Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
M   S M
ONTANA  TATE  EDICAID 
 
F C U :  
  RAUD  ONTROL  NIT  
 
2012 O R  
  NSITE  EVIEW 
 
Stuart Wright  
Deputy Inspector General for 
Evaluation and Inspections 
 
October 2013 
OEI-09-12-00700   
   
MONTANA STATE MEDICAID FRAUD CONTROL UNIT:  
2012 ONSITE REVIEW 
OEI-09-12-00700 
 
WHY WE DID THIS STUDY 
The Office of Inspector General (OIG) oversees all State Medicaid Fraud Control Units 
(MFCUs or Units) with respect to Federal grant compliance.  As part of this oversight, 
OIG annually reviews and certifies all Units.  In addition, OIG conducts onsite reviews of 
selected States. These reviews assess Unit performance in accordance with the 12 MFCU 
performance standards and monitor Unit compliance with Federal grant requirements,  
laws, and regulations. 
 
HOW WE DID THIS STUDY  
We analyzed data from seven sources:  (1) a review of documentation, policies, and 
procedures related to the Units operations, staffing, and caseload; (2) a review of 
financial documentation; (3) structured interviews with key stakeholders; (4) a survey of 
Unit staff; (5) structured interviews with the Units management and selected staff; (6) an 
onsite review of case files; and (7) an onsite review of Unit operations. 
 
WHAT WE FOUND 
From fiscal years 2010 through 2012, the Unit reported recoveries of $9.8 million, 
6 convictions, and 31 civil judgments and settlements.  Ninety-five percent of Unit case 
files contained documentation of supervisory approval to open cases; however, 
40 percent of closed case files lacked documentation of supervisory approval to close 
cases. In addition, 65 percent of Unit case files lacked documentation of periodic 
supervisory reviews. The Unit also did not refer sentenced providers to OIG for program  
exclusion within the appropriate timeframe.  Finally, the Units memorandum of 
understanding (MOU) with Montanas State Medicaid agencythe Department of Public 
Health and Human Services (DPHHS)did not reflect current law and practice as 
required, and the Unit did not always adhere to the MOU stipulations.   
 
WHAT WE RECOMMEND 
We recommend that the Montana Unit (1) ensure that supervisory approval to close cases 
and periodic supervisory reviews are documented in Unit case files, (2) ensure that it 
refers providers for exclusion to OIG within the appropriate timeframe, (3) revise its 
MOU with DPHHS, and (4) adhere to the MOU provisions.  The Unit concurred with all 
four of our recommendations. 
 
 
 
 
 
 
 
 
   
TABLE OF CONTENTS 
Objective......................................................................................................1 

Background..................................................................................................1 

Methodology................................................................................................4 

Findings........................................................................................................7 

From FY 2010 through FY 2012, the Unit reported recoveries       

of $9.8 million, 6 convictions, and 31 civil judgments and 

settlements........................................................................................7 

Ninety-five percent of case files contained documentation of 

supervisory approval to open cases; however, 40 percent of   

closed case files lacked documentation of supervisory approval    

to close cases....................................................................................8 

Sixty-five percent of case files lacked documentation of periodic 
supervisory reviews .........................................................................8 

The Unit did not refer sentenced providers to OIG for program 

exclusion within the appropriate timeframe ....................................9 

The Units MOU with DPHHS did not reflect current law and 
practice.............................................................................................9 

The Unit did not provide training to SURS or hold bimonthly 

meetings with SURS, as stipulated in the MOU ............................10 

Other observation: The Unit received a limited number of         

fraud referrals from DPHHS ..........................................................10 

Conclusion and Recommendations ............................................................12 

Unit Comments and Office of Inspector General Response ..........13 

Appendixes ................................................................................................14 

A: Performance Standards for MFCUs (Units) ............................14 

B: Revised 2012 Performance Standards for MFCUs (Units) ......18 

C: Referrals of Provider Fraud and Patient Abuse and Neglect     

to the Montana MFCU by Source, FYs 2010 Through 2012 ........25 

D: Investigations Opened and Closed by Provider Category       

and Case Type, FYs 2010 Through 2012 .......................................26 

E: Case File Review Population, Sample Size Counts, and 

Confidence Interval Estimates .......................................................28 

F: Unit Comments.........................................................................30 

Acknowledgments......................................................................................32 

 
   
   
OBJECTIVE 
To conduct an onsite review of the Montana State Medicaid Fraud Control 
Unit (MFCU or Unit). 
BACKGROUND 
The mission of State MFCUs, as established by Federal statute, is to 
investigate and prosecute Medicaid provider fraud and patient abuse and 
neglect under State law.1  Pursuant to Title XIX of the SSA, each State 
must maintain a certified Unit unless the Secretary of Health and Human 
Services (HHS) determines that operation of a Unit would not be 
cost-effective because (1) minimal Medicaid fraud exists in that State; and  
(2) the State has other, adequate safeguards to protect Medicaid 
beneficiaries from abuse and neglect.2   Currently, 49 States and the 
District of Columbia (States) have created such Units.3 In fiscal year 
(FY) 2012, combined Federal and State grant expenditures for the Units 
totaled $217.3 million, of which Federal funds represented 
$162.9 million.4, 5   That year, the 50 Units employed 1,901 individuals.6  
To carry out its duties and responsibilities in an effective and efficient 
manner, each Unit must employ an interdisciplinary staff that consists of 
at least an investigator, an auditor, and an attorney.7  The staff reviews 
complaints provided by the State Medicaid agency and other sources and 
determines their potential for criminal prosecution and/or civil action.  
Collectively, in FY 2012, the 50 Units reported 1,337 convictions and 
 
1 Social Security Act (SSA)  1903(q).  

2 SSA  1902(a)(61).  Regulations at  42 CFR  1007.11(b)(1) add that the Units 

responsibilities may include reviewing complaints of misappropriation of patients 

private funds in  residential health care facilities. 

3 North Dakota and the territories of American Samoa, Guam, the Northern Mariana 

Islands, Puerto Rico, and the U.S. Virgin  Islands have not established Units.  Medicaid 

Fraud Control Units, Office of Inspector General (OIG) web site.  Accessed at 

http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp on May 21, 2013. 

4 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2012 Grant Expenditures and 

Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/ on 
 
March 19, 2013. 

5 All FY references in this report are based on the Federal FY (October 1  through  
September 30). 
 
6 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2012 Grant Expenditures and 

Statistics. 

7 SSA  1903(q)(6) and 42 CFR  1007.13.  
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  1  
   
   
823 civil judgments and settlements. That year, the Units reported 
recoveries of approximately $2.9 billion.8  
Units are required to have either statewide authority to prosecute cases or 
formal procedures to refer suspected criminal violations to an office with 
such authority.9  In Montana and 43 other States, the Units are located 
within offices of State Attorneys General that have this authority.  In the  
remaining six States, the Units are located within other State agencies; 
generally, such Units must refer cases to offices with prosecutorial 
authority.10  Additionally, each Unit must be a single, identifiable entity of 
State government, distinct from the State Medicaid agency, and each Unit 
must develop a formal agreemente.g., a memorandum of understanding 
(MOU)that describes the Units relationship with that agency.11   
Oversight of the MFCU Program 
The Secretary of HHS delegated to OIG the authority both to annually 
certify the Units and to administer grant awards to reimburse States for a 
percentage of their costs of operating them.12 All Units are currently funded 
by the Federal Government on a 75-percent matching basis, with the States 
contributing the remaining 25 percent.13   To receive Federal reimbursement, 
each Unit must submit an initial application to OIG.14  OIG reviews the 
application and notifies the Unit whether it is approved and the Unit is 
certified. Approval and certification are valid for a 1-year period; the Unit 
must be recertified each year thereafter.15    
Pursuant to Title XIX of the SSA, States must operate Units that effectively 
carry out their statutory functions and meet program requirements.16   OIG 
developed and issued 12 performance standards to define the criteria that 
OIG applies in assessing whether a Unit is effectively carrying out statutory 
 
8 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2012 Grant Expenditures and 

Statistics. Pursuant to  42 CFR  1007.17, Units report the total amount  of recovered 

funds in their annual  reports to  OIG.  Recoveries are defined as the amount  of money 
 
that defendants are required to pay as a result of a judgment or settlement in criminal and 

civil cases, and may not  reflect actual collections.  Recoveries may involve cases that 
 
include participation by other Federal and State agencies. 

