Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
K S M
ANSAS  TATE  EDICAID 
 
 
F C U :  
RAUD  ONTROL  NIT   
 
2  012 O R
  NSITE  EVIEW
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Stuart Wright 
 
Deputy Inspector General for 
 
Evaluation and Inspections 
 
September 2012 
OEI-07-12-00200   
   
EXECUTIVE SUMMARY:   
KANSAS STATE MEDICAID FRAUD CONTROL UNIT:    
2012 ONSITE REVIEW  
OEI-07-11-00200 
 
 
WHY WE DID THIS STUDY  
 
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.  This is a review of the Kansas Unit.   
 
HOW WE DID THIS STUDY 
 
We analyzed data from seven sources:  (1) a review of policies, procedures, and 
documentation of 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 
 
For fiscal years (FY) 2009 through 2011, the Unit reported combined civil and criminal 
recoveries of nearly $66 million and 44 convictions.  The Unit increased referrals through 
education and outreach efforts.  We found no evidence of significant noncompliance with 
applicable laws, regulations, or policy transmittals.  However, we found opportunities for 
improvement and instances in which the Unit did not fully meet the performance 
standards.  Specifically, for FYs 2009 and 2010, the Unit had several internal control 
weaknesses and inadequate policies and procedures related to certain expenditures.  For 
FYs 2009 through 2011, the Unit did not report the identities of all convicted providers to 
OIG within 30 days of sentencing for the purpose of program exclusion.  The Unit also 
did not establish annual training plans for its professional disciplines.  Finally, case files 
had inconsistent documentation of supervisory approval for key stages of investigations, 
yet cases generally proceeded timely.   
 
WHAT WE RECOMMEND 
 
Based on these findings, the Kansas Unit should:  (1) develop policies and procedures to 
address internal control weaknesses; (2) develop a protocol to ensure identities of 
convicted providers are reported to OIG; (3) establish annual training plans for 
professional disciplines; and (4) ensure that all case files contain opening and closing 
investigative memoranda, documented supervisory approval, and documented periodic 
supervisory reviews.  The Kansas Unit concurred with all four of our recommendations.
     
   
TABLE OF CONTENTS 
 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................7 
For FYs 2009 through 2011, the Unit reported combined civil  
and criminal recoveries of nearly $66 million and 44 convictions ..7 
For FYs 2009 and 2010, the Unit had several internal control 
weaknesses and inadequate policies and procedures related to 
certain expenditures .........................................................................8 
The Unit did not report the identities of all convicted providers to  
OIG within 30 days of sentencing for the purpose of program 
exclusion ..........................................................................................8 
The Unit did not establish annual training plans for its  
professional disciplines ....................................................................9 
Case files had inconsistent documentation of supervisory  
approval for key stages of investigations, yet cases generally 
proceeded timely ............................................................................10 
Conclusion and Recommendations ............................................................ 11 
Unit Comments and Office of Inspector General Response .......... 11 
Appendixes ................................................................................................13 
A:  Performance Standards ............................................................13 
B:  Population and Sample Distribution of Case Files Open Any 
Time During FYs 2009 Through 2011 ...........................................17 
C:  Investigations Opened and Closed by Provider Category     
for Fiscal Years 2009 Through 2011 ..............................................18 
D:  Medicaid Fraud Control Unit Referrals by Provider Category 
for Fiscal Years 2009 Through 2011 ..............................................20 
E:  Expanded Information on Internal Control Weaknesses  
and Inadequate Policies and Procedures Related to Certain 
Expenditures ..................................................................................21 
F:  Point Estimates and Confidence Intervals Based on Case  
File Reviews...................................................................................24 
     
   
G:  Unit Comments ........................................................................25 
Acknowledgments......................................................................................35 
     
   
OBJECTIVE 
To conduct an onsite review of the Kansas 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  Under the Medicaid statute, each State must 
maintain a certified Unit unless the Secretary of Health & 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) 2011, combined 
Federal and State grant expenditures for the Units totaled $208.6 million, 
and Units employed 1,833 individuals.4   
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  Unit staff review 
complaints provided by the State Medicaid agency and other sources and 
determines their potential for criminal prosecution.  In FY 2011, the 
50 Units collectively reported 1,230 convictions and 906 civil settlements 
or judgments.6  That year, the Units reported recoveries of approximately 
$1.7 billion.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 Kansas and 42 other States, the Units are located 
 
