Medicaid Fraud Control Unit’s 2022 Annual Report Key Takeaways

What is a Medicaid Fraud Control Unit (MFCU)?

Fraud and abuse are unfortunate realities of the healthcare industry. Hundreds of claims and investigations are carried out yearly to combat the growing number of providers, organizations, and entities contributing to fraud and abuse within state and federal healthcare programs. But these programs cannot be controlled by Medicaid and Medicare alone. Legislation passed in 1977 provided each state and US territory the opportunity and resources to establish an agency that would help investigate and prosecute healthcare fraudsters and abusers. With this legislation, Medicaid Fraud Control Units (MFCUs) were born.

Medicaid Fraud Control Units (MFCUs) are a legal enforcement agency tasked with investigating and prosecuting Medicaid provider fraud, including abuse and neglect of residents and patients in healthcare facilities, board and care facilities, and Medicaid beneficiaries in non-institutional or other settings. MFCUs operate in all fifty states, as well as the District of Columbia, Puerto Rico, and the US Virgin Islands. In some states, the MFCU is a part of the State Attorney General’s Office. MFCUs employ large teams of attorneys, auditors, and investigators to help with their fraud investigations and prosecutions.

The Office of Inspector General (OIG) oversees all MFCUs and annually recertifies them, assessing each unit’s performance and compliance with the 12 MFCU performance standards and federal regulations and statutes. OIG administers a federal grant to fund a portion (75-90%) of each MFCU’s operational costs. They also provide ongoing guidance and technical support (including training, outreach, and issuing policy transmittals) to Units when needed.

The OIG MFCU Annual Report

Every year, OIG releases an MFCU Annual Report, which provides a complex overview of its efforts to combat Medicaid fraud and abuse. The OIG takes information provided by the 53 fraud control units and analyzes the data, presenting the number of convictions, civil settlements and judgments, and individuals and/or entities excluded, as well as the dollar amount of civil recoveries from the previous fiscal year (FY) in an annual report.

Released in March 2023, MFCU’s Fiscal Year 2022 Annual Report is comprised of easy-to-read statistical data and infographic charts that provide a look into the fraud and abuse outcomes from the past year.

The following are highlights from the 2022 Annual Report:

  • 1,327 total convictions (946 fraud, 381 patient abuse or neglect)
  • 1,018 individuals or entities excluded
  • $416 million in criminal recoveries
  • 553 civil settlements and judgments
  • $641 million in civil recoveries
  • A total of $1.1 billion recovered
  • Increase in fraud convictions for Personal Care Service (PCS) attendants
  • Increase in patient neglect/abuse convictions for nurses, nurse’s aids, or physician assistants
  • Increase in drug diversion convictions

2022 Convictions and Exclusions

In 2022, MFCU cases resulted in 946 convictions for fraud and 381 convictions for patient abuse or neglect, equaling a total of 1,327 convictions. Though the portion of patient abuse and neglect convictions to fraud convictions was similar to previous years, the total number of convictions has continued to increase from FY 2020.

An alarming trend of a new provider type that can bill Medicaid, Personal Care Specialists (PCS) attendants accounted for a significant portion of total fraud convictions in 2022 — more than any other type of provider. This continues a four-year trend of PCS attendants having a higher number of fraud convictions than any other type of provider. PCS attendants accounted for 412 of the 946 total fraud convictions. One thousand six hundred forty-one investigations were opened just on personal care attendants, the majority of which were criminal investigations. Only 20 of the 1,641 were civil investigations.

Regarding patient abuse and neglect in FY 2022, nurses and nurse’s aides were the providers with the most convictions. This group accounted for 147 of the total 381 patient abuse or neglect convictions.

There were also 171 convictions related to drug diversion cases in FY 2022, an increase over the previous two years. Drug diversion is when a prescription medication is obtained, used, or distributed illegally. These cases generally involve the fraudulent billing of Medicaid or fraudulent activities of Medicaid providers involving drugs diverted from legal and medically necessary uses.

