Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
S  C S
OUTH  AROLINA  TATE 
 
M F C U : 
EDIC  AID  RAUD  ONTROL  NIT
  
2011 O R  
  NSITE  EVIEW
 
Stuart Wright 
Deputy Inspector General for 
Evaluation and Inspections 
 
October 2012 
OEI-09-11-00610   
   
SOUTH CAROLINA STATE MEDICAID FRAUD CONTROL UNIT:  
2011 ONSITE REVIEW 
OEI-09-11-00610 
 
WHY WE DID THIS STUDY  
 
The Office of Inspector General (OIG) oversees all Medicaid Fraud Control Units 
(MFCU or Unit) with respect to Federal grant compliance.  As part of this oversight, 
OIG reviews all Units.  These reviews assess Unit performance in accordance with the 
12 MFCU performance standards and monitor Unit compliance with Federal grant 
requirements.  
 
HOW WE DID THIS STUDY 
 
We based our review on an analysis of 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; (6) an onsite review of case files; and (7) an onsite review of Unit 
operations. 
 
WHAT WE FOUND 
 
Our analysis of collected data from fiscal year (FY) 2008 through FY 2010 shows that 
the Units caseload increased by 65 percent and that the amount of funds the Unit 
recovered nearly doubled, from $15.3 million in FY 2008 to $30.3 million in FY 2010.  
Although almost all Unit case files documented supervisory approval to open and close 
cases, the Units case files lacked consistent documentation of periodic supervisory 
reviews.  In addition, the Unit had not updated its policies and procedures manual to 
reflect the Units current operations or its memorandum of understanding with 
South Carolinas State Medicaid agency to reflect current law and practice.  Finally, 
although the Unit maintained proper fiscal control of its resources, it did not report 
program income properly in FY 2010.  We found no further evidence of noncompliance 
with applicable laws, regulations, and policy transmittals. 
 
WHAT WE RECOMMEND 
 
We recommend that the South Carolina Unit:  (1) ensure that periodic supervisory 
reviews are documented in Unit case files; (2) complete revisions to its policies and 
procedures manual to reflect current Unit operations and revise its memorandum of 
understanding with South Carolinas single State Medicaid agency to reflect current law 
and practice; and (3) ensure that program income is reported properly.  The 
South Carolina Unit concurred with all three of our recommendations. 
 
 
 
   
   
 
 
TABLE OF CONTENTS 
 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................8 
From fiscal year 2008 through fiscal year 2010, the Units  
caseload increased by 65 percent and the amount of funds the   
Unit recovered nearly doubled .........................................................8 
Although almost all case files contained documentation of   
supervisory approval to open and close cases, 61 percent   
contained no documentation of periodic supervisory reviews .........9 
The Unit had not updated its policies and procedures manual        
or its memorandum of understanding with the South Carolina 
Department of Health and Human Services ...................................10 
The Unit maintained proper fiscal control of its resources,           
but it did not report program income properly in fiscal year  
2010................................................................................................ 11 
Conclusion and Recommendations ............................................................13 
Unit Comments and Office of Inspector General Response ..........14 
Appendixes ................................................................................................15 
A:  Performance Standards for Medicaid Fraud Control Units .....15 
B:  Referrals of Provider Fraud and Patient Abuse and Neglect to 
the Medicaid Fraud Control Unit by Source, Fiscal Years 2008 
Through 2010 .................................................................................19 
C:  Investigations Opened and Closed by Provider Category       
and Case Type, Fiscal Years 2008 Through 2010 ..........................20 
D:  Case File Review Population, Sample Size Counts, and 
Confidence Interval Estimates .......................................................22   
E:  Unit Comments.........................................................................24   
Acknowledgments......................................................................................28 
   
   
OBJECTIVE 
To conduct an onsite review of the South Carolina 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 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) 2011, combined 
Federal and State grant expenditures for the Units totaled $208.6 million, 
of which Federal funds represented $156.7 million.4  The 50 MFCUs 
employed 1,833 individuals.  
Each Unit must employ an interdisciplinary staff that consists of at least an 
investigator, an auditor, and an attorney to carry out its duties and 
responsibilities in an effective and efficient manner.5  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 2011, the 50 Units reported 1,230 convictions and 
906 civil settlements or judgments.  That year, the Units reported 
recoveries of approximately $1.7 billion. 6, 7   
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.8  In South Carolina and 43 other States, the Units are 
 
