OIG: Medicaid Fraud Control Units Recovered $300M From Criminal Cases in FY 2014

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By James Swann

April 22 — Medicaid Fraud Control Units (MFCUs) recovered $300 million from criminal cases in fiscal year 2014, a steep drop from FY 2013, when MFCUs recovered $969 million, according to a report from the Department of Health and Human Services Office of Inspector General released April 21.

MFCUs recovered $1.7 billion from civil cases, a small increase from $1.5 billion in recoveries in FY 2013.

The report, “Medicaid Fraud Control Units FY 2014 Annual Report” (OEI-06-15-00010), said the FY 2014 criminal recoveries were more in line with historical precedent, and the criminal recoveries from FY 2013 were elevated by a state and federal investigation of Abbott Laboratories that resulted in the largest individual MFCU recovery ($700 million).

MFCUs operate in 49 states and the District of Columbia and are designed to investigate and prosecute Medicaid fraud. They receive 75 percent of their funding from the federal government, with states paying the remainder.

The OIG has oversight responsibility for MFCUs and determines whether to recertify individual MFCUs on an annual basis.

Criminal Convictions

MFCUs achieved 1,318 criminal convictions in FY 2014, consistent FY 2013 (1,344).

Thirty percent of all criminal convictions involved home health aides, followed by certified nursing aides (9 percent) and other medical support (7 percent), a category that includes individuals and organizations that provide medical support services, the OIG said.

Among home health aides, the bulk of convictions were related to aides fraudulently submitting claims for services that were never provided, while certified nursing aide convictions were based on patient harm, submitting claims for services that were never provided and submitting fraudulent time sheets for hours worked.

Criminal convictions among providers of medical support services covered a multitude of offenses.

The bulk of criminal convictions in FY 2014 (73 percent) were for fraud, and 27 percent were for patient abuse and neglect, the OIG said.

Civil Settlements, Judgments

Beyond criminal convictions, MFCUs reached 874 civil settlements and judgments in FY 2014, the OIG said.

A slight majority (52 percent) of the civil settlements and judgments involved pharmaceutical manufacturers, such as the April 2014 settlement with Astellas Pharma US Inc.

The settlement resolved allegations that Astellas marketed the drug Mycamine for pediatric use, even though it was only approved for adults suffering from infections caused by the fungus Candida.

A further 10 percent of MFCU civil settlements and judgments involved pharmacies, while 8 percent involved durable medical equipment suppliers.

Sixty-six percent of all MFCU civil settlements and judgments were global, meaning they involved multiple states, while 34 percent involved only one state.

The OIG said it excluded 1,337 providers from participating in federal health-care programs because of MFCU investigations and convictions.

MFCU Expansion

Looking ahead, the OIG said a provision in President Barack Obama's FY 2015 budget proposal would encourage the expansion of MFCUs to U.S. territories by eliminating a cap on federal Medicaid funding for the territories.

The budget provisions would allow “the territories to use appropriated funding to establish and operate an MFCU while retaining the same amount of appropriated dollars for Medicaid services and essential administrative functions,” the report said.

The administration's FY 2015 budget proposal would also expand MFCUs' ability to investigate patient abuse issues.

Currently, MFCUs have authority to investigate patient abuse only in Medicaid-funded facilities, such as hospitals, nursing homes and assisted living facilities.

The FY 2015 budget proposal would allow MFCUs to investigate patient abuse in cases where Medicaid services are provided in a patient's home.

“The proposal would give MFCUs the same authority in the areas of patient abuse and neglect that they already have in the area of fraud,” the report said. “MFCUs already investigate a large number of cases of fraud in personal care services and other fraud cases that arise in the home or community.”

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com