9  SSA  1903(q)(1). 
 
10 In States with  a Unit, the Unit shares responsibility for protecting the integrity of the 

Medicaid program with the section of the State Medicaid agency that functions as the 
 
Program Integrity Unit.  Some States also employ a Medicaid Inspector General who 

conducts and coordinates anti-fraud, waste, and abuse activities for the State agency. 

11  SSA  1903(q)(2)  and 42  CFR   1007.9(d).  

12 The portion of funds reimbursed to States by the Federal  Government for its share of 
 
expenditures for the Federal  Medicaid program, including  the MFCUs, is  referred to as 

Federal Financial Participation.  

13  SSA  1903(a)(6)(B). 
  
14 42 CFR   1007.15(a). 

15 42 CFR   1007.15(b) and  (c). 

16  SSA  1902(a)(61). 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  2  
   
   
functions and meeting program requirements.17  Examples include 
maintaining an adequate caseload through referrals from several sources, 
maintaining an annual training plan for all three of the professional 
disciplines (i.e., for auditors, investigators, and attorneys), and establishing  
policy and procedures manuals to reflect the Units operations.  See 
Appendix A for a complete list of the performance standards.18  
Montana Unit  
The Unit is an autonomous entity within the Montana Department of 
Justices Division of Criminal Investigation and has the authority to 
prosecute cases of Medicaid fraud and of patient abuse and neglect.  At the 
time of our review, the Unit had eight employeessix in the State capital 
of Helena, and one investigator located in each of the two satellite 
offices.19  The Unit Director serves as the Chief Investigator and directly 
supervises all Unit employees.  
The Unit receives referrals of provider fraud from the State Medicaid 
agencythe Montana Department of Public Health and Human Services 
(DPHHS)and from Federal agencies, such as OIG.  The Unit receives 
patient abuse and neglect referrals from DPHHSs Certification Bureau 
and from Adult Protective Services.  In addition, the Unit receives both 
types of referrals from other State and local agencies, from healthcare 
providers, and from the public through a Medicaid Fraud Control Unit 
hotline and a fraud-reporting form located on the Montana Department of  
Justices Web site. 20   For additional information on Unit referrals, see 
Appendix C. 
Upon receiving a referral, Unit employees gather background information 
on it and forward it to the Unit Director for review.  The Director screens 
the referral and decides whether to open it as a case or refer it to another 
agency. For additional information on the Units opened and closed 
investigations, including a breakdown by case type and provider category, 
see Appendix D. 
After the Director opens a referral for investigation, a Unit auditor gathers 
preliminary data on the case and the Director assigns the case to an 
 
17 59 Fed. Reg. 49080 (Sept. 26, 1994).  Accessed at http://oig.hhs.gov  on  
November 22, 2011.   
18 Prior to the time of our onsite data collection (December 2012), OIG published a 
revision  of the performance standards, 77 Fed. Reg. 32645  (June 1, 2012).  See 
Appendix B  for a complete list of the revised performance standards.   Unless otherwise 
noted, the performance standards referred to in this report were published in 1994 and  
were in effect during most of  our review  period (FYs 2010 through 2012).  
19 The Unit Director, Chief Attorney, two auditors, one investigator, and an  
administrative assistant are located in Helena. 

20 The Unit occasionally will open cases that were not formally referred  by  an  outside  

source. For example, a case may be brought to the Units attention  by the media. 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  3  
   
   
investigator. The Unit may open a case and pursue it through a variety of 
actions, including criminal prosecution, civil action, or a combination of 
the two. The Unit may close a case for a variety of reasons, including but 
not limited to resolving it through criminal and/or civil action or referring 
it to another agency. 
Previous Review  
In 2007, OIG conducted an onsite review of the Montana Unit and found 
that a Unit attorney and a Unit administrative support staff member 
regularly engaged in non-Unit activities.  This 2012 onsite review of the 
Unit found no indication that this issue persisted. 
METHODOLOGY 
We analyzed data from seven sources:  (1) a review of documentation, 
policies, and procedures related to the Units operations, staffing, and 
caseload for FYs 2010 through 2012; (2) a review of financial 
documentation for FYs 2010 through 2012; (3) structured interviews with 
key stakeholders; (4) a survey of Unit staff; (5) structured interviews with 
the Units management and selected staff; (6) an onsite review of case 
files that were open in FYs 2010 through 2012; and (7) an onsite review of 
Unit operations. 
We analyzed data from all seven sources to describe the caseload and 
assess the performance of the Unit.  We also analyzed the data to identify 
any opportunities for improvement and any instances in which the Unit 
did not meet the performance standards or was not operating in 
accordance with laws, regulations, and policy transmittals.21 In addition, 
we noted practices that appeared to benefit the Unit.  We based these 
observations on statements from Unit staff, data analysis, and our own 
judgment.  We did not independently verify the effectiveness of these 
practices, but included the information because it may be useful to other 
Units in their operations. 
We conducted the onsite review in December 2012. 
Data Collection and Analysis 
Review of Unit Documentation.  We collected and reviewed 
documentation, policies, and procedures related to the Units operations, 
staffing, and cases, including its annual reports, quarterly statistical 
reports, and responses to recertification questionnaires.  We reviewed this 
documentation to determine how the Unit investigates and prosecutes 
Medicaid cases. The documentation also included data such as the 
 
21 All relevant  regulations, statutes, and  policy transmittals are available online at 
http://oig.hhs.gov. 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  4  
   
   
number of referrals received by the Unit and the number of investigations 
opened and closed. Additionally, we confirmed with the Unit Director 
that the information we had was current at the time of our review and, as 
necessary, requested any additional data or clarification that was needed.    
Review of Financial Documentation. We reviewed Unit financial 
practices to determine compliance with applicable laws and regulations 
and to determine the need for additional internal controls.  Prior to the 
onsite review, we reviewed the Units financial policies and procedures, 
its response to an internal control questionnaire, and MFCU grant-related 
documents such as financial status reports.  During the onsite review, we 
reviewed a sample of the Units purchase and travel transactions.  In 
addition, we reviewed reviewed vehicle records, the equipment inventory, 
and a sample of time and effort records.  
Interviews With Key Stakeholders.  We conducted structured interviews 
with seven individual stakeholders among four agencies who were 
familiar with Unit operations.  Specifically, we interviewed DPHHSs 
Surveillance Utilization Review System (SURS) Supervisor; DPHHSs 
Certification Bureau Chief; an Assistant U.S. Attorney based in Montana; 
an investigator for the U.S. Attorneys Office based in Montana; the 
Investigations Bureau Chief22 for the Division of Criminal Investigation of 
the Montana Department of Justice; an OIG Assistant Special Agent in 
Charge for the State of Montana; and an OIG Special Agent who has 
worked with the Unit.  These interviews focused on the Units interaction  
with external agencies, Unit operations, opportunities for improvement, 
and any practices that appeared to benefit the Unit and that may be useful 
to other Units in their operations. 
Survey of Unit Staff. We conducted an electronic survey of Unit staff.23   
We requested and received responses from five nonmanagerial staff 
members, for a 100-percent response rate.24 Our questions focused on 
operations of the Unit, opportunities for improvement, and practices that 
appeared to benefit the Unit and that may be useful to other Units in their 
operations. The survey also sought information about the Units 
compliance with applicable laws, regulations, and policy transmittals.   
Interviews With Unit Management and Selected Staff. We conducted 
structured interviews with the Units Director (Chief Investigator), Chief 
Attorney, and an auditor.  We asked them to provide us with additional 
 
22 The Investigations Bureau Chief supervises the Unit Director. 
23 We did not survey one of the  Units nonmanagerial auditors because we interviewed 

that auditor onsite. 