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. 
4 All FY references in this report are based on the Federal FY (October 1 through 
September 30). 
5 SSA  1903(q)(6) and 42 CFR 1007.13. 
6 Office of Inspector General (OIG), State Medicaid Fraud Control Units Fiscal Year 
2011 Grant Expenditures and Statistics.  Accessed at http://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/ on April 16, 2012. 
7 Pursuant to 42 CFR  1007.17, Units report the total amount of recovered funds in their 
annual reports to OIG.   
8 SSA  1903(q)(1). 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  1 
   
   
located within offices of State Attorneys General that have this authority. 
In the remaining 6 States, the Units are located in other State agencies;9  
generally, such Units must refer cases to other offices with prosecutorial 
authority.  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.10  
Oversight of the MFCU Program 
The Secretary of HHS delegated to OIG the authority to both annually 
certify the Units and administer grant awards to reimburse States for a 
percentage of their costs in operating certified Units.11  All Units are 
currently funded by the Federal Government on a 75-percent matching basis, 
with the States contributing the remaining 25 percent.12  To receive Federal 
reimbursement, each Unit must submit an initial application to OIG.13  
OIG reviews the application and notifies the Unit if the application is 
approved and the Unit is certified.  Approval and certification is for a 
1-year period; the Unit must be recertified each year thereafter.14   
Pursuant to Title XIX of the SSA, States must operate Units that effectively 
carry out their statutory functions and meet program requirements.15  
OIG developed and issued 12 performance standards to define further the 
criteria that OIG applies in assessing whether a Unit is effectively carrying 
out statutory functions and meeting program requirements.16  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. 
 
9 Among those 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 fraud, waste, and abuse activities for the State 
agency. 
10 SSA  1903(q)(2); 42 CFR  1007.9(d).  
11 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 called Federal 
Financial Participation (FFP). 
12 SSA  1903(a)(6)(B).  
13 42 CFR  1007.15(a). 
14 42 CFR  1007.15(b) and (c). 
15 SSA  1902(a)(61). 
16 59 Fed. Reg. 49080 (Sept. 26, 1994).  Accessed at http://oig.hhs.gov on 
November 22, 2011.  Since the time of our review, OIG published a revision of the 
performance standards, 77 Fed. Reg. 32645 (June 1, 2012). 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  2 
   
   
South Carolina Unit  
The Unit is an autonomous entity within the Criminal Prosecution 
Division of the South Carolina Office of the Attorney General and has the 
authority to prosecute Medicaid fraud and patient abuse and neglect cases.  
At the time of our review, the Unit had 16 employees, all of whom were 
located in the State capital of Columbia.17  Unit investigators are generally 
assigned to cover one of two areas:  provider fraud or patient abuse and 
neglect.  However, because of the Units relatively small size, 
investigators and attorneys often work on both types of cases.   
The Unit receives referrals of provider fraud from the single State 
Medicaid agency, the South Carolina Department of Health and Human 
Services (SCDHHS).  Fraud referrals also come to the Unit from Federal 
sources, such as OIG.  Patient abuse and neglect referrals come from the 
State Long Term Care Ombudsman.  Referrals in both categories also 
come from various law enforcement agencies and other State and local 
sources.  From FY 2008 through FY 2010, the Unit received an average of 
100 referrals annually (see Appendix B).  The Units Provider Fraud 
Intake Committeecomposed of the Chief Attorney, a Chief Investigator, 
and an analystdecides whether to accept a referral as a case or to refer it 
to another agency.   
The Unit will not open a case unless it plans to investigate and prosecute 
it.  Unit management assigns an attorney, investigator, supervisor, and 
analyst to each case the Unit decides to open.  From FY 2008 through 
FY 2010, the Unit opened an average of 101 cases annuallyan average 
of 62 cases of provider fraud and 39 cases of patient abuse and neglect.18  
For additional information on Unit investigations opened and closed, 
including a breakdown by case type and provider category, see 
Appendix C.   
The Unit may pursue a case through a variety of actions, including 
criminal prosecution, civil action, or a combination of the two.  From 
FY 2008 through FY 2010, the Unit closed an average of 113 cases 
annuallyan average of 55 provider fraud and 58 patient abuse and 
neglect cases.19  From FY 2008 through FY 2010, the Unit obtained an 
 
17 We conducted our onsite review of the South Carolina Unit in December 2011. 
18 The Unit will occasionally open cases that were not formally referred by another 
agency.  For example, a case may be brought to the Units attention by the media. 
19 Averages are rounded to the nearest whole number.  The number of closed cases 
includes multiple cases opened before FY 2008. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  3 
   
