State Medicaid Fraud Control Units: What Providers Should Know

29 May State Medicaid Fraud Control Units: What Providers Should Know

Every state in the United States, except North Dakota, has a Medicaid Fraud Control Unit (“MFCU”) that’s mission is to investigate and prosecute Medicaid provider fraud and patient abuse, and neglect.  MFCUs are a creation of federal statute and receive 75% of their funding for operations from the federal government. As a result, MFCUs are required to comply with federal guidelines regarding their activities and expenses.

Every MFCU is regulated and supervised by the Office of the Inspector General of the United States Department of Health and Human Services (“OIG”).  OIG has developed twelve standards which each MFCU is required to operate under.  Each year, the OIG uses these standards to evaluate every MFCU and determine if the MFCU is adequately achieving its goals.  

These standards are:

1. Comply with all applicable federal statutes, regulations, and policy directives;
2. Maintain reasonable staff levels and office locations in relation to the state’s Medicaid program expenditures;
3. The unit has written policies and procedures for its operations and ensures that staff are familiar with, and adhere to, policies and procedures;
4. The MFCU takes steps to maintain an adequate volume and quality of referrals from the State Medicaid agency and other sources;
5. The unit takes steps to maintain a continuous case flow and to complete cases in an appropriate timeframe based on the complexity of the cases;
6. The MFCU’s case mix, as practicable, covers all significant provider types and includes a balance of fraud and, where appropriate, patient abuse and neglect cases;
7. Each MFCU must maintain case files in an effective manner and develop a case management system that allows efficient access to case information and other performance data;
8. Each unit must cooperate with OIG and other Federal agencies in the investigation and prosecution of Medicaid and other health care fraud;
9. The unit makes statutory or programmatic recommendations, when warranted, to the State government;
10. Each unit must have a Memorandum of Understanding with the state Medicaid agency and must periodically review that memorandum to ensure that it reflects current practice, policy, and legal requirements of the Unit; 
11. The MFCU must properly utilize the financial resources allocated to it; and
12. A unit must provide adequate training to its staff so that the unit can properly carry out its mission.

These standards can be found at 77 FR 32645 (2012).

Health care providers that serve Medicaid recipients and bill Medicaid for those services must be aware of the existence and purpose of their state’s MFCU.  The twelve standards under which MFCUs must operate give insight to providers into how MFCUs operate and what they are looking for.  

Providers should note that, based on standard number two, the more money their state spends on Medicaid, the larger the MFCU staff will be.  A larger staff means more investigations and potentially more scrutiny on providers in that state.  Therefore, in states like Pennsylvania, New York and California that spend a large amount of money on Medicaid, there will be a larger volume of investigations and prosecutions.  

Standards four, five, and six tell us that MFCUs are required to seek out cases involving all types of providers and investigate any potential fraud.  The MFCUs cannot sit back and wait for referrals to come in, they must proactively seek out cases of potential fraud and/or abuse to investigate.  This means that MFCU supervisors and investigators must be aggressive in seeking out cases of potential fraud.

The standards also show us that there must be a close relationship between the MFCU and the state Medicaid agency.  Additionally, the state units have to cooperate with federal authorities in any investigations of health care fraud.  This means that state MFCUs will be pushed by the federal government to be even more aggressive in seeking out, investigating and prosecuting Medicaid fraud.

State MFCUs and federal authorities are ever on the lookout for potential Medicaid fraud to investigate and prosecute.  Merely being investigated for Medicaid fraud can have dire consequences for a health care provider.  If an investigation leads to a prosecution and conviction, that can mean severe penalties, repayment obligations, exclusion from participation in federal health care programs and even jail time for health care providers.  Not all federal and state statutes regulating health care fraud require a knowing violation by a health care provider to support a conviction.  All health care providers regardless of size should have a compliance program and be knowledgeable of the rules and regulations that govern their practice.

If your practice needs help and guidance on establishing an appropriate compliance program, please feel free to contact us.