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Medicaid Fraud Control Units (MFCU)

Medicaid provider fraud costs American taxpayers hundreds of millions of dollars annually and hinders the very integrity of the Medicaid program. State Medicaid Fraud Control Units (MFCUs) have long been in the forefront of health care fraud enforcement. A Medicaid Fraud Control Unit is a single identifiable entity of state government, annually certified by the Secretary of the U.S.Department of Health and Human Services, that conducts a statewide program for the investigation and prosecution of health care providers that defraud the Medicaid program. In addition, a MFCU reviews complaints of abuse or neglect of nursing home residents. A Unit may review complaints of the misappropriation of patients’ private funds in these facilities. The Unit is also charged with investigating fraud in the administration of the program and for providing for the collection or referral for collection to the single state agency and overpayments it identifies in carrying on its activities.

The Ticket to Work and Work Incentives Improvement Act of 1999 extended the jurisdiction of the Units to allow them, with the approval of the Inspector General of the relevant federal agency, to investigate fraud in any federally funded health care program, such as Medicare. This authority is limited to those cases that are primarily related to Medicaid. This law allows the MFCUs the option to investigate complaints of abuse or neglect of those residing in board and care facilities, regardless of the source of payment.

Federal regulations prohibit the Units from pursuing recipient fraud, unless there is a conspiracy with a provider. The Units are also prohibited from engaging in the routine computer screening activities that are the usual monitoring function of the Medicaid agency.

The majority of the 50 MFCUs are located in the office of the state attorney general. Seven are located in other state agencies. These are: Connecticut, District of Columbia, Georgia, Illinois, Iowa, Tennessee, and West Virginia. North Dakota has received a waiver from the federal government and does not have a Unit.

Each Unit receives a federal grant, annually, from the U.S. Department of Health and Human Services. This federal grant of 75% must be matched by the state for the remaining 25%. Because of this incentive funding, the Units are subject to certain requirements and limitations. The Units must employ attorneys, investigators and auditors who are required to perform full-time duty intended to last a year and work only on Medicaid fraud cases. Temporary or part-time staff that may conduct an occasional investigation or prosecution do not develop the necessary specialized expertise to successfully investigate and prosecute these very complicated criminal cases.  A Unit is intended to operate as a “strike force” using a multi-disciplinary approach, with the team of investigators and auditors directed by an attorney.

Units must employ attorneys that are experienced with the investigation and prosecution of civil fraud or criminal cases, investigators with substantial experience in commercial or financial investigations and auditors capable of supervising the review of financial records and advising or assisting in the investigation of alleged fraud. A Unit Director, generally an assistant attorney general, manages the Unit, although some Units are managed by an investigator.

Each Unit operates under the administrative oversight of the Office of Inspector General of the U.S. Department of Health and Human Services and must be recertified annually. As part of this process, the Inspector General reviews a Unit’s application for recertification and conducts on-site visits periodically.

To receive federal certification, a Unit must be separate and distinct from the Medicaid or single state agency. Federal regulations also prohibits any official from the Medicaid agency from having authority to review or overrule activitites of the Unit. Furthermore, a Unit is prohibited from receiving funds from the Medicaid agency.

The Medicaid agency is required to enter into an agreement, known as the Memorandum of Understanding, with the Unit which outlines each agency’s responsibilities and duties to each other.

The Units employ approximately 1,900 staff nationwide. Units range in size from the largest New York with a total of 312 to the smallest Wyoming with a total staff of four.