   
annual average of 32 convictions (89 total) and closed an annual average 
of 16 cases (49 total) through civil action.20   
From FY 2008 through FY 2010, the Unit directly participated in 
18 globali.e., multi-Statecases through the National Association of 
Medicaid Fraud Control Units.21  The Unit Director, Chief Auditor, and 
Administrative Assistant to the Director all participated in global cases, 
and the Unit Director and Chief Auditor trained State and Federal 
prosecutors in the global process.22  The Unit Director is a member of the 
National Association of Medicaid Fraud Control Units Global Case 
Committee, which coordinates training in the global case process for State 
attorneys and data analysts.   
Previous Review 
In 2005, OIG conducted an onsite review of the South Carolina Unit.  In 
the resulting memorandum, OIG noted no instances of noncompliance 
with applicable Federal laws, regulations, or policy transmittals.  The 
memorandum contained no recommendations for Unit improvement.  In 
addition, the Unit received the 2010 State Fraud Award from OIG in 
recognition of efficient and effective management practices in combating 
fraud and abuse in the Medicaid program. 
METHODOLOGY 
We based our review on an analysis of data from seven sources:  
(1) a review of documentation, policies, and procedures related to the 
Units operations, staffing, and caseload for FYs 2008 through 2010; 
(2) a review of financial documentation for FYs 2008 through 2010; 
(3) structured interviews with key stakeholders; (4) a survey of Unit staff; 
(5) structured interviews with the Units management; (6) an onsite review 
of case files that were open in FYs 2008 through 2010; 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 
 
20 The Unit provided these figures on January 27, 2012.  Figures are based on cases 
closed as a result of criminal prosecution and/or civil action.  These figures do not 
include cases closed because the Unit determined the cases were no longer viable. 
21 Global cases are civil false-claims cases involving the U.S. Department of Justice 
and other State MFCUs.  The National Association of Medicaid Fraud Control Units is a 
voluntary association of all 50 Units.  Among other services, the Association provides 
training opportunities and facilitates the settlement of global cases.  More information on 
the Association and its involvement in global cases is available online at 
http://www.namfcu.net. 
22 During the review period, the Unit Director participated as a trainer/speaker in five 
training sessions, and the Chief Auditor participated as a trainer once. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  4 
   
   
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.23  In addition, 
we noted any practices that appeared to be beneficial to 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. 
Data Collection and Analysis 
Review of unit documentation.  We requested 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 also requested 
and reviewed the Units data describing how it investigates and prosecutes 
Medicaid cases.  Data collected included information such as the number 
of referrals received by the Unit and the number of investigations opened 
and closed.   
Review of financial documentation.  We reviewed policies and procedures 
related to budgeting, accounting systems, cash management, procurement, 
property, and personnel to evaluate internal controls and to design our test 
of financial documentation.  We obtained from the Unit its claimed grant 
expenditures for FY 2008 through FY 2010 to:  (1) review final Federal 
Status Reports24 and supporting documentation; (2) select and review 
transactions within direct cost categories to determine if costs were 
allowable; and (3) verify that indirect costs were accurately computed 
using the approved indirect cost rate.  Finally, we reviewed records in the 
Department of Health & Human Services (HHS) Payment Management 
System25 and revenue accounts to identify any unreported program 
income.26 
Interviews with key stakeholders.  We conducted structured interviews 
with eight individual stakeholders among four agencies who were familiar 
 
23 All relevant regulations, statutes, and policy transmittals are available online at 
http://oig.hhs.gov.  
24 The Unit transmits financial status reports to OIGs Office of Management and Policy 
on a quarterly and annual basis.  These reports detail Unit income and expenditures. 
25 HHS uses its electronic Payment Management System to distribute funds to program 
grantees. 
26 Program income refers to any funds typically received by the Unit as part of a legal 
judgment or settlement, including restitution of Unit investigative and legal costs.  
However, State settlement proceeds provided to the MFCU after refunding the Federal 
share of the entire recovery to the Centers for Medicare & Medicaid Services do not 
constitute program income under Federal grant regulations.  OIG State Fraud Policy 
Transmittal 10-01, Program Income (March 22, 2010).     
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  5 
   
   
with Unit operations.  Specifically, we interviewed SCDHHSs Director of 
Program Integrity; two Assistant U.S. Attorneys based in Columbia; 
South Carolinas Chief Deputy Attorney General; three OIG Special 
Agents based in Columbia; and an Assistant Special Agent in Charge for 
OIGs Region IV, which includes the State of South Carolina.27  These 
interviews focused on the Units interaction with external agencies, Unit 
operations, opportunities for improvement, and any practices that appeared 
to be beneficial to the Unit and that may be useful to other Units in their 
operations. 
Survey of Unit staff.  We conducted an electronic survey of all 
nonmanagerial Unit staff.  We requested and received responses from each 
of the 11 nonmanagerial staff members, a 100-percent response rate.28  
Our questions focused on operations of the Unit, opportunities for 
improvement, and practices that appeared to be beneficial to 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.  We conducted structured interviews 
with the Units director, deputy director (chief attorney), two chief 
investigators, and chief auditor/analyst.  We asked these managers to 
provide us with additional information necessary to better understand the 
Units operations, identify opportunities for improvement, identify 
practices that appeared to be beneficial to 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 
100 case files from the 456 cases29 that were open at any point from 
FY 2008 through FY 2010.  The design of this sample allowed us to 
estimate the percentage of all 456 cases with various characteristics  
(+/-10 percent) at the 95-percent confidence level.  We reviewed the 
100 sampled case files and the Units processes for monitoring the status 
and outcomes of cases.30  Of these 100 case files, we selected a further 
 
