OIG: Medicaid Fraud Control Units Recovered Nearly $2.5 Billion in Fiscal Year 2013

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By James Swann  

March 10 --State Medicaid Fraud Control Units (MFCUs) recovered almost $2.5 billion in fiscal year 2013 from criminal and civil investigations, according to the MFCU FY 2013 Annual Report, which the Department of Health and Human Services Office of Inspector General released March 10.

MFCUs recovered $969 million related to criminal investigations, more than the combined recovery total for such investigations for the FY 2010-2012 period, as well as $1.5 billion from civil investigations in FY 2013, a 42 percent drop from FY 2012 levels.

In addition to recoveries, MFCU investigations led to 1,341 criminal convictions in fiscal year 2013, a slight increase from FY 2012's 1,336 criminal convictions, as well as 879 civil settlements and judgments, an increase from FY 2012's 824.

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

The OIG is responsible for MFCU oversight and administers federal funding.

Criminal Convictions

The bulk of the MFCU criminal convictions (74 percent) were related to Medicaid fraud, including:

• conspiracy to commit health-care fraud;

• health-care fraud;

• submitting false statements regarding health care;

• making false statements regarding health-care reimbursements;

• grand larceny; and

• anti-kickback violations.


The remaining 26 percent of criminal convictions were related to patient abuse and neglect.

In the top three categories for criminal convictions, home health-care aides accounted for 26 percent, followed by other medical support personnel (7 percent) and physicians (7 percent).

As for MFCU civil settlements and judgments, the majority (62 percent) involved pharmaceutical cases, followed by pharmacies (6 percent) and home health-care agencies (5 percent).

During FY 2013, the OIG excluded 1,022 individuals and entities from participating in federal health-care programs on the basis of MFCU investigations, a 37 percent increase from FY 2012 (746 exclusions), according to the annual report.

MFCU Challenges

The OIG report identified several ongoing challenges for the MFCU program, including a lack of fraud referrals from Medicaid managed care organizations (MCO).

For example, only 25 MFCUs reported receiving a fraud referral from an MCO in FY 2013.

“Although direct referrals from MCOs are not the only way Units can learn about potential fraud in Medicaid managed care--for example, State agencies can forward allegations of fraud to the Units--the MCOs are a critical source of referrals,” the report said.

It included ideas from MFCU officials on how to improve MCO fraud referral, such as by holding regular meetings between MCO program integrity personnel and MFCU personnel and creating informal relationships between MCO and MFCU staff.

Other ideas included creating data mining applications for MCO data and working with the state Medicaid agency to encourage more MCO fraud referrals.


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

To contact the editor responsible for this story: Ward Pimley at wpimley@bna.com

The MFCU annual report is at http://oig.hhs.gov/oei/reports/oei-06-13-00340.pdf.

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