24 This report uses the terms management and supervisors interchangeably.  

Nonmanagement employees are Unit staff members who have no  supervisory
  
authority. 

Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  5  
   
   
information necessary to better understand the Units operations, identify 
opportunities for improvement, identify practices that appeared to benefit 
the Unit and that may be useful to other Units in their operations, and 
clarify information obtained from other data sources.  
Onsite Review of Case Files.  We selected a simple random sample of 
55 case files from the 105 cases that were open at any point from   
FY 2010 through FY 2012.25  The design of this sample allowed us to 
estimate the percentage of all 105 cases with various characteristics at the 
95-percent confidence level. We reviewed these 55 sampled case files and 
the Units processes for monitoring the status and outcomes of cases.  
From these 55 case files, we selected another simple random sample of   
35 files and conducted a more comprehensive review to identify any other 
potential issues. For population and sample size counts, as well as 
confidence interval estimates, see Appendix E. 
Onsite Review of Unit Operations. While onsite, we reviewed the Units 
operations. Specifically, we observed intake of referrals, data analysis 
operations, security of data and case files, and the general functioning of 
the Unit. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency.26  
 
25 This  figure includes cases opened before FY  2010 that  remained open at some point  
during FYs 20102012. 

26 Full text  of these standards is available online at  

http://www.ignet.gov/pande/standards/oeistds11.pdf. 

Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  6  
   
   
FINDINGS 
From FY 2010 through FY 2012, the Unit reported 
recoveries of $9.8 million, 6 convictions, and 31 civil 
judgments and settlements 
From FY 2010 through FY 2012, the Unit reported total criminal and civil 
recoveries of $9.8 millionan annual average of $3.3 million (see 
Table 1). Of the $9.8 million in recoveries, the Unit attributed 
$9.7 million to civil recoveries and $77,000 to criminal recoveries.  
Global case judgments and settlements accounted for $9.5 million of the 
total civil recoveries and global cases accounted for 4 of the Units 
105 cases over the 3-year period.27  The Units annual average 
expenditures for FYs 2010 through 2012 were $697,000.28    
Table 1: Montana Unit Reported Recovered Funds, FYs 2010 Through 2012  
3-Year  Annual  
FY 2010   FY 2011   FY 2012  
  Total   Average*  
Reported Criminal 
$58,294   $5,916   $13,437   $77,647   $25,882  
Recoveries 
Global 
$1,326,958  $2,950,573   $5,222,030  $9,499,561   $3,166,520  
Recoveries 
Non-Global Civil 
$59,978   $0  $140,423   $200,401   $66,800  
Recoveries 
Total Reported  
$1,445,230  $2,956,489   $5,375,890  $9,777,609   $3,259,203  
Recoveries  
Total  
$657,113   $724,219   $710,704   $2,092,036   $697,345  
Expenditures 
Source:  OIG review of Unit self-reported QSR and other data, FYs 20102012. 
*Averages in  this  table are rounded. 
 
From FY 2010 through FY 2012, the Unit Reported 6 Convictions and 
31 Civil Judgments and Settlements.  From FY 2010 through FY 2012, the 
Unit reported 6 convictions and 31 civil judgments and settlementsan 
annual average of 2 convictions and 10.3 civil judgments and settlements 
(see Table 2). 
 
 
 
 
27 Unit-reported recoveries include funds recovered  from  multi-State, or global, civil 
false claims cases, both those  worked directly by the Unit and those worked  by staff from 
other Units.  
28 The figures presented in this finding are rounded.  
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  7  
   
   
Table 2: Unit Convictions and Civil Judgments and/or Settlements, 
FYs 2010 Through 201229  
3-Year  Annual  
FY 2010   FY 2011   FY 2012  
  Total   Average 
Convictions  2  0  4  6  2 
Civil Judgments and/or Settlements  11  10  10  31  10.3 
Source:  OIG review of Unit self-reported QSR and other data, FYs 20102012. 
 
From FYs 2010 through 2012, the Unit opened an average of 34 cases 
annuallyan average of 26 provider fraud and 9 patient abuse and neglect 
cases. From FYs 2010 through 2012, the Unit closed an average of 
27 cases annually, with an average of 19 provider fraud and 8 patient 
abuse and neglect cases.30  From FYs 2010 through 2012, the Unit 
received an average of 126 referrals annuallyan average of 109 provider 
fraud and 17 patient abuse and neglect referrals.  
Ninety-five percent of case files contained 
documentation of supervisory approval to open cases; 
however, 40 percent of closed case files lacked 
documentation of supervisory approval to close cases  
According to Performance Standard 6(b), Unit supervisors should approve 
the opening and closing of cases to ensure a continuous case flow and the 
timely completion of cases.  Supervisory approval to open and close cases 
demonstrates that Unit supervisors are monitoring the intake of cases and  
the timeliness of case resolutions, thereby promoting the efficiency and 
effectiveness of Unit staff.  The Unit documented supervisory approval to 
open cases in 95 percent of the case files. However, 40 percent of closed 
case files lacked documented supervisory approval to close cases. 
Sixty-five percent of case files lacked documentation 
of periodic supervisory reviews 
According to Performance Standard 6(c), supervisory reviews should be 
conducted periodically and noted in the case file to ensure timely case 
completion.31  Sixty-two percent of Unit case files lacked documentation 
of at least one supervisory review and 65 percent of the case files lacked 
documentation of additional, periodic supervisory reviews.   
 
29 Civil Judgments and/or Settlements include those received from global cases.   

30 Closures include multiple cases opened before FY 2010. 

31 For the purposes of this report, supervisory approval to  open and close a case does not 
 
constitute a supervisory review.  Periodic supervisory reviews indicates that a 

supervisor reviewed a case more than  once  between the cases opening and closing and 

documented those reviews in  the case file.
  