27 The Chief Deputy Attorney General supervises the Unit Director. 
28 This report uses the terms management and supervisors interchangeably.  
Nonmanagement employees are Unit staff members who have no supervisory 
authority. 
29 This figure includes cases opened before FY 2008 that remained open at some point 
during FYs 20082010. 
30 The Unit provided us with an orientation of the case files and case tracking system to 
confirm and supplement our understanding of how the Unit maintains and tracks case 
progress and documentation.  The Unit also gave us access to staff to answer any 
questions and locate any available documentation missing from the case files. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  6 
   
   
random sample of 50 files for a more in-depth review of selected issues, 
such as the timeliness of investigations and prosecutions.31  For population 
and sample size counts, as well as confidence interval estimates, see 
Appendix D. 
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.32 
 
31 We initially selected 50 case files for more in-depth review; however, because time 
allowed, we viewed an additional 3 case files. 
32 Full text of these standards is available online at 
http://www.ignet.gov/pande/standards/oeistds11.pdf.  
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  7 
   
   
FINDINGS 
From FY 2008 through FY 2010, the Units caseload 
increased by 65 percent and the amount of funds the 
Unit recovered nearly doubled 
The Units caseload (measured by the number of opened cases) increased 
each year of the review period and the Units reported recovered funds 
nearly doubled, from approximately $15.3 million in FY 2008 to 
approximately $30.3 million in FY 2010.   
The Units caseload increased by 65 percent 
The Units caseload increased each year from FY 2008 through FY 2010.  
The Unit opened 71 cases in FY 2008, 116 in FY 2009, and 117 in 
FY 2010a 65-percent increase over the review period.  Unit 
management and staff attributed the increased number of opened cases 
partly to the establishment of the Units Provider Fraud Intake Committee 
in 2009.  This committee meets biweekly to review recent referrals and 
determine which to open as cases and which to refer to another agency.  
According to Unit management and staff, the committee greatly 
streamlined the process of accepting and directing appropriate cases, 
serving as a terrific screening process ... a kind of triage.  One staff 
member stated that the committee helped the Unit become more efficient 
in handling our cases.   
Unit management and staff also attributed the increased number of opened 
cases partly to an increase in referrals.  According to Performance 
Standard 4, the Unit should take steps to ensure that it maintains an 
adequate workload through referrals from the single State Medicaid 
agencySCDHHSand other sources.  The Unit received 71 referrals in 
FY 2008, 114 in FY 2009, and 114 in FY 2010a 61-percent increase 
over the review period.  According to management, staff, and individual 
stakeholders, the increase in Unit referrals is partly due to the Units 
productive relationships with other agencies.  For example, the Unit 
established MOUs with the South Carolina Law Enforcement Division 
and the State Long Term Care Ombudsman, and the Unit has made 
numerous outreach efforts to local law enforcement.  From 
FY 2008 through FY 2010, the Unit received 100 combined referrals from 
law enforcement and the State Long Term Care Ombudsman.  Both the 
Unit Director and the SCDHHS Program Integrity director indicated that 
the relationship between the Unit and SCDHHS was excellent.  From 
FY 2008 through FY 2010, the Unit received 39 referrals from 
SCDHHS.  According to individual stakeholders, the Unit also established 
a productive working relationship with OIG, which resulted in the Unit 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  8 
   
   
receiving 17 referrals from OIG in FY 2010, compared to 3 in the previous 
2 years combined.   
The Units recovered funds nearly doubled 
The total reported amount of funds the Unit recovered nearly doubled 
from FY 2008 to FY 2010 (see Table 1).  The Units total operating costs 
for FY 2010 were approximately $1.35 million.33  That year, the Unit 
received over $30 million in reported recovered fundsa return on 
investment of roughly 22.5 to 1.34  
Table 1:  South Carolina MFCU recovered funds, FY 2008 through FY 2010 
3-Year 
FY 2008  FY 2009  FY 2010 
  Total 
Reported Criminal 
$2,496,686  $375,011  $3,779,253  $6,650,950 
Recoveries 
Reported Civil Recoveries  $12,791,408  $16,652,635  $26,521,904  $55,965,947 
Total Reported Recoveries  $15,288,094  $17,027,646  $30,301,157  $62,616,897 
 
Source:  OIG analysis of Unit Quarterly Statistical Reports, FY 2008 through FY 2010. 
 
