Each year the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) releases its annual Medicaid Fraud Compliance Performance Report. There is much to learn from this compendium of information provided by 50 Medicaid Fraud Control Units (MFCUs), and this article will highlight some of the accomplishments and significant cases. 

Why MFCUs Exist

The mission of the MFCUs is to investigate and prosecute under state law Medicaid provider fraud and patient abuse or neglect. With limited exceptions, each state is required to have an MFCU. Cases can be brought from the public or a state or federal agency for investigation and/or criminal prosecution or civil action. Outcomes can include criminal conviction, civil settlements, exclusions, or other program recommendations (including overpayment recoveries). 

Since each MFCU is funded jointly by state and federal funding, the OIG has jurisdiction. Each unit receives federal funding equivalent to 75 percent of its total expenditures. In 2016, combined state and federal expenditures for the MFCUs totaled $259 million (of which $194 million represented federal funds).

The OIG is responsible for accessing each MFCU’s performance and compliance with federal requirements, OIG policy, and 12 performance standards. Performance standards can involve staffing, maintaining adequate referrals, and cooperation with federal authorities. The OIG releases its statistical data about MFCU outcomes on its website. Take a look to see how your state performed.

Overall Summary of Findings

In the 2016 fiscal year, Units reported 1,564 convictions, over one-third of which involved personal care services attendants. Fraud cases accounted for 74 percent of the 1,564 convictions. The number of convictions related to drug diversion cases increased from 2015. Units reported 998 civil settlements and judgments, with settlements with pharmaceutical manufacturers making up almost half of Unit settlements. Units also reported almost $1.9 billion in criminal and civil recoveries.

In 2016, Units continued a trend of increasing numbers of convictions, and civil settlements and judgments reached a five-year high. The number of OIG exclusions resulting from Unit conviction referrals decreased slightly in 2016, as compared to the previous two years.

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Other Interesting Findings

  • Fraud cases accounted for 74 percent of all convictions
  • Almost 50 percent of fraud cases involved unlicensed providers
  • Personal care services amounted to the greatest number of the unlicensed providers
  • The number of drug diversion convictions increased by 4 percent
  • Almost 50 percent of civil settlements/judgments involved pharmaceutical manufacturers
  • $1.9 billion in total recoveries were made 
  • MFCUs spent $259 million to investigate and prosecute
  • MFCUs’ ROI was $7:$1 
  • 2016 OIG exclusions from MFCU conviction referrals decreased slightly
  • In FY 2016, MFCU referrals accounted for 35 percent of OIG exclusions

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The OIG has many hats to wear in its role as enforcement and policy provider for HHS. One of its most interesting reports is its annual Medicaid Fraud Control Unit performance report. The OIG is tasked with oversight as well as investigative and prosecutorial roles of any and all federal healthcare funds (Medicare, Medicaid, CHIP, Tricare, etc.). Given its involvement in oversight of each state MFCU’s performance with the 12 performance standards, the OIG is not only instructive, but provides a picture of state healthcare fraud and abuse convictions, settlements, and enforcement trends. The results of 2016 prove once again that MFCUs play an important role in ferreting out healthcare fraud and abuse, and their combined efforts with the OIG return huge dividends to the U.S. Treasury.  

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