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  8  
   
   
Unit management and staff reported that all open cases are reviewed 
during monthly staff meetings and that the Unit Director is informally 
involved in all cases. Unit management reported that for some of the 
Units complex cases, it documents significant case activity on a case 
activity tracking sheet to ensure that these cases move forward in a timely 
manner. 
The Unit did not refer sentenced providers to OIG for 
program exclusion within the appropriate timeframe 
According to Performance Standard 8(d), when a convicted provider is  
sentenced, the Unit should send a referral letter to OIG within 30 days or 
other reasonable time period for the purpose of program exclusion.32   The  
Unit reported six total convictions within the review period but referred 
none of these sentenced providers to OIG for program exclusion within the 
appropriate timeframe.  However, after we determined that the Unit did not 
refer these providers to OIG for exclusion within  the appropriate 
timeframe, the Unit provided documentation indicating it later referred the 
providers to OIG for exclusion.33       
The Units MOU with DPHHS did not reflect current law 
and practice 
According to Performance Standard 10, Units should periodically review  
their MOUs with the State Medicaid agency to ensure that the MOUs reflect 
current law and practice.  As required by Federal regulations, the Unit had 
an MOU (dated July 2010) with DPHHS/SURS.  34 However, the MOU did 
not include payment suspension provisions for providers who are subject to 
an ongoing investigation related to credible allegations of fraud.35  Federal 
regulations also require that the MOU include a provision requiring the 
State Medicaid agency to provide the Unit with access to, and free copies 
of, any records or information kept by the agency or its contractors.36   
However, contrary to this regulation, an MOU provision stipulates that any 
cost associated with MFCU special requests which require system changes  
 
32 Pursuant to  42 U.S.C.   1320a-7(a),  OIG excludes from participation in Federal  health
  
care programs any person or entity convicted of a criminal offense related to the delivery 

of an item or service under the Medicaid program or to the neglect  or abuse of  patients in 
 
residential health care facilities.  No payment may be made by Medicaid, Medicare, or 

other Federal  health care programs for an item or service provided,  ordered, or  prescribed
  
by an excluded individual or entity.  42 CFR   1001.1901.  

33  We made this  determination in September 2012.  The documentation provided by the 
 
Unit indicated that the providers were referred for exclusion in October 2012. 
 
34  42 CFR  1007.9(d).  

35  42 CFR  455.23 and 1007.9(e).   

36 42 CFR   455.21(a)(2)(i) and 42 CFR   1007.9(d). 

Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  9  
   
   
will be paid by the MFCU.37  Both the Unit Director and SURS staff 
reported, however, that SURS has never charged the Unit for data.  Unit 
management reported that it is working with DPHHS to issue a revised 
MOU that incorporates the payment  suspension provision and removes the 
stipulation that the Unit may be charged for special data requests. 
The Unit did not provide training to SURS or hold 
bimonthly meetings with SURS, as stipulated in the 
MOU 
Pursuant to the Units MOU with DPHHS, the Unit agrees to provide 
training specific to Medicaid provider fraud detection to SURS at least 
once a year.38  However, DPHHS/SURS staff reported that Unit trainings 
to SURS are few and far between, and the Unit Director reported that 
the Unit has not provided training to SURS in a couple of years.  
Another provision in the MOU stipulates that the Unit and SURS will 
meet at least every two months for various purposes, including 
discussing potential referrals and open cases.  Both the Unit Director and  
SURS staff reported, however, that the two agencies had not met in over 
6 months.  SURS staff reported that the two agencies had not met because 
SURS was busy working on its Medicaid Management Information 
System.     
Other observation:  The Unit received a limited 
number of fraud referrals from DPHHS  
Pursuant to Federal regulations, a State Medicaid agency must refer all 
cases of suspected fraud to the Unit in its State.39 According to the Units 
MOU with DPHHS, DPHHS will, at the earliest practical opportunity in 
its preliminary investigation, advise the MFCU of any suspected fraud.40      
However, the Unit reported that DPHHS/SURS sent only seven total fraud 
referrals to the Unit during the review period, including only one referral 
in FY 2012.41 According to SURS staff, any referral to the Unit was 
 
37  Memorandum  of Understanding between the Montana  Department  of Justice and the 

Montana  Department of  Public  Health and Human Services,  Part III,  A and  B. 
 
38 Ibid., Part III,   E. 

39 42 CFR   455.21(a)(1).  

40  Memorandum  of Understanding between the Montana  Department  of Justice and the 
Montana  Department of  Public  Health and Human Services,  Part III,  E.  
41 The Medicaid  Integrity Group  (MIG) of the Centers for Medicare & Medicaid Services 
conducts periodic onsite program integrity reviews of State Medicaid  programs.  In 2010, 
the MIG conducted a review  of DPHHS.  The resulting  July 2011 MIG report noted that 
DPHHS referred very  few cases to the Unit.  This report recommended that DPHHS 
develop more suspected fraud cases for the MFCU, and that DPHHS and the Unit 
should meet to discuss any barriers to the successful prosecution of fraud.   MIG,  
Montana  Comprehensive Program Integrity Review  Final Report (July 2011), pp. 89.  
Accessed at http://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-
Prevention/FraudAbuseforProfs/Downloads/MTfy10.pdf on  May 21, 2013. 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  10  
   
   
considered to be a credible allegation of fraud and therefore subject to 
provider payment suspension.42  SURS staff further reported that all such 
referrals must be approved by a DPHHS administrator and, therefore, 
unless the referral clearly constituted a credible allegation of fraud, SURS 
was reluctant to make any referrals to the Unit.    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                 
42 A State Medicaid agency must suspend all Medicaid  payments to a provider if the 
agency determines that the provider is under investigation for a credible fraud allegation,  
unless the agency or a law enforcement entity has good cause not to suspend payments or 
to suspend them only in part.  42 CFR   455.23(a)(1).  
42 A State Medicaid agency must suspend all Medicaid  payments to a provider if the 
agency determines that the provider is under investigation for a credible fraud allegation,  
unless the agency or a law enforcement entity has good cause not to suspend payments or 
to suspend them only in part.  42 CFR   455.23(a)(1).  
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  11  
   
   
CONCLUSION AND RECOMMENDATIONS 
From FY 2010 through FY 2012, the Unit reported recoveries of 
$9.8 million, 6 convictions, and 31 civil judgments and settlements.  Unit 
case files consistently contained documentation of supervisory approval to 
open cases. 
Other opportunities for Unit improvement exist.  Specifically, Unit case 
files did not consistently contain documentation of supervisory approval to 
close cases or documentation of periodic supervisory reviews.  In addition, 
the Unit did not refer sentenced providers to OIG for program exclusion 
within the appropriate timeframe.  The Units MOU with DPHHS did not 
reflect current law and practice, and the Unit did not always adhere to the 
MOU stipulations. Finally, the Unit received a limited number of fraud 
referrals from DPHHS.  With the exception of the MOU stipulation that 
the Unit may be charged for special data requests, we found no evidence 
of noncompliance with applicable laws, regulations, and policy 
transmittals.  
We recommend that the Montana Unit:   
Ensure that supervisory approval to close cases and periodic 
supervisory reviews are documented in Unit case files 
The Unit could use its case activity tracking sheets to document both 
periodic supervisory case reviews and supervisory approval to close cases 
in all case files.  
Ensure that letters referring providers for exclusion are 
submitted to OIG within the appropriate timeframe  
The Unit should ensure that letters referring providers for exclusion are 
sent within 30 days of defendant sentencing, consistent with the 
2012 Performance Standard 8 (f). 
Revise its MOU with DPHHS to reflect current law and practice 
The Unit should revise its MOU with DPHHS to include  payment 
suspension provisions for providers who are subject to an ongoing 
investigation related to credible allegations of fraud.   In  addition,  the  Unit  
should revise its MOU with DPHHS to remove the stipulation that the 
Unit may be charged for data requests. 
Ensure that it consistently adheres to its MOU  
Consistent with the stipulations of the MOU between the Unit and 
DPHHS, the Unit should provide Medicaid provider fraud detection 
training to DPHHS/SURS on an annual basis and meet with 
DPHHS/SURS at least bimonthly. 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  12  
   