Although almost all case files contained 
documentation of supervisory approval to open and 
close cases, 61 percent contained no documentation 
of periodic supervisory reviews 
According to Performance Standard 6, a Unit should have a continuous 
case flow and cases should be completed in a reasonable time.  To help 
ensure this, according to Performance Standard 6(b), Unit supervisors 
should approve the opening and closing of cases.  The Unit documented 
supervisory approval to open cases 97 percent of the time.  Among closed 
cases, the Unit documented supervisory approval to close them 98 percent 
of the time.   
According to five of eight individual Unit stakeholders, the Units 
program knowledge benefitted the Units case flow.  In addition, Unit staff 
and three of eight individual Unit stakeholders identified personnel 
retention as beneficial to the Units case flow.  For example, the current 
Unit Director has served as Director since immediately after the Units 
establishment in 1995.  Unit supervisors have an average of 15 years 
 
33 The South Carolina Attorney Generals Office Finance staff provided the total 
operating costs. 
34 Reported recoveries include funds recovered from global cases, both those worked 
directly by the Unit and those worked by staff from Federal agencies and other Units. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  9 
   
   
experience with the Unit and investigators have an average of 8 years of 
experience. 
According to Performance Standard 6(c), supervisory reviews also should 
be conducted periodically and noted in the case file to ensure timely 
case completion.35  Ninety-three percent of Unit case files contained 
documentation of at least one supervisory review.  However, 61 percent of 
case files contained no documentation of additional, periodic supervisory 
review.  Although 70 percent of closed case files contained no 
documentation of periodic supervisory review, 22 percent of open case 
files in our sample (4 of 18) contained no such documentation.36  
Fifty-seven percent of all cases without documentation of additional 
periodic supervisory review were open for more than a year.37   
Unit supervisors explained that they conducted reviews frequently through 
informal conversations and that they did not record these conversations in 
the case files.  Management further explained that the Unit had recently 
taken steps to ensure periodic supervisory review of documentation by 
using case status forms, which track supervisory approval and review 
(including informal conversations) as well as pertinent actions on a case.  
The Unit began using the case status forms in FY 2011.  
The Unit had not updated its policies and procedures 
manual or its MOU with SCDHHS 
Although the Unit was in the process of updating its policies and 
procedures, these updates had not yet been completed and had not been 
incorporated into the Units written manual.  Moreover, the Units MOU 
with SCDHHS had not been updated to reflect recent legal changes that 
allow the Unit to refer any provider under investigation for a credible fraud 
allegation to SCDHHS for payment suspension.     
The Unit had not updated its policies and procedures manual to 
reflect current Unit operations 
According to Performance Standard 3, a Unit should establish policies and 
procedures for its operations, which should be included in a policies and 
procedures manual.  The current edition of the Units policies and 
 
35 For the purposes of this report, supervisory approval to open and close a case does not 
constitute a case file review.  Periodic supervisory review indicates that a supervisor 
reviewed a case more than once between its opening and closing. 
36 We were unable to confidently project this percentage to all 392 closed case files due 
to the small sample size. 
37 Because there were only 61 cases without documentation of additional periodic 
supervisory review in our sample, the 95-percent confidence interval for this estimate is 
4469 percent. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  10 
   
   
procedures manual was created in 2005.  Unit supervisors stated that they 
constantly review policies and procedures for potential revisions, and 
that the manual is overdue for a formal, written overhaul.  According to 
Unit management, the manual needs to be further revised to address the 
Units new electronic case management system and electronic health 
records seizure policy.  Unit management stated that the manual was 
currently being revised and would be completed in 2012. 
The Unit had not updated its MOU with SCDHHS to reflect 
current law and practice 
According to Performance Standard 10, Units should periodically review 
their MOU with the single State Medicaid agencySCDHHSto ensure 
that the MOU reflects current law and practice.  As required by Federal 
regulation, the Unit had an MOU with SCDHHS.38   However, the 
MOU was not revised to reflect recent legal changes that allow the Unit to 
refer any provider under investigation for a credible fraud allegation to 
SCDHHS for payment suspension.39  Both Unit management and 
SCDHHS officials stated that they are aware of this omission and are 
currently working to update the MOU, with the applicable changes to be 
incorporated in the next revision. 
The Unit maintained proper fiscal control of its 
resources, but it did not report program income 
properly in FY 2010 
According to Performance Standard 11, the Unit Director should exercise 
proper fiscal control over the Units resources.  Control includes 
maintaining an equipment inventory, using generally accepted accounting 
principles, properly reporting program income, and conducting proper 
reporting between the Unit and its State parent agency.   
From FY 2008 through FY 2010, the Unit claimed expenditures that 
represented allowable, allocable, and reasonable costs in accordance with 
applicable Federal regulations.  In addition, the Unit maintained adequate 
internal controls relating to accounting, budgeting, staff, procurement, 
property, and equipment.  However, the Unit improperly reported 
$8,275 of its portion of settlement proceeds as program income on its 
Federal Financial Status Reports for FY 2010.40  According to OIG policy, 
 
38 42 CFR  1007.9(d). 
39 42 CFR  455.23; 42 CFR 1007.9(e).  These MOU revisions also should specify the 
procedures for referring such providers and the subsequent actions to be taken by the single 
State Medicaid agency, such as SCDHHS. 
40 The Unit reports annual expenses and program income to account for how much 
money the Unit draws down, or withdraws, from the HHS Payment Management 
System as Federal reimbursement for its annual operating costs.     
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  11 
   
   
State settlement proceeds provided to the MFCU after refunding the 
Federal share of the entire recovery to the Centers for Medicare 
& Medicaid Services do not constitute program income under Federal 
grant regulations.41, 42  Because the Unit did not follow OIG policy, the 
Unit subsequently withdrew fewer funds from the HHS Payment 
Management System than it was entitled to receive. 
 
