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I want to make sure I understand correctly - you received a W2, but entered it as if you didn't receive a W2?

If you received a W2, I would delete the entry you have for this and enter it as a W2.  

You will enter the W2 just as it it, not adding anything. After you finish the W2 entry you will get to a screen asking about uncommon situations that looks like this:

Make sure you check the box for nontaxable Medicaid waiver payments.

The next screen will ask how much you received for Medicaid waiver payments. You will enter the amount here.

When you get to your California return you will see this screen (eventually):

Let us know if this doesn't take care of your issue.