   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
The Unit concurred with the four report recommendations. 
Regarding our first recommendation, the Unit adopted a case review form 
that will be attached to each open case file.  The Unit also amended its 
policies and procedures manual to reflect supervisory responsibility to 
approve the opening and closing of cases, as well as to document periodic 
case file reviews in the case files.  
Regarding our second recommendation, the Unit referred all omitted 
convictions to OIG for program exclusion.  The Unit also amended its 
policies and procedures manual to reflect the Unit Directors responsibility 
to ensure that all convictions are reported to OIG for program exclusion. 
Regarding our third recommendation, the Unit created a revised draft of its 
MOU with DPHHS that incorporates the suggested revisions mentioned in 
this report.  
Regarding our fourth recommendation, the Unit has established a training 
plan with DPHHS/SURS that requires quarterly cross-training between the 
two agencies, beginning in January 2014. 
The full text of the Units comments is provided in Appendix F.   We did 
not make any changes to the report as a result of the Units comments. 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  13  
   
   
APPENDIX A 
Performance Standards for MFCUs (Units)43   
1. 	A Unit will be in conformance with all applicable statutes, 
regulations and policy transmittals.  In meeting this standard, the 
Unit must meet, but is not limited to, the following requirements:  
a. 	  The Unit professional staff must consist of permanent employees 
working full-time on Medicaid fraud and patient abuse matters. 
b. 	  The Unit must be separate and distinct from the single State 
Medicaid agency. 
c. 	  The Unit must have prosecutorial authority or an approved formal 
procedure for referring cases to a prosecutor. 
d. 	  The Unit must submit annual reports, with appropriate 

certifications, on a timely basis. 
 
e. 	  The Unit must submit quarterly reports on a timely basis. 
f. 	  The Unit must comply with the Americans with Disabilities Act, 
the Equal Employment opportunity requirements, the Drug Free 
workplace requirements, Federal lobbying restrictions, and other 
such rules that are made conditions of the grant. 
2. 	A Unit should maintain staff levels in accordance with staffing 
allocations approved in its budget. In meeting this standard, the 
following performance indicators will be considered: 
a. 	  Does the Unit employ the number of staff that was included in the 
Unit's budget as approved by the Office of Inspector General 
(OIG)? 
b. 	  Does the Unit employ the number of attorneys, auditors, and 
investigators that were approved in the Unit's budget? 
c. 	  Does the Unit employ a reasonable size of professional staff in 
relation to the State's total Medicaid program expenditures?   
d. 	  Are the Unit office locations established on a rational basis and are 
such locations appropriately staffed? 
3. 	A Unit should establish policies and procedures for its operations, 
and maintain appropriate systems for case management and case 
tracking.  In meeting this standard, the following performance 
indicators will be considered: 
 
43 59 Fed. Reg. 49080  (Sept. 26, 1994).  These performance standards were in effect 
during most of our review  period and precede the performance standards published in 
June 2012.  
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  14  
   
   
a. 	  Does the Unit have policy and procedure manuals? 
b. 	  Is an adequate, computerized case management and tracking 
system in place? 
4. A Unit should take steps to ensure that it maintains an adequate 
workload through referrals from the single State agency and other 
sources.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit work with the single State Medicaid agency to 
ensure adequate fraud referrals? 
b. 	  Does the Unit work with other agencies to encourage fraud 

referrals? 

c. 	  Does the Unit generate any of its own fraud cases? 
d. 	  Does the Unit ensure that adequate referrals of patient abuse 
complaints are received from all sources? 
5. 	A Units case mix, when possibl e, should cover all significant 
provider types. In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit seek to have a mix of cases among all types of 
providers in the State? 
b. 	  Does the Unit seek to have a mix of Medicaid fraud and Medicaid 
patient abuse cases? 
c. 	  Does the Unit seek to have a mix of cases that reflect the 

proportion of Medicaid expenditures for particular provider 

groups? 

d.	   Are there any special Unit initiatives targeting specific provider 
types that affect case mix? 
e. 	  Does the Unit consider civil and administrative remedies when  
appropriate? 
6. 	A Unit should have a continuous case flow, and cases should be 
completed in a reasonable time. In meeting this standard, the 
following performance indicators will be considered:  
a. 	  Is each stage of an investigation and prosecution completed in an 
appropriate time frame?  
b.	   Are supervisors approving the opening and closing of 

investigations?
   
c. 	  Are supervisory reviews conducted periodically and noted in the 
case file? 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  15  
   
   
7. A Unit should have a process for monitoring the outcome of cases.  
In meeting this standard, the following performance indicators will be 
considered:  
a. 	  The number, age, and type of cases in inventory. 
b. 	  The number of referrals to other agencies for prosecution. 
c. 	  The number of arrests and indictments. 
d. 	  The number of convictions. 
e. 	  The amount of overpayments identified. 
f. 	  The amount of fines and restitution ordered. 
g. 	  The amount of civil recoveries. 
h. 	  The numbers of administrative sanctions imposed. 
8. 	 A Unit will cooperate with the OIG and other federal agencies, 
whenever appropriate and consistent with its mission, in the 
investigation and prosecution of health care fraud.  In meeting this 
standard, the following performance indicators will be considered: 
a. 	  Does the Unit communicate effectively with the OIG and other 
Federal agencies in investigating or prosecuting health care fraud 
in their State? 
b. 	  Does the Unit provide OIG regional management, and other 
Federal agencies, where appropriate, with timely information 
concerning significant actions in all cases being pursued by the 
Unit? 
c. 	  Does the Unit have an effective procedure for referring cases,  
when appropriate, to Federal agencies for investigation and other 
action?  
d. 	  Does the Unit transmit to the OIG, for purposes of program  
exclusions under section 1128 of the Social Security Act, reports 
of convictions, and copies of Judgment and Sentence or other 
acceptable documentation within 30 days or other reasonable time 
period? 
9. 	A Unit should make statutor y or programmatic recommendations, 
when necessary, to the State government. In meeting this standard, 
the following performance indicators will be considered:  
a. 	  Does the Unit recommend amendments to the enforcement 
provisions of the State's statutes when necessary and appropriate to 
do so? 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  16  
   
   
b. 	  Does the Unit provide program recommendations to single State 
agency when appropriate? 
c. 	  Does the Unit monitor actions taken by State legislature or State 
Medicaid agency in response to recommendations? 
10. 	A Unit should periodica lly review its memorandum of 
understanding (MOU) with the single State Medicaid agency and 
seek amendments, as necessary, to ensure it reflects current law  
and practice.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Is the MOU more than 5 years old? 
b. 	  Does the MOU meet Federal legal requirements? 
c. 	  Does the MOU address cross-training with the fraud detection staff  
of the State Medicaid agency? 
d. 	  Does the MOU address the Units responsibility to make program  
recommendations to the Medicaid agency and monitor actions  
taken by the Medicaid agency concerning those recommendations? 
11. The Unit director should exercise proper fiscal control over the 
Unit resources.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit director receive on a timely basis copies of all fiscal 
and administrative reports concerning Unit expenditures from the 
State parent agency? 
b. 	  Does the Unit maintain an equipment inventory?  
c. 	  Does the Unit apply generally accepted accounting principles in its 
control of Unit funding? 
12. A Unit should maintain an annual training plan for all 
professional disciplines.  In meeting this standard, the following 
performance indicators will be considered:  
a. 	  Does the Unit have a training plan in place and funds available to 
fully implement the plan? 
b. 	  Does the Unit have a minimum number of hours training 
requirement for each professional discipline, and does the staff 
comply with the requirement? 
c. 	  Are continuing education standards met for professional staff? 
d. 	  Does the training undertaken by staff aid to the mission of the 
Unit? 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  17  
   