1   
Social Security Act (SSA)  1903(q)(3).
2
 SSA  1902(a)(61) and 1903(q)(3).  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 Ibid.  
8 SSA  1903(q)(1). 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  1   
   
within offices of State Attorneys General; in the remaining 7 States, the 
Units are located in other State agencies.9  Generally, Units outside of the 
Attorneys General offices must refer cases to other offices with 
prosecutorial authority.   
Each Unit must be a single, identifiable entity of State government, 
distinct from the single State Medicaid agency, and each Unit must 
develop a formal agreement (i.e., a memorandum of understanding) that 
describes the Units relationship with that agency.10  
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 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 application to OIG.13  
OIG reviews the application and notifies the Unit if it is approved and the 
Unit is certified.  Approval and certification are for a 1-year period; the Unit 
must be recertified each year thereafter.14   
Under the Medicaid statute, 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 the criteria it 
applies in assessing whether a Unit is effectively carrying out statutory 
functions and meeting program requirements.16  Examples of criteria include 
maintaining an adequate caseload through referrals from several sources, 
maintaining an annual training plan for all professional disciplines, and 
establishing policy and procedure manuals to reflect the Units operations.  
See Appendix A for a complete list of the performance standards. 
 
9
 The Units share 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  1007.5 and 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. 
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.  Note that OIG published revised performance standards on June 1, 2012.  
(See 77 Fed. Reg. 32645.)  The standards referred to in this report are from 1994 and were in 
effect at the time of our review. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  2   
   
Kansas State MFCU  
The Attorney Generals Medicaid Fraud and Abuse Division acts as the 
MFCU for the State of Kansas.17  It has authority to prosecute Medicaid 
fraud and cases of patient abuse and neglect.  At the time of our review, 
the Units 15 employees were located in the State capital of Topeka.18  For 
FY 2011, the Kansas Unit was authorized to receive $1.2 million in 
Federal funds (with a State match of $400,000), but expended just under 
$1 million in Federal funds.19  Total Medicaid expenditures in Kansas 
increased from $2.4 billion in FY 2009 to $2.8 billion in FY 2011.20   
For FYs 2009 through 2011, the Unit received an average of 132 fraud 
referrals each year.  The Unit also reviews every complaint received by 
the Kansas Department on Aging (KDOA) regarding potential abuse, 
neglect, or exploitation occurring in health care facilities, as well as 
reports from consumers or the public.21   During FY 2011, the Unit 
reviewed 4,979 complaints that were received by KDOA.22   
Upon receipt of a Medicaid fraud referral, an analyst is assigned to 
determine whether criminal or civil liability exists.  The analyst forwards a 
recommendation memo to the Units Special Agent in Charge (SAC), who 
in turn forwards his or her recommendation to the Unit Director.  Upon 
determining that a referral merits a full investigation, the SAC assigns an 
investigator and the Director assigns an attorney(s) and an analyst.   
Previous Review 
In 2007, OIG conducted an onsite review of the Kansas Unit and found that:  
(1) the Unit lacked consistency in its investigative case files and did not have 
standardized policies and procedures for creating and maintaining case files; 
(2) the Unit did not routinely include opening, interim, or closing 
investigative memorandums in official files; (3) the Units case files did not 
contain an index identifying the information contained within each case file; 
(4) final dispositions of investigations were not noted in case files and Unit 
case files remained open indefinitely; (5) the Unit did not have any 
complaint, intake, or referral forms or documentation that identified specific 
complaint(s) or allegation(s) or the source of the information; and (6) the 
Unit initiated an open, active investigation for every complaint, referral, or 
 
