What Do You Need to Know About Medicaid Fraud Control Units?

Medicaid Fraud Control Units (MFCUs) investigate and prosecute Medicaid provider fraud as well as patient abuse or neglect in health care facilities and board and care facilities. MFCUs operate in 49 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. The MFCUs—usually a part of the state attorney general’s office that employs teams of investigators, attorneys and auditors—are constituted as single, identifiable entities, and must be separate and distinct from the state Medicaid agency. The Office of Inspector General (OIG), in exercising oversight for the MFCUs, annually recertifies each MFCU, assesses each MFCU’s performance and compliance with federal requirements, and administers a federal grant award to fund a portion of each MFCU’s operational costs.

Organization of MFCUs

A MFCU must be organized according to one of the following three options related to its prosecutorial authority:

1. The MFCU is in the office of the state attorney general or another department of state government that has authority to prosecute people for violations of criminal laws with respect to fraud and patient abuse or neglect in the provision or administration of Medicaid funds. For purposes of the MFCU’s authority, fraud means any act that constitutes criminal or civil fraud under applicable state law.

2. If there is no state agency with the authority or capacity for criminal fraud or patient or resident abuse or neglect prosecutions, the MFCU has established formal written procedures ensuring that it refers suspected cases of criminal fraud in the state Medicaid program or of patient or resident abuse and neglect to the appropriate prosecuting authority, and coordinates with and assists the authority in the prosecution of such cases.

3. The MFCU has a formal working relationship with the office of the state attorney general or another office with prosecutorial authority, and has formal written procedures for referring suspected criminal violations to the state attorney general and for effective coordination of the activities of both entities relating to the detection, investigation and prosecution of those violations relating to the state Medicaid program. The office of the state attorney general or other office must agree to assume responsibility for prosecuting alleged criminal violations referred to it by the MFCU. However, if the state attorney general finds that another prosecuting authority has the demonstrated capacity, experience and willingness to prosecute an alleged violation, they may refer a case to that prosecuting authority, as long as the office of the state attorney general maintains oversight responsibility. The MFCU must be separate and distinct from the Medicaid agency, and no official of the Medicaid agency can have authority to review the activities of the MFCU or to review or overrule the referral of a suspected criminal violation to an appropriate prosecuting authority.

Staffing of MFCUs

A MFCU must employ individuals from each of the following categories of professional employees, whose exclusive effort is devoted to the work of the MFCU:

• One or more attorneys capable of prosecuting the MFCU’s health care fraud or criminal cases, giving informed advice on applicable law and procedures and providing effective prosecution or liaison with other prosecutors;
   
• One or more experienced auditors capable of reviewing financial records and advising or assisting in the investigation of alleged health care fraud and patient or resident abuse and neglect; and
   
• One or more investigators capable of conducting investigations of health care fraud and patient or resident abuse and neglect matters, including a senior investigator who is capable of supervising and directing the investigative activities of the MFCU.

Responsibilities of MFCUs

A MFCU conducts a statewide program for investigating and prosecuting violations of all applicable state laws, including criminal statutes, as well as civil false claims statutes or other civil authorities, pertaining to the following:

1. Fraud in the administration of the Medicaid program, the provision of medical assistance, or the activities of providers.

2. Fraud in any aspect of the provision of health care services and activities of providers of such services under any federal health care program; if the MFCU obtains the written approval of the inspector general of the relevant agency and the suspected fraud or violation of law is primarily related to the state Medicaid program.

3. The MFCU will also review complaints alleging abuse or neglect of patients or residents in health care facilities receiving payments under Medicaid and may review complaints of misappropriation of funds or property of patients or residents of such facilities.

The following definitions apply:

• Abuse of patients or residents may include the infliction of injury, unreasonable confinement, intimidation or punishment with resulting physical or financial harm, pain, or mental anguish under state law.
   
• Neglect of patients or residents may include the failure to provide goods and services necessary to avoid physical harm, mental anguish or mental illness under state law.
   
• Health care facility means a provider that receives payments under Medicaid and furnishes food, shelter and some treatment or services to four or more persons unrelated to the proprietor in an inpatient setting.
   
• Board and care facility means a residential setting that receives payment (regardless of whether such payment is made under the Medicaid program) from or on behalf of two or more unrelated adults who reside there, and for whom one or both of the following is provided: nursing care services by or under the supervision of a registered nurse, licensed practical nurse or licensed nursing assistant; and a substantial amount of personal care services to assist with the activities of daily living, including personal hygiene, dressing, bathing, eating, toileting, ambulation, transfer, positioning, self-medication, body care, travel to medical services, essential shopping, meal preparation, laundry and housework.
   
• Misappropriation of patient or resident funds means the wrongful taking or use, as defined under applicable state law, of funds or property of a patient or resident of a health care facility or board and care facility.

4. The MFCU may review complaints of abuse or neglect, including misappropriation of funds or property, of patients or residents of board and care facilities, regardless of whether payment to such facilities is made under the Medicaid program.

5. If the initial review of the complaint indicates substantial potential for criminal prosecution, the MFCU will investigate the complaint or refer to an appropriate criminal investigative or prosecutorial authority.

6. If the MFCU discovers that overpayments have been made to a health care facility or other provider, the MFCU will either recover such overpayment as part of its resolution of a fraud case or refer the matter to the appropriate state agency for collection.

7. The MFCU will offer OIG investigators and attorneys all information in the MFCU’s possession concerning investigations or prosecutions conducted by the MFCU. The MFCU will coordinate with OIG investigators and attorneys on any MFCU cases involving suspects or allegations that are also under investigation or prosecution by OIG or other federal investigators or prosecutors.

8. The MFCU will establish a practice of regular MFCU meetings or communication with OIG investigators and federal prosecutors.

9. When the MFCU lacks the authority or resources to pursue a case, including for allegations of Medicare fraud and for civil false claims actions in a state without a civil false claims act or other state authority, the MFCU will make appropriate referrals to OIG investigators and attorneys.

If you are confronted with an issue pertaining to a state Medicaid Fraud Control Unit, you should contact your health care attorney for assistance and guidance.