Frequently Asked Questions
A Medicaid Fraud Control Unit (“Unit” or “MFCU”) is a single identifiable entity of state government, annually certified by the Secretary of the U.S. Department of Health and Human Services. The Unit has either statewide criminal prosecution authority or formal procedures for referring cases to local prosecutorial authorities with respect to the detection, investigation and prosecution of suspected criminal violations of the Medicaid program. See 42 U.S.C. §1396b(q). There are 50 state MFCUs. 43 are currently located in the office of the state Attorney General. Connecticut, D.C., Georgia, Illinois, Iowa, Tennessee and West Virginia have Units which are in other departments of state government. North Dakota received a waiver from the federal government and does not have a Unit.
Under federal law, each state must have a Unit unless the state demonstrates to the satisfaction of the Secretary of the Department of Health and Human Services that a Unit would not be cost effective because minimal fraud exists in the state's Medicaid program and Medicaid beneficiaries will be protected from abuse and neglect.
A Unit's function is to conduct a statewide program for the investigation and prosecution of health care providers who defraud the Medicaid program. In addition, a Unit reviews complaints of abuse or neglect against patients in health care facilities receiving Medicaid funding and 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 Medicaid program. The Ticket to Work and Work Incentives Improvement Act of 1999 authorizes the Units, with the approval of the Inspector General of the relevant federal agency, to investigate fraud in other federally-funded health care programs, if the case is primarily related to Medicaid. This section also authorizes the Units, on an optional basis, to investigate and prosecute resident abuse or neglect in non-Medicaid board and care facilities.
MFCUs receive annual grants (Federal Financial Participation or "FFP") from the U.S. Department of Health and Human Services. Grant amounts must be matched with state funding. Initially, a Unit receives federal funding at a 90 percent level. After its first three years, the FFP is reduced to 75 percent.
Federal financial participation is authorized for full-time attorneys, investigators and auditors involved in the investigation and prosecution of matters within the jurisdiction of a Unit. Full-time employees are required to be hired to perform full-time duty intended to last at least a year. Federal grant money may also be used for part-time support staff but only to the extent that these part-time employees participate in work activities that further the jurisdictional duties of the Unit. Finally, FFP is available to the Unit's parent agency to cover all indirect costs associated with the operation of the Unit.
A Unit is intended to operate using a "strike force" concept of investigators, auditors and attorneys working together full-time to develop Medicaid fraud investigations and prosecutions. The staff of the Unit must include attorneys experienced in the investigation and prosecution of civil fraud or criminal cases, auditors capable of supervising the review of financial records, and investigators with substantial experience in commercial or financial investigations. If a Unit lacks direct prosecutorial authority, it must have a formalized procedure in place for referring cases to the appropriate prosecutorial authority.
Each Unit operates under the administrative oversight of the Inspector General of the U.S. Department of Health and Human Services and must be recertified annually. As part of the recertification process, the Inspector General reviews a Unit's application for recertification and may conduct on-site visits. Additionally, the MFCUs are required to submit annual reports to the Inspector General. These reports include specific statistical data required by federal legislation on the number and type of cases under investigation, the number of convictions obtained and the number of dollar recoveries to the Medicaid program. The day-to-day supervision of a Unit rests with the parent agency.
While specifics may vary from state to state, a primary source of referrals is the agency responsible for auditing and reviewing Medicaid provider claims, the Medicaid agency. Other significant sources of referrals are the MFCUs in other states as well as other law enforcement agencies.
Medicaid fraud global settlements generally arise in connection with
a U.S. Department of Justice investigation against a Medicare provider.
When resolving these Medicare cases, the federal government, often at
the request of defense counsel, turns to the state MFCUs because it
cannot settle the Medicaid portion of the case without the Units.
Moreover, defense attorneys are unlikely to settle the case without the
affected states because each state has the authority to exclude a
convicted provider from its health care programs. The Department of
Justice typically contacts the National Association of Medicaid Fraud
Control Units about a potential settlement, and the President of the
Association appoints a settlement team which usually consists of three
to four members.
Under federal regulations, providers who are convicted of a program related offense are excluded for a minimum of five years from receiving funds from any federally funded health care program, either as a health care provider or employee. Often, this sanction has a greater impact on the convicted individual and the provider community at large than the criminal penalties assessed in the case.
The National Association of Medicaid Fraud Control Units (NAMFCU)
was founded in 1978 to provide a forum for a nationwide sharing of
information concerning the problems of Medicaid fraud, to improve the
quality of Medicaid prosecutions by conducting training programs, to
provide technical assistance to Association members and to provide the
public with information about the MFCU program. All 50 MFCUs are
members of the Association. NAMFCU is headquartered in Washington, D.C.
and is staffed by an Executive Director, an Association Administrator and a part-time Association Assistant.