17
 Kansas Attorney Generals Medicaid Fraud and Abuse Division Annual Report 201011.  
Accessed at http://www.ag.ks.gov on September 13, 2012. 
18 
Our onsite review occurred in April 2012. 
19 
OIG analysis of State form SF-425 for FY 2011. 
20 
Medicaid Fraud Control Units FY2011 Statistical Chart.  Accessed at http://oig.hhs.gov/ on 
March 1, 2012. 
21
 Kansas Attorney Generals Medicaid Fraud and Abuse Division Annual Report 201011. 
22
 All KDOA complaints are referred to local law enforcement and county prosecutors.  The 
Unit determined that none of the 4,979 complaints merited further investigation.  
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  3   
   
allegation received, resulting in each investigator having approximately 
61 open investigative cases, which may have been too burdensome to allow 
investigators to effectively and efficiently manage their caseload. 
As part of the 2007 onsite review, OIG recommended that the Kansas Unit 
(1) develop and implement standardized policies and procedures for creating 
and maintaining investigative case files; (2) incorporate opening, interim, 
and closing investigative memorandums in case files; (3) develop and 
implement a case file index listing all documents contained within the case 
file to allow easy identification and access by staff; (4) close case files upon 
final adjudication of the case or determine an appropriate timeframe after 
final adjudication to close the official case file; (5) ensure that original 
complaint, intake, or referral documents are part of the official investigative 
case file; and (6) conduct preliminary investigations into all complaints, 
referrals, or allegations for a specified period and determine whether an 
active, open investigation should be initiated, develop minimum 
requirements for opening an investigative case, and prioritize investigative 
bases based on their merit.   
The present onsite review found no evidence that issues related to findings  
1, 3, 4, 5, or 6 continue to occur. 
METHODOLOGY 
Our review covered the 3-year period of FYs 2009 through 2011.  We 
analyzed data from seven sources:  (1) a review of policies, procedures, 
and documentation of the Units operations, staffing, and caseload for 
FYs 2009 through 2011; (2) a review of financial documentation for 
FYs 2009 through 2011; (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 2009 through 2011; and (7) an onsite review of Unit operations.  If 
interview and survey respondents provided information that fell outside of 
our 3-year review period, we used it to explain further the results of our 
analyses covering FYs 2009 through 2011. 
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 fully meet the performance standards or was not operating in 
accordance with laws, regulations, and policy transmittals.23   
 
23
 All relevant regulations, statutes, and policy transmittals are available online at 
http://oig.hhs.gov. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  4   
   
Data Collection and Analysis 
Review of Unit Documentation.  We reviewed policies, procedures, and 
documentation of the Units operations, staffing, and cases, including its 
annual reports, quarterly statistical reports, and responses to recertification 
questionnaires.  We also reviewed the Units data describing how it 
detects, investigates, and prosecutes Medicaid cases.  Data collected 
included the number of referrals received by the Unit and the number of 
investigations opened and closed.   
Review of Financial Documentation.  We reviewed Unit policies and 
procedures related to budgeting, accounting systems, cash management, 
procurement, property, and personnel to evaluate internal controls and 
design our tests for financial documentation.  We reviewed the Units 
claimed $3,793,846 ($2,834,019 Federal share) in grant expenditures for 
FYs 2009 through 2011 to:  (1) review final Federal Status Reports and 
the supporting documentation, (2) purposively select and review 
transactions within direct cost categories to determine whether costs were 
allowable, and (3) verify that indirect costs were accurately computed 
using the approved indirect cost rate.  We reviewed records from the 
Payment Management System to identify unusual patterns of drawn-down 
amounts.  Finally, we reviewed revenue accounts to identify program 
income amounts. 
Interviews With Key Stakeholders.  We conducted structured interviews 
with key stakeholders who were familiar with the operations of the Unit.  
Specifically, we interviewed the General Counsel of Social Rehabilitation 
Services (SRS)24; the Director of KDOA; the Assistant Chief Counsel of 
Kansas Department of Health and Environment, Division of Health Care 
Finance (DHCF); and staff from the DHCF OIG.  Additionally, we 
interviewed the SAC in HHS OIGs Kansas City region, as well as a 
Special Agent from the HHS OIGs Wichita field office.  These interviