Proposed rule expands investigative authority for state MFCUs

Federal agencies want to expand the scope of state Medicaid Fraud Control Units (MFCUs) to investigate fraud, abuse and neglect cases, while outlining a more defined organizational structure and emphasizing collaboration with federal partners.

A new proposed rule, released by the Office of Inspector General and the Centers for Medicare & Medicaid Services on Monday, would allow MFCUs to investigate and prosecute patient abuse or neglect in any healthcare facility, “regardless of whether the facilities receive Medicaid payments.” The rule would also expand the definition of patient abuse and neglect to include financial harm.

The rule would allow MFCUs to seek approval from OIG to investigate potential fraud in any federal healthcare program, “as long as the fraud is primarily related to Medicaid.” MFCUs would be required to meet regularly with the OIG and federal prosecutors, either in person, or by telephone or video conference, reflecting the federal government’s ongoing emphasis on collaboration between state and federal agencies.

"We believe that requiring regular meetings or communication with OIG investigators and with federal prosecutors will strengthen relationships, enhance the effectiveness of fraud investigations and prosecutions, and ultimately improve the integrity of the Medicaid program,” the proposed rule states. “We believe that such communication is routine in most of the units, but we also know through our onsite reviews that there are units with a lack of communication with OIG investigators and federal prosecutors.”

In addition to a greater investigative reach, the rule also includes new definitions and clarifications regarding unit organization and staffing, including a requirement that all MFCUs employ a director. State agencies would be required to meet new re-certification requirements that would mandate annual statistical reporting, and establish basic procedures for the OIG to deny or approve re-certification.  

The OIG and CMS proposed the rule less than a week after the OIG’s annual report on MFCU’s that showed fraud convictions had increased in 33 percent between 2011 and 2015, but civil settlements and recoveries were continuing a steady decline.