41 OIG State Fraud Policy Transmittal 10-01, Program Income (March 22, 2010). 
42 Pursuant to 45 CFR  92.25(g), program income is deducted from total net outlays to 
defray a portion of Federal reimbursement to a grantee (in this case, the Unit).  The Unit 
should not have reported settlement proceeds on its Federal Financial Status Reports 
because the Federal Medical Assistance Percentage share of the total recovery proceeds 
already had been reimbursed to CMS.  The Federal Medical Assistance Percentage is the 
State-specific rate of Federal matching funds allocated annually to assist State programs 
such as Medicaid.  
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  12 
   
   
CONCLUSION AND RECOMMENDATIONS 
From FY 2008 through FY 2010, the Unit opened 304 cases, obtained                    
89 convictions, and reported over $62 million in recoveries and restitution.  
During this period, the Units caseload increased by 65 percent and the 
total reported amount of funds the Unit recovered nearly doubled.  A 
practice that appeared to be beneficial and that may have contributed to 
this increase was the establishment of the Units Provider Fraud Intake 
Committee.  Unit supervisors consistently approved the opening and 
closing of cases, and 93 percent of cases documented at least one 
supervisory review. 
Despite this progress, opportunities for improvement exist.  Specifically, 
Unit case files did not consistently document periodic supervisory 
reviews.  Additionally, the Unit did not complete ongoing revisions to the 
Units policies and procedures manual and the Units MOU with SCDHHS 
was not updated to reflect current law and practice.  Finally, the Unit did 
not report program income properly in FY 2010.   
We found no further evidence of noncompliance with applicable laws, 
regulations, and policy transmittals. 
We recommend that the South Carolina Unit: 
Ensure That Periodic Supervisory Reviews Are Documented in 
Unit Case Files 
To ensure timely completion of its cases, the Unit should include 
documentation in its case files to demonstrate that supervisors conducted 
periodic reviews. 
Complete Revisions to Its Policies and Procedures Manual To 
Reflect Current Unit Operations and Revise Its MOU With 
SCDHHS To Reflect Current Law and Practice 
The Unit should incorporate its pending policies and procedures revisions 
into an updated edition of the policies and procedures manual.  The Unit 
should also add sections that address aspects of its operations not covered 
previously, such as the Units new electronic case management system and 
electronic health records seizure policy. 
The Unit should also revise its MOU with SCDHHS to specify that the 
Unit may refer any provider suspected of fraud for payment suspension to 
SCDHHS and to describe the procedure for this type of referral. 
Ensure That Program Income Is Reported Properly 
The Unit should report its program income according to guidelines in 
OIG State Fraud Policy Transmittal 10-01. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  13 
   
   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
The Unit concurred with the three report recommendations.   
Regarding our first recommendation, the Unit implemented a case status 
form that documents supervisory approval at the appropriate case stages.  
The Unit also restructured its procedure for assigning investigative teams 
to ensure periodic supervisory review. 
Regarding our second recommendation, the Unit Director created a 
Policies and Procedures Manual Committee to complete the final draft of a 
revised policies and procedures manual by the end of 2012; after vetting, 
the revised manual should be completed in early 2013.  The Unit and 
SCDHHS are working to complete a revised MOU by the end of 2012. 
Regarding our third recommendation, the Unit implemented a process to 
ensure that program income is reported appropriately according to Federal 
guidelines. 
The full text of the Units comments is provided in Appendix E.  We did 
not make any changes to the report based on the Units comments. 
 
 
 
 
 
 
 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  14 
   
   
APPENDIX A 
Performance Standards for Medicaid Fraud Control Units 
(Unit)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: 
a.  Does the Unit have policy and procedure manuals? 
 