MFCU convictions commonly lead to the exclusion of individuals and entities from participating in federally-funded healthcare programs. When a Unit makes a referral to OIG regarding a fraud or patient abuse/neglect conviction, OIG has the authority to exclude those convicted individuals or entities. These MFCU referrals ensure that if an individual or entity is excluded in one state, their exclusion carries over to Medicaid programs in other states and other Federal programs related to healthcare.

When ProviderTrust asked the OIG about these MFCU referrals, the Office of Counsel to the Inspector General (OIG OCIG) had this to say, “OIG excludes individuals and entities based largely on referrals from OIG/DOJ and Medicaid Fraud Control Units as well as state licensing boards when those subjects meet specific legal authorities set forth in the Social Security Act.”

OIG imposed a total of 2,332 exclusions on individuals and entities in 2022, with MFCU cases responsible for 1,018 of those exclusions. Various MFCUs also participated in joint cases with the OIG Office of Investigations, which may have resulted in additional exclusions.

ProviderTrust reached out to OIG for a quote about this increase in exclusions. The Office of Counsel to the Inspector General (OIG OCIG) said, “While exclusion numbers can vary from year to year, OIG notes that courts closed and investigations slowed in 2020 and 2021 due to the Covid-19 pandemic, which may help explain a decrease of about 460 exclusions reported in those years. That said, as you point out, OIG excluded about 640 more individuals/entities in FY22 than FY21, which may correlate with the fact that courts have reopened and investigations resumed at this point in the public health emergency. Regardless of any pandemic factor, again, OIG’s exclusion actions depend largely on referrals from other law enforcement and state board partners, which do vary from year to year.”

Beneficial Practices

The Annual Report also summarizes MFCU practices highlighted by the OIG as beneficial to Unit operations. They include this section as a way to encourage Units to adopt these practices into their everyday operations. These beneficial practices cite activities by specific MFCUs and are organized in relation to the 12 MFCU performance standards.

Perhaps the most notable beneficial practice included in this year’s report involves Performance Standard 8, which states: “A Unit cooperates with OIG and other Federal agencies in the investigation and prosecution of Medicaid and other healthcare fraud.” California, Idaho, and Florida are highlighted in this section, which points to the measures these three units took to address deficiencies in their operations.

In California and Florida, unit staff had workstations at an OIG field office, which improved communication and cooperation with OIG on joint cases. In Idaho, the Unit’s legal secretary monitored media sources for convictions in patient abuse/neglect cases and submitted police reports and court documents to OIG. These measures are likely to have contributed to the 44% of exclusions that came from MFCU referrals. After all, improved communication and cooperation between MFCUs and OIG helps both agencies eliminate fraud and abuse faster and more efficiently.

Key Takeaways

The full Annual Report is full of insight into fraud and abuse outcomes from 2022, but here are our key takeaways:

  • Most at risk of committing healthcare fraud or patient abuse/neglect: PCS attendants, nurses, and nurse’s aides
  • Drug diversion cases are on the rise
  • $1.1 billion in total recoveries
  • Increase in criminal-related outcomes (investigations and convictions)
  • Increase in exclusions

MFCUs play a pivotal role in holding wrongdoers accountable for Medicaid provider fraud and patient abuse/neglect. Their annual report signals an increased need for scrutiny of PCS attendants, nurses, and nurse’s aids (or physician assistants) and improved communication and cooperation between MFCUs and OIG. It’s clear that healthcare fraud and abuse are not going away, but neither are MFCUs and the OIG. Consider what proactive measures you can take to ensure you remain compliant with state and federal regulations and standards.

How ProviderTrust Can Help

At ProviderTrust, we’re committed to upholding the highest standards of data accuracy, security, and patient safety. That’s why we stand by our proprietary Compliance Intelligence™ technology that ensures our data is always accurate and delivered in real-time. Our monitoring platform enables healthcare organizations across the continuum to use our hybrid approach to efficiently and accurately manage, monitor, and verify all types of healthcare credentials, from physical therapy licenses to BLS certificates and everything in between, helping you meet regulatory requirements with ease.

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