   
APPENDIX B 
Revised 2012 Performance Standards for MFCUs (Units)44   
1. 	A unit conforms with all applicable statutes, regulations, and 
policy directives, including:  
a. 	  Section 1903(q) of the Social Security Act, containing the basic 
requirements for operation of a MFCU; 
b. 	  Regulations for operation of a MFCU contained in 42 CFR 

part 1007; 

c. 	  Grant administration requirements at 45 CFR part 92 and Federal 
cost principles at 2 CFR part 225; 
d. 	  OIG policy transmittals as maintained on the OIG Web site; and  
e. 	  Terms and conditions of the notice of the grant award. 
2. 	A Unit maintains reasonable staff levels and office locations in 
relation to the States Medicaid program expenditures and in 
accordance with staffing allocations approved in its budget.  
a. 	  The Unit employs the number of staff that is included in the Units 
budget estimate as approved by OIG. 
b. 	  The Unit employs a total number of professional staff that is 
commensurate with the States total Medicaid program  
expenditures and that enables the Unit to effectively investigate  
and prosecute (or refer for prosecution) an appropriate volume of 
case referrals and workload for both Medicaid fraud and patient 
abuse and neglect. 
c. 	  The Unit employs an appropriate mix and number of attorneys, 
auditors, investigators, and other professional staff that is both 
commensurate with the States total Medicaid program  
expenditures and that allows the Unit to effectively investigate and 
prosecute (or refer for prosecution) an appropriate volume of case 
referrals and workload for both Medicaid fraud and patient abuse 
and neglect. 
d. 	  The Unit employs a number of support staff in relation to its 
overall size that allows the Unit to operate effectively.  
e. 	  To the extent that a Unit maintains multiple office locations, such 
locations are distributed throughout the State, and are adequately 
staffed, commensurate with the volume of case referrals and 
workload for each location. 
 
44  77  Fed.  Reg. 32645 (June 1, 2012). 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  18  
   
   
3. 	A Unit establishes written policies and procedures for its 
operations and ensures that staff are familiar with, and adhere to, 
policies and procedures.  
a. 	  The Unit has written guidelines or manuals that contain current 
policies and procedures, consistent with these performance 
standards, for the investigation and (for those Units with 
prosecutorial authority) prosecution of Medicaid fraud and patient 
abuse and neglect. 
b. 	  The Unit adheres to current policies and procedures in its 

operations. 

c. 	  Procedures include a process for referring cases, when appropriate, 
to Federal and State agencies. Referrals to State agencies, 
including the State Medicaid agency, should identify whether 
further investigation or other administrative action is warranted, 
such as the collection of overpayments or suspension of payments. 
d. 	  Written guidelines and manuals are readily available to all Unit 
staff, either online or in hard copy. 
e. 	  Policies and procedures address training standards for Unit 

employees. 

4. 	A Unit takes steps to maintain an adequate volume and quality of 
referrals from the State Medicaid agency and other sources. 
a. 	  The Unit takes steps, such as the development of operational 
protocols, to ensure that the State Medicaid agency, managed care 
organizations, and other agencies refer to the Unit all suspected 
provider fraud cases. Consistent with 42 CFR 1007.9(g), the Unit 
provides timely written notice to the State Medicaid agency when 
referred cases are accepted or declined for investigation.  
b. 	  The Unit provides periodic feedback to the State Medicaid agency 
and other referral sources on the adequacy of both the volume and 
quality of its referrals.  
c. 	  The Unit provides timely information to the State Medicaid or 
other agency when the Medicaid or other agency requests 
information on the status of MFCU investigations, including when 
the Medicaid agency requests quarterly certification pursuant to 
42 CFR 455.23(d)(3)(ii). 
d. 	  For those States in which the Unit has original jurisdiction to 
investigate or prosecute patient abuse and neglect cases, the Unit 
takes steps, such as the development of operational protocols, to 
ensure that pertinent agencies refer such cases to the Unit, 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  19  
   
   
consistent with patient confidentiality and consent.  Pertinent 
agencies vary by State but may include licensing and certification 
agencies, the State Long Term Care Ombudsman, and adult 
protective services offices. 
e. 	  The Unit provides timely information, when requested, to those 
agencies identified in (D) above regarding the status of referrals. 
f. 	  The Unit takes steps, through public outreach or other means, to 
encourage the public to refer cases to the Unit.  
5. 	A Unit takes steps to maintain a continuous case flow and to 
complete cases in an appropriate timeframe based on the 
complexity of the cases.  
a. 	  Each stage of an investigation and prosecution is completed in an 
appropriate timeframe. 
b. 	  Supervisors approve the opening and closing of all investigations 
and review the progress of cases and take action as necessary to 
ensure that each stage of an investigation and prosecution is 
completed in an appropriate timeframe. 
c. 	  Delays to investigations and prosecutions are limited to situations 
imposed by resource constraints or other exigencies. 
6. 	A Units case mix, as practicabl e, covers all significant provider 
types and includes a balance of fraud and, where appropriate, 
patient abuse and neglect cases.  
a. 	  The Unit seeks to have a mix of cases from all significant provider 
types in the State.  
b. 	  For those States that rely substantially on managed care entities for 
the provision of Medicaid services, the Unit includes a 
commensurate number of managed care cases in its mix of cases. 
c. 	  The Unit seeks to allocate resources among provider types based 
on levels of Medicaid expenditures or other risk factors.  Special 
Unit initiatives may focus on specific provider types. 
d. 	  As part of its case mix, the Unit maintains a balance of fraud and 
patient abuse and neglect cases for those States in which the Unit 
has original jurisdiction to investigate or prosecute patient abuse 
and neglect cases.  
e. 	  As part of its case mix, the Unit seeks to maintain, consistent with 
its legal authorities, a balance of criminal and civil fraud cases. 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  20  
   
   
7. 	A Unit maintains case files in an effective manner and develops a 
case management system that allows efficient access to case 
information and other performance data. 
a. 	  Reviews by supervisors are conducted periodically, consistent with 
MFCU policies and procedures, and are noted in the case file.  
b. 	  Case files include all relevant facts and information and justify the 
opening and closing of the cases. 
c. 	  Significant documents, such as charging documents and settlement 
agreements, are included in the file.  
d. 	  Interview summaries are written promptly, as defined by the Units 
policies and procedures. 
e. 	  The Unit has an information management system that manages and 
tracks case information from initiation to resolution. 
f. 	  The Unit has an information management system that allows for 
the monitoring and reporting of case information, including the 
following: 
1. 	  The number of cases opened and closed and the reason that  
cases are closed. 
2. 	  The length of time taken to determine whether to open a 
case referred by the State Medicaid agency or other 
referring source. 
3. 	  The number, age, and types of cases in the Units 
inventory/docket. 
4. 	  The number of referrals received by the Unit and the 
number of referrals by the Unit to other agencies. 
5. 	  The dollar amount of overpayments identified. 
6. 	  The number of cases criminally prosecuted by the Unit or 
referred to others for prosecution, the number of 
individuals or entities charged, and the number of pending 
prosecutions. 
7. 	  The number of criminal convictions and the number of civil 
judgments. 
8. 	  The dollar amount of fines, penalties, and restitution 
ordered in a criminal case and the dollar amount of 
recoveries and the types of relief obtained through civil 
judgments or prefiling settlements. 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  21  
   