43 59 Federal Register 49080 (Sept. 26, 1994).  These performance standards were in 
effect at the time of our review and precede the performance standards published in 
June 2012.   
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  15 
   
   
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 possible, 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? 
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. 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  16 
   
   
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 statutory 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? 
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? 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  17 
   
   
 
10.  A Unit should periodically 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? 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  18 
   
   
APPENDIX B 
Referrals of Provider Fraud and Patient Abuse and Neglect to 
the Medicaid Fraud Control Unit by Source, Fiscal Years 2008 
Through 2010 
 
Table B1:  Medicaid Fraud Control Unit Referrals 
FY 2008  FY 2009  FY 2010 
   
Abuse  Abuse  Abuse 
Referral Source  Fraud  and  Fraud  and  Fraud  and  Total 
Neglect  Neglect  Neglect 
South Carolina 
Department of Health  14  0  12  1  12  0  39 
and Human Services 
Other State Agencies  9  13  9  0  16  0  47 
Licensing Board  0  1  1  0  1  0  3 
Law Enforcement  0  19  3  18  1  23  64 
Office of Inspector 
1  0  2  0  17  0  20 
General (OIG) 
Outside Prosecutors  2  1  0  0  2  0  5 
Providers  0  2  0  0  0  0  2 
Provider Associations  0  0  10  0  0  0  10 
Long Term Care 
2  3  0  22  0  9  36 
Ombudsman 
Private Citizens  2  0  1  0  6  0  9 
Unit Hotline  0  0  9  0  11  0  20 
Other  2  0  26  0  10  6  44 
Total  32  39  73  41  76  38  299 
Annual Total  71  114  114 
 
Annual Average  100 
 
Source:  OIG analysis of South Carolina Medicaid Fraud Control Unit (Unit) Quarterly Statistical Reports, fiscal year 
(FY) 2008 through FY 2010. 
 
 
 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  19 
   
   
APPENDIX C 
Investigations Opened and Closed by Provider Category and 
Case Type, Fiscal Years 2008 through 2010 
Table C1:  Total Annual Opened and Closed Investigations 
 
 
Case Type  FY 2008  FY 2009  FY 2010  3-Year Total  Annual Average 
 
Opened  71  116  117  304  101* 
 
Patient Abuse and 
40  42  34  116  39 
  Neglect 
Provider Fraud  31  74  83  188  63 
 
           
 
Closed  72  109  157  338  113 
 
Patient Abuse and 
48  52  73  173  58 
Neglect 
Provider Fraud  24  57  84  165  55 
Source:  Office of Inspector General (OIG) analysis of South Carolina Medicaid Fraud Control Unit (Unit) Annual 
Reports, fiscal year (FY) 2008 through FY 2010. 
*Due to rounding, the total average of opened cases does not match the combined averages of patient abuse and 
neglect and provider fraud opened cases. 
 
Table C2:  Total Investigations, by Case Type 
 
FY 2008  FY 2009  FY 2010 
Case Type 
Opened  Closed  Opened  Closed  Opened  Closed  Total 
Patient Abuse and 
40  48  42  52  34  73  289 
Neglect 
Provider Fraud  31  24  74  57  83  84  353 
Total   71  72  116  109  117  157  642 
Source:  OIG analysis of Unit Annual Reports, FY 2008 through FY 2010.   
 
 
Table C3:  Patient Abuse and Neglect Investigations 
   
Provider  FY 2008  FY 2009  FY 2010 
Category       
Opened  Closed  Opened  Closed  Opened  Closed  Total 
Nursing Facility  2  2  0  2  0  3  9 
Nondirect Care  15  13  8  13  7  10  66 
Other Long Term 
1  1  1  0  0  1  4 
Care 
Certified Nurse 
1  4  19  7  1  18  50 
Aides 
Other  21  28  14  30  26  41  160 
Total   40  48  42  52  34  73  289 
   
Source:  OIG analysis of Unit Annual Reports, FY 2008 through FY 2010.
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  20 
   
   
Table C4:  Provider Fraud Investigations 
 
Provider   
FY 2008  FY 2009  FY 2010 
Category 
Facilities  Opened  Closed  Opened  Closed  Opened  Closed  Total 
Nursing Facilities  0  0  0  0  3  2  5 
Other Long Term 
1  0  0  1  0  0  2 
Care Facilities 
Other   1  1  1  2  5  5  15 
Practitioners  Opened  Closed  Opened  Closed  Opened  Closed  Total 
Doctors of 
Medicine or  3  0  5  4  11  11  34 
Osteopathy 
Dentists  6  0  7  8  3  5  29 
Podiatrists  0  0  0  1  0  0  1 
Optometrists/ 
0  0  0  0  2  2  4 
Opticians 
Counselors/ 
1  1  2  1  1  3  9 
Psychologists 
Chiropractors  0  1  0  0  3  3  7 
Other   0  1  2  2  1  1  7 
Medical Support  Opened  Closed  Opened  Closed  Opened  Closed  Total 
Pharmacies  1  3  4  6  3  5  22 
Pharmaceutical 
2  0  26  3  9  5  45 
Manufacturers 
Suppliers of 
Durable Medical 
1  0  3  6  7  3  20 
Equipment and/or 
Supplies 
Laboratories  0  4  2  2  0  3  11 
Transportation 
4  2  0  8  3  5  22 
Services 
Home Health 
7  3  4  5  6  6  31 
Care Agencies 
Home Health 
3  6  5  4  1  3  22 
Care Aides 
Nurses, Physician 
Assistants, Nurse 
Practitioners,  0  0  2  1  2  1  6 
Certified Nurse 
Aides 
Radiologists  0  0  0  0  2  0  2 
Medical 
1  2  10  3  21  21  58 
SupportOther 
Program Related  Opened  Closed  Opened  Closed  Opened  Closed  Total 
Managed Care   0  0  1  0  0  0  1 
Total   31  24  74  57  83  84  353 
Source:  OIG analysis of Unit Annual Reports, FY 2008 through FY 2010.   
 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  21 
   
