Medicaid provides health insurance coverage for certain low-income people, families and children, pregnant women, the elderly, and people with disabilities. While Medicaid is funded jointly by the States and the federal government, the program is administered by the individual States, according to federal requirements.
Significantly, Medicaid fraud reportedly costs taxpayers an estimated $60 billion to $90 billion each year and threatens the very integrity of Medicaid and the critical resources it provides.
In combating Medicaid fraud, State Medicaid Fraud Control Units (“MFCU”s) are tasked with investigating and prosecuting Medicaid provider fraud and patient abuse and neglect. MFCUs are also charged with providing for the collection, or referral for collection, of overpayments they identify.
Provisions of the federal Social Security Act (“SSA”) require each State to operate a MFCU, unless the Secretary of Health and Human Services determines that (1) the operation of a Unit would not be cost-effective because minimal Medicaid fraud exists in a particular State and (2) the State has other adequate safeguards to protect beneficiaries from abuse or neglect. MFCUs operate in 49 States and the District of Columbia. (North Dakota and the territories of American Samoa, Guam, the Northern Marianas Islands, Puerto Rico, and the U.S. Virgin Islands have not established Units).
Medicaid Fraud Control Unit Guidelines
MFCUs must meet a number of requirements established by the SSA and Federal regulations. For example, each Unit must:
- Be a single, identifiable entity of State Government, separate and distinct from the State Medicaid agency;
- Employ an interdisciplinary staff that consists of at least an investigator, an auditor, and an attorney;
- Develop a formal agreement, such as a memorandum of understanding, describing the Unit’s relationship with the State Medicaid agency; and
- Have either statewide authority to prosecute cases or formal procedures to refer suspected criminal violations to an agency with such authority.
Each MFCU receives Federal reimbursement for 75% percent of its total expenditures, with State funds contributing the remaining 25%. For 2017, combined Federal and State expenditures for MFCUs totaled about $276 million (with $207 million of that amount representing Federal funds).
The U.S. Department of Health & Human Services, Office of Inspector General (“OIG”) oversees the MFCU grant program by recertifying Units, conducting onsite reviews of Units, providing technical assistance to Units, and maintaining key statistical data about Unit caseloads and outcomes.
According to the OIG’s 2017 Annual Report, MFCUs recovered $1.8 billion in misappropriated Medicaid funds – of which $1.1 billion came from civil cases and $693 million from criminal cases. The civil funds resulted from 961 civil settlements and judgments; the criminal funds were derived from 1,528 criminal convictions (of which 1,157 were fraud cases and 371 were patient abuse and neglect cases), which resulted in 1,181 individuals and entities being excluded from federally funded health programs.
The National Association of Medicaid Fraud Control Units
In 1978, the National Association of Medicaid Fraud Control Units (“NAMFCU”) was created to provide a forum for the MFCUs to have a mutual exchange of information, to foster interstate cooperation, and to improve the quality of Medicaid fraud and resident abuse investigations and prosecutions through training programs. NAMFCU is an organization of officials from the various state agencies that are responsible for investigating Medicaid fraud. NAMFCU helps coordinate national investigations and prosecution of Medicaid Fraud for the states. NAMFCU facilitates joint discussions of cases involving fraud where more than one state’s Medicaid system has been impacted. While membership in NAMFCU is voluntary, all 50 federally certified MFCUs are members of the Association. NAMFCU maintains its offices at the National Association of Attorneys General in Washington, D.C.
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