   
8. 	A Unit cooperates with OIG and other Federal agencies in the 
investigation and prosecution of Medicaid and other health care 
fraud.  
a. 	  The Unit communicates on a regular basis with OIG and other 
Federal agencies investigating or prosecuting health care fraud in 
the State.  
b.	   The Unit cooperates and, as appropriate, coordinates with OIGs 
Office of Investigations and other Federal agencies on cases being 
pursued jointly, cases involving the same suspects or allegations, 
and cases that have been referred to the Unit by OIG or another 
Federal agency. 
c. 	  The Unit makes available, to the extent authorized by law and 
upon request by Federal investigators and prosecutors, all 
information in its possession concerning provider fraud or fraud in 
the administration of the Medicaid program. 
d.	   For cases that require the granting of extended jurisdiction to 
investigate Medicare or other Federal health care fraud, the Unit 
seeks permission from OIG or other relevant agencies under 
procedures as set by those agencies.  
e. 	  For cases that have civil fraud potential, the Unit investigates and 
prosecutes such cases under State authority or refers such cases to 
OIG or the U.S. Department of Justice. 
f. 	  The Unit transmits to OIG, for purposes of program exclusions 
under section 1128 of the Social Security Act, all pertinent 
information on MFCU convictions within 30 days of sentencing, 
including charging documents, plea agreements, and sentencing 
orders. 
g. 	  The Unit reports qualifying cases to the Healthcare Integrity & 
Protection Databank, the National Practitioner Data Bank, or 
successor data bases.  
9. 	 A Unit makes statutory or programmatic recommendations, when 
warranted, to the State government. 
a. 	  The Unit, when warranted and appropriate, makes statutory 
recommendations to the State legislature to improve the operation 
of the Unit, including amendments to the enforcement provisions 
of the State code. 
b.	   The Unit, when warranted and appropriate, makes other regulatory 
or administrative recommendations regarding program integrity 
issues to the State Medicaid agency and to other agencies 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  22  
   
   
responsible for Medicaid operations or funding.  The Unit monitors 
actions taken by the State legislature and the State Medicaid or 
other agencies in response to recommendations. 
10. 	A Unit periodically reviews  its Memorandum of Understanding 
(MOU) with the State Medicaid agency to ensure that it reflects 
current practice, policy, and legal requirements. 
a. 	  The MFCU documents that it has reviewed the MOU at least every 
5 years, and has renegotiated the MOU as necessary, to ensure that 
it reflects current practice, policy, and legal requirements. 
b. 	  The MOU meets current Federal legal requirements as contained in 
law or regulation, including 42 CFR 455.21, Cooperation with 
State Medicaid fraud control units, and 42 CFR 455.23, 
Suspension of payments in cases of fraud. 
c. 	  The MOU is consistent with current Federal and State policy, 
including any policies issued by OIG or the Centers for Medicare 
& Medicaid Services (CMS). 
d.	   Consistent with Performance Standard 4, the MOU establishes a 
process to ensure the receipt of an adequate volume and quality of  
referrals to the Unit from the State Medicaid agency. 
e. 	  The MOU incorporates by reference the CMS Performance 
Standard for Referrals of Suspected Fraud from a State Agency to 
a Medicaid Fraud Control Unit. 
11. 	A Unit exercises proper fiscal  control over Unit resources.  
a. 	  The Unit promptly submits to OIG its preliminary budget 
estimates, proposed budget, and Federal financial expenditure 
reports. 
b.	   The Unit maintains an equipment inventory that is updated 

regularly to reflect all property under the Units control. 

c. 	  The Unit maintains an effective time and attendance system and 
personnel activity records. 
d.	   The Unit applies generally accepted accounting principles in its 
control of Unit funding. 
e. 	  The Unit employs a financial system in compliance with the 
standards for financial management systems contained in 
45 CFR 92.20. 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  23  
   
   
12. 	A Unit conducts training that  aids in the mission of the Unit. 
a. 	  The Unit maintains a training plan for each professional discipline 
that includes an annual minimum number of training hours and that 
is at least as stringent as required for professional certification. 
b. 	  The Unit ensures that professional staff comply with their training 
plans and maintain records of their staffs compliance.  
c. 	  Professional certifications are maintained for all staff, including  
those that fulfill continuing education requirements.  
d. 	  The Unit participates in MFCU related training, including training 
offered by OIG and other MFCUs, as such training is available and 
as funding permits. 
e. 	  The Unit participates in cross training with the fraud detection staff  
of the State Medicaid agency. As part of such training, Unit staff 
provide training on the elements of successful fraud referrals and 
receive training on the role and responsibilities of the State 
Medicaid agency. 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  24  
   
   
APPENDIX C 
Referrals of Provider Fraud and Patient Abuse and Neglect to  
the Montana MFCU by Source, FYs 2010 Through 2012 
Table C-1: Total MFCU Referrals of Fraud and Abuse Referrals and Annual 
Average 
Annual  
  Case Type   FY 2010   FY 2011   FY 2012   3-Year Total  
Average*  
Patient Abuse and Neglect  25  14  11  50  17 
 
Provider Fraud   86  133  108  327  109 
 
  Total   111  147  119  377  126 
 
Source:   Montana Medicaid Fraud Control Unit (Unit) response to Office of  Inspector General (OIG) data request. 
 
*Averages in  this  table are rounded. 
 
Table C-2: Unit Referrals, by Referral Source 
 
FY 2010   FY 2011   FY 2012    
Abuse  Abuse  Abuse  Percentage 
Referral 
Fraud   and  Fraud   and  Fraud   and  Total   of All 
Source  
Neglect   Neglect   Neglect   Referrals  
Private 
45  0  73  2  43  4  167  44.3 
Citizens 
Providers  14  3  24  3  20  0  64  17.0 
State Medicaid 
8  4  8  0  11  1  32  8.5 
AgencyOther  
Unit Hotline  0  0  1  0  20  0  21  5.6 
State Survey  
and 
3  5  3  5  0  1  17  4.5 
Certification 
Agency 
Adult 
Protective  1  11  4  0  0  0  16  4.2 
Services  
Law  
6  0  6  0  2  2  16  4.2 
Enforcement  
Other   2  0  4  1  8  0  15  4.0 
Other State 
0  1  2  2  2  2  9  2.4 
Agencies 
State Medicaid 
Agency  3  0  3  0  1  0  7  1.9 
SURS 
Private Health 
3  0  2  0  0  0  5  1.3 
Insurers  
OIG  0  0  2  0  1  1  4  1.1 
Long-Term 
Care  0  0  1  1  0  0  2  0.5 
Ombudsman  
Prosecutors  0  1  0  0  0  0  1  0.3 
Provider 
1  0  0  0  0  0  1  0.3 
Associations  
Total   86  25  133  14  108  11  377  100 
Annual    
111  147  119 
Total    
Annual    
126 
Average*    
Source:  Unit response to OIG data request. 

*Average is rounded. 

Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  25  
   
   
APPENDIX D 
Investigations Opened and Closed by Provider Category and 
Case Type, FYs 2010 Through 2012 
Table D-1: Total Annual Opened and Closed Investigations  
 
  Annual   
 Case Type   FY 2010   FY 2011   FY 2012   3-Year Total   Average*  
 Opened   28  39  36  103  34 
Patient Abuse and 
  14  7  5  26  9 
Neglect 
  Provider Fraud   14  32  31  77  26 
Closed  12  38  31  81  27 
 
Patient Abuse and 
7  13  3  23  8 
  Neglect 
Provider Fraud   5  25  28  58  19 
 
Source:  Montana  MFCU response to  OIG data request. 
*Averages in  this  table are rounded. 
 