   
APPENDIX D 
Case File Review Population, Sample Size Counts, and 
Confidence Interval Estimates 
Table D-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.  Due to these small sample sizes, we cannot generalize what we 
found in our sample review to case types in the population, and only our 
overall point estimates project to the population of all case files.  We 
estimated the 6 population values for all 456 case files from the results of 
our review of the case files selected in our simple random sample.  
Table D-2 includes the estimate descriptions, sample sizes, point 
estimates, and 95-percent confidence intervals for these six estimates.  
 
Table D-1:  Population and Sample Size Counts for Case Types 
Population Count  Sample Count*       Sample Count* 
Case Type  and (%)   and (%)   and (%)  
n=456  n=100  n=50 
Closed  392 (86%)  82 (82%)  43 (86%) 
Open  64 (14%)  18 (18%)  7 (14%) 
       
Civil  73 (16%)  17 (17%)  9 (18%) 
Criminal  367 (80%)  79 (79%)  39 (78%) 
Civil and Criminal  16 (4%)       4 (4%)  2 (4%) 
       
Patient Abuse/Neglect  199 (44%)  39 (39%)  22 (44%) 
Provider Fraud  257 (56%)  61 (61%)  28 (56%) 
Source:  The Medicaid Fraud Control Unit provided a list of all case files open during fiscal year (FY) 2008 through 
FY 2010. 
*The Office of Inspector General generated this random sample. 
 
 
 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  22 
   
   
Table D-2:  Confidence Intervals for Key Case File Review Data 
Point  95-Percent Confidence 
Estimate Description  Sample Size 
Estimate  Interval 
Case files with 
documented supervisory  100  97.0%  91.5%99.4% 
approval for opening 
Case files with 
documented supervisory  82  97.6%  91.5%99.7% 
approval for closing 
Case files with 
documentation indicating 
100  93.0%  86.1%97.1% 
at least one supervisory 
review 
Case files with no 
documentation indicating 
100  61.0%  52.5%69.5% 
periodic supervisory 
review 
Closed case files with no 
documentation indicating 
82  69.5%  60.7%78.3% 
periodic supervisory 
review 
Case files with no 
documentation indicating 
periodic supervisory  61  57.4%  44.0%69.0% 
review open for more 
than a year 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  23 
   
   
APPENDIX E 
Unit Comments 
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  24 
   
   
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  25 
   
   
 
 
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  26 
  n 
It 
Response 
We agree the unit should report its program income according to guidelines in OIG State Fraud Policy 
Transmittal I0-0I. 
Analysis 
From FY 2008 to FY 20l 0 the unit drew down fewer funds from the i fHS Payment Management 
System than it was entitled to receive. The unit improperly reported $8,275 of its portion of settlement 
procet-'tls as program income on its Federal Financial Status Reports for FY 20 I0, causing the 
deficiency in funding to the unit. 
1: 
Plan 
The unit will ensure that program income is reported appropriately and performed according to Federal 
Medical Assistance Percentage guidelines. This process ha~ already been implemented. 
1: 
CONCLUSION 
The SC MFCU appreciates the efforts ofHHS-010 and found the audit pruccss to be 
educational. We appreciate and concur with the recommendations. We commend OJG-HHS lor going 
beyond the typical constraints of the audit process to include the many positives ofthe SC MFCU
increased caseload, increased recoveries, the productive, collegial relationship with external agencies, 
and modified processes which increa~c the efficiency of the Unit. The SC MFCU remains committed  [i 
to the joint federal-state mission of fighting fraud in the Medicaid Program. 
Sincerely yours, 
C. William Gambrell, Jr. 
Senior Assistant Attorney General 
Director, Medicaid Fraud Control Unit 
r. 
4 
I 
South Carolina State Medicaid Fraud Control Unit 2011 Onsite Review (OEI-09-11-0061 0)  27   
   
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 from the San Francisco regional office 
who conducted the study include Marcia Wong.  Central office staff who 
provided support include Thomas Brannon, Kevin Farber, Debra Roush,     
Christine Moritz, and Maureen Pucciano.  Office of Audit Services staff 
who provided support include Gupa Goha, Ryan Moul, and Clarissa Yu.  
Office of Investigations staff who provided support include Rene Olivas.  
Office of Management and Policy staff who provided support include 
Alexis Lynady.   
South Carolina State Medicaid Fraud Control Unit:  2011 Onsite Review (OEI-09-11-00610)  28 
   
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.