HHS-OIG releases Medicaid Fraud Control Units 2022 annual report

Earlier this month, the U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) released its 2022 Annual Report regarding Medicaid Fraud Control Units (“MFCUs”).[1] The Report highlights the important role of MFCUs in investigating and prosecuting Medicaid provider fraud, patient abuse, and neglect, and the results of the MFCUs’ work, including in obtaining healthcare fraud criminal convictions, exclusions from federal programs, and civil settlements and recoveries. The report also yields interesting insights into the perspective of HHS-OIG on areas of high fraud risk, including in appendices attached to the Report addressing various medical specialties.

What are MFCUs?

MFCUs operate as task forces in each of the 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.[2] They are typically embedded in the state Offices of Attorney General and their equivalents, and receive joint state and federal funding, consistent with the mandate of state Medicaid agencies in overseeing this joint program.[3] (According to the Report, “[i]n FY 2022, combined Federal and State expenditures for the Units totaled approximately $343 million, of which approximately $257 million represented Federal funds.”[4])

The MFCUs include teams of attorneys, investigators, and auditors, with oversight from HHS-OIG, which annually reviews the MFCUs’ performance and compliance with federal requirements, and oversees federal funding of a percentage of the MFCUs’ operational costs.[5] MFCUs typically get their cases from referrals, or from “data mining,” or statistical analysis of data.[6]

Highlights from the 2022 report

The Report touts the following achievement in Fiscal Year 2022:

• 1,327 criminal convictions (946 of them for fraud; 381 for patient abuse or neglect), representing an increase for the second year in a row
• $416 million in criminal recoveries
• 553 civil settlements and judgments, marking a continued decline from 2020 (786) and 2021 (716)
• $641 million in civil recoveries, of which the highest number of settlements are attributable to pharmaceutical manufacturers, followed by medical device manufacturers, retail and institutional wholesale pharmacies, clinical labs and nursing facilities
• 1,018 individuals or entities excluded from federally funded health programs, accounting for as much as 44 percent of the total HH-OIG exclusions (2,332) of individuals and entities

Considering the combined federal and state funding of $343 million in the MFCUs, criminal and civil recoveries of over $1.5 billion reflect a handsome return on investment.

Other notable findings from the Report include the following:

1. Various physician specialties implicated. The Report notes the impact of criminal fraud convictions and civil settlements and judgments on various areas of specialty, among them family medicine, internal medicine, emergency medicine, pediatrics, psychiatry, ophthalmology, surgery and urology, and civil settlements also impacting cardiology, OB/GYN, and radiology.
2. Kinds of services accounting for most fraud convictions. The overwhelming majority of fraud convictions (412) involved personal care services attendants. Nurses, nurse practitioners and physician assistants were a distant second in numbers of convictions (88).
3. Highest inpatient and outpatient facilities implicated in fraud. Hospices and nursing facilities were the two most common types of inpatient facilities implicated in fraud, and nonresidential mental health facilities were by far the most common type of outpatient facility involved in fraud cases.
4. Continued increase in criminal convictions arising from drug diversion. MFCUs reported 171 criminal convictions arising from drug convictions, leading to financial recoveries of $18 million, 79 percent of which is attributable to recoveries by MFCUs in Pennsylvania ($9 million) and Kentucky ($6 million).

Appendix A to the Report provides a useful index of MFCUs with respect to 12 performance standards by which each MFCU is measured. These performance standards include the steps an MFCU takes to maintain an adequate volume and quality of referrals from the state’s Medicaid agency, completing cases within an appropriate timeframe based upon the complexity of the cases, cooperation with HHS-OIG and other Federal agencies, and training programs that aid in the mission of that MFCU.

What the report means for healthcare providers

MFCU cases include thousands of open criminal and civil investigations—17,806, to be precise. The Report notes there are 10,604 criminal and 7,202 civil investigations involving, among others, physicians, dentists, nursing facilities, nurse aides, nurses or physician assistants, therapists, and personal care aides or home care aides.

The Report notes a return on investment of $3.08 for every $1 spent by MFCUs in FY 2022.[7] As long as the Federal and state governments continue to see a positive return on investment, MFCUs will likely continue to be adequately funded to detect and prevent Medicaid program fraud, and the protection of patients from abuse and neglect.

Providers of all types, and in every state, must remain vigilant to ensure compliance with Medicaid requirements to avoid criminal and civil investigations brought by MFCUs and their federal partners.

Saul Ewing attorneys regularly assist providers to ensure compliant practices with respect to Medicare and Medicaid programs, and assist providers who are the subjects of investigations alleging noncompliant behavior.

Bruce D. Armon, a Partner and Chair of the Healthcare Practice at Saul Ewing LLP, counsels clients on how federal and state health care laws affect health care providers of all types and businesses.

Justin C. Danilewitz, a Partner in the White Collar and Government Enforcement Practice at Saul Ewing LLP, is a former Assistant U.S. Attorney who represents physicians, medical practice groups, assisted living facilities, and others in federal and state government investigations.

[1] U.S. Dep’t of Health and Human Services, Office of Inspector General, Medicaid Fraud Control Units Fiscal Year 2022 Annual Report, https://oig.hhs.gov/oei/reports/OEI-09-23-00190.pdf (last visited Mar. 30, 2023) (the “Annual Report”).

[2] See U.S. Dep’t of Health and Human Services, Office of Inspector General, Medicaid Fraud Control Units, https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/ (last visited Mar. 20, 2023).

[3] Id.

[4] Annual Report at 1.

[5] See U.S. Dep’t of Health and Human Services, Office of Inspector General, Medicaid Fraud Control Units, https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/ (last visited Mar. 20, 2023).

[6] Annual Report at 1.

[7] Id. at 25, n.12.