Table D-2: Total Investigations, by Case Type 
FY 2010   FY 2011   FY 2012  
Case Type  
Opened  Closed  Opened  Closed  Opened  Closed 
Patient Abuse and Neglect  14  7  7  13  5  3 
Provider Fraud   14  5  32  25  31  28 
Total   28  12  39  38  36  31 
Source:  Unit response to OIG data request. 
 
Table D-3: Patient Abuse and Neglect Investigations  
 
Provider Category   FY 2010   FY 2011   FY 2012  
        
Opened  Closed  Opened  Closed  Opened  Closed 
Non-Direct Care   2  1  2  4  3  2 
Nurses/Doctors Assistants  4  3  3  2  1  1 
Nursing Facilities   4  0  1  5  0  0 
Other Long-Term  Care 
0  0  0  0  1  0 
Facilities  
Other   4  3  1  2  0  0 
Total   14  7  7  13  5  3 
Source:  Unit response to OIG data request. 
 
 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  26  
   
   
Table D-4: Provider Fraud Investigations  
 
Provider Category   FY 2010   FY 2011   FY 2012  
Facilities   Opened  Closed   Opened  Closed   Opened  Closed  
Hospitals  0  0  2  3  2  2 
Nursing Facilities   1  0  3  2  0  1 
Other Long-Term  Care 
0  0  1  1  0  0 
Facilities  
Other   0  0  0  0  5  4 
Practitioners   Opened  Closed  Opened  Closed  Opened  Closed 
Counselors/Psychologists  1  1  4  4  1  0 
Dentists  1  0  1  1  0  0 
Doctors of Medicine or 
2  0  1  2  0  1 
Osteopathy  
Other   0  0  2  2  2  1 
Medical Support  Opened  Closed   Opened  Closed   Opened  Closed  
Durable Medical 
0  0  2  1  2  2 
Equipment Suppliers 
Home Health Care 
0  0  1  1  1  0 
Agencies 
Home Health Care Aides  6  3  11  4  15  11 
Laboratories  0  0  0  0  1  1 
Nurses/Doctors Assistants  1  0  1  1  0  1 
Pharmaceutical 
0  0  1  1  2  2 
Manufacturers 
Pharmacies  1  0  1  1  0  1 
Transportation Services  0  0  1  1  0  0 
Other   1  1  0  0  0  1 
Program  Related   Opened  Closed  Opened  Closed  Opened  Closed 
All Programs*  0  0  0  0  0  0 
Total   14  5  32  25  31  28 
Source:  Unit response to OIG data request. 

 
*For example, managed care, Medicaid program administration, and billing companies. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  27  
   
   
APPENDIX E 
Case File Review Population, Sample Size Counts, and 
Confidence Interval Estimates 
Table E-1 shows population and sample counts and percentages by case 
type. Note that both samples have percentages of case types similar to the 
general population, though sample counts for some case types are very 
small.  Because of these small sample sizes, we cannot reliably generalize 
what we found in our sample review to each case type in the population, 
and only our overall estimates project to the population of all case files.  
We estimated the 4 population values for all 105 case files from the results 
of our review of the case files selected in our simple random samples.  
Table E-2 includes the estimate descriptions, sample sizes, point estimates, 
and 95-percent confidence intervals for these four estimates.  
 
Table E-1:  Population and Sample Size Counts for Case Types 
Population Count  Sample Count*    Sample Count* 
Case Type  
and (%)  n=105   and (%)  n=55   and (%)  n=35  
Closed  79 (75%)   47 (85%)   28 (80%)  
Open   26 (25%)   8 (15%)   7 (20%)  
       
Civil  4 (4%)   2 (4%)   2 (6%)  
Criminal  101 (96%)   53 (96%)   33 (94%)  
       
Global  4 (4%)   2 (4%)   2 (6%)  
Patient Abuse/Neglect  26 (25%)   13 (23%)   9 (26%)  
Provider Fraud   75 (71%)   40 (73%)   24 (68%)  
Source: The Montana MFCU provided a list of all  case  files open during FYs 2010 through 2012. 
*OIG generated this random sample. 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  28  
   
   
Table E-2:  Confidence Intervals for Key Case File Review  Data  
Point  95-Percent Confidence 
Estimate Description  Sample Size 
Estimate  Interval  
Case Files With 
Documented Supervisory   55   94.5%   87.697.1%  
Approval for Opening  
Case Files With 
Documented Supervisory   47  59.6%   49.469.6%  
Approval for Closing  
Case Files With No 
Documentation Of at 
55   61.8%   51.570.9%  
Least One Supervisory 
Review  
Case Files With No 
Documentation Of 
55  65.4%   55.374.8%  
Periodic Supervisory  
Reviews  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  29  
   
   
APPENDIX E 
Unit Comments 
 
 
 
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  30  
  Mr. Stuart Wright, Deputy Inspector General for Evaluation and Inspections 
Department ofHealth and Human Services, Office oflnspector General 
August 27,2013 

Page2 

MFCU with the Data Bank was completed on May 1, 2013. Convictions are now being 
reported to the Data Bank in the manner required, i.e., within 30 days following conviction. 
(Prior convictions were also "caught up" and reported to that agency.) The policy manual 
was amended to reflect the unit director's responsibility to make those notifications. 
-The third recommendation was that the SURS/MFCU Memorandum of 
Understanding (MOU) needed to be revised to reflect current law and practice. The final 
draft of the updated MOU wa~ completed and signatures were obtained from the 
administrator and attorney of the state's Medicaid program and from the administrator of 
the MT Division of Criminal Investigation (of which the MFCU is a part) and by the 
MFCU prosecutor. 
-The fourth and final recommendation was that the MFCU consistently adhere to 
the MOU with SURS. That recommendation included cross-training between the two units. 
We have set up a training plan between the MFCU and SURS to bring us into conformity 
with the MOU. 
The timeline for the recommendations is as follows: 
The first, second, and third recommendations have already been implemented. The 
fourth recommendation regarding cross-training with the MT DPHHS SURS will 
commence in November 2013 and will be occurring quarterly beginning in January 2014. 
Thank you for the work of the onsite team. Please let me know ifyou have any questions; 
my direct telephone number is (406) 444-4606 and my email contact is dfosket@mt.gov. 
Sincerely, 
+'  
Debrah Foskct, Director 
Medicaid Fraud Control Unit 
Montana Division of Criminal Investigations 
Cc: MT Attorney General Tim Fox 
MT Division of Criminal Investigations Administrator Bryan Lockerby 
Montana State Medicaid Fraud Control Unit; 2012 Onsite Review (OEI-09-12-00700)  31   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Timothy S. Brady, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Michael Henry,  Deputy Regional Inspector General.  
Matthew DeFraga served as the lead analyst for this study.  Other Office 
of Evaluation and Inspections staff who provided support include 
Rosemary Rawlins.  Central office staff who provided support include 
Susan Burbach, Kevin Farber, Christine Moritz, and Sherri Weinstein.  
Office of Investigations staff who provided support include Bill Kennedy.   
Montana State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-09-12-00700)  32  
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office  of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving program operations.  
Office of Investigations  
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office  of Counsel to  the Inspector  General  
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.