The Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) have finalized changes to State Medicaid Fraud Control Unit (MFCU) regulations to reflect statutory changes and policies adopted since the MFCU rules were first issued in 1978. Among other things, the regulations incorporate statutory policies that: authorize a federal matching rate of 90% for the first 3 years of MFCU operation and 75% thereafter; establish standards under which MFCUs must be operated; allow MFCUs to investigate and prosecute Medicare or other federal health care fraud cases as long as the fraud is primarily related to Medicaid, with the approval of the relevant Inspector General; and allow MFCUs to investigate and prosecute patient abuse or neglect in board and care facilities, regardless of whether the facilities receive Medicaid payments.

Additionally, the rule addresses, among other things: the OIG’s delegated authority and MFCU/OIG coordination; definition of terms; MFCU organizational requirements; MFCU prosecutorial authority; provisions of agreements with state Medicaid agencies; staffing requirements; limits on federal financial participation for data mining activities that duplicate surveillance and utilization review responsibilities of State Medicaid agencies; and disallowance procedures. The agencies are not finalizing a proposal that would have made mandatory the review of complaints of misappropriation of patients’ or residents’ funds; the final rule retains that as an optional authority.

The final rule is effective May 21, 2019.