On October 6, the U.S. Department of Health and Human Services Office of Inspector General (the OIG) published in the Federal Register a proposed revision to the performance standards governing the state Medicaid Fraud Control Units (MFCUs).  The proposed standards would replace and supersede the standards previously published in the Federal Register on September 26, 1994 at 59 Fed. Reg. 49080, which are currently in effect.  

MFCUs are state-level law enforcement entities comprised of attorneys, auditors, and investigators that investigate and prosecute Medicaid fraud as well as patient abuse and neglect in health care facilities.  The OIG initially certifies, and annually recertifies, each state MFCU to determine its eligibility for federal financial participation (FFP) dollars under Section 1903 of the Social Security Act.  For this purpose, the OIG collects information about MFCU operations each year and assesses whether they comply with relevant statutes, regulations, and OIG policy. MFCUs are regulated under Part 1007 of Title 42 of the Code of Federal Regulations.  The OIG also analyzes MFCU performance based on certain performance standards and recommends program improvements where appropriate.  In order to qualify for FFP, the state MFCUs must meet the performance standards set out by the OIG.

The OIG performance standards prescribe operational requirements in several categories, including:  legal/regulatory compliance, staffing, policies and procedures, maintenance of referrals, maintenance of case flow, required case mix, performance outcomes and measurement, cooperation with federal authorities, program recommendations, agreements with Medicaid agencies, fiscal controls, and staff training.

Some notable changes proposed by the October 6 notice are outlined below:

  • The OIG added a standard, entitled “Maintaining Case Information,” which would require MFCUs to utilize an information management system that allows aggregate reporting of case information, among other activities. •With regard to the policies and procedures standard, MFCUs would have to establish formal, written policies regarding employee training and procedures relating to referring cases to federal and state agencies.
  • With regard to the referrals standard, MFCUs would have to provide feedback to the state’s Medicaid agency periodically and upon request regarding the adequacy of the volume and quality of its referrals. 
  • With regard to the case mix standard, MFCUs would have to ensure that their case mixes reflected a commensurate number of managed care cases in relation to fee for service cases, in those states that rely upon managed care entities to provide Medicaid services.
  • With regard to the performance outcomes and measurement standard, MFCUs would have to establish their own annual performance goals and strategic plans.
  • With regard to the fiscal controls standard, MFCUs would have to employ a financial system in which all funds are assigned to individual accounts according to source such that all of the MFCU’s expenditure items can be traced to the original funding stream and account.

Additionally, HHS has published an interactive online map outlining statistical data for MFCUs in FY 2010.  The map shows the number of investigations, indictments, convictions, settlements/judgments, recoveries, expenditures, and staff numbers of each MFCU.  In FY 2010, MFCUs recovered over $1.84 billion in Medicaid dollars through 1,077 civil settlements and judgments.

A copy of the 1994 OIG MFCU performance standards currently in effect is available by clicking here.  A copy of the October 6 Federal Register notice proposing the revised performance standards is available by clicking here.  A copy of the interactive MFCU map and MFCU statistical data for FY 2010 is available by clicking here.

Public comments regarding the proposed revision to the MFCU performance standards are due to the OIG by December 5, 2011.