added.

The auditor reviewed three health plans, and found that “each of the three … spent between $4,600 and $47,000 annually on expenses related to events for their employees and sometimes guests.”

For example, a Kern County plan spent $7,200 annually on an automobile allowance for its chief executive officer; $4,600 for a retirement luncheon; and an average of $22,400 each for four employee recognition events held during a four-year span. In Santa Clara County, a plan spent $22,500 on employee picnics from 2016 to 2018.

“The health plans indicated that these expenses were for increasing employee morale and retention,” the auditor stated.

The auditor also found that the health plans used tax dollars to provide employee bonuses. “Although health plans are allowed to use Medi-Cal funds to pay reasonable employee bonuses, DHCS does not oversee whether such bonuses are reasonable,” the auditor reported. In San Joaquin County, the average bonus given to executives in 2016-17 was $48,200 per person.

Additionally, the department “does not consistently ensure that health plans have proper processes in place to prevent, identify, and address fraud, and it does not evaluate whether health plans have controls in place to prevent conflicts of interest,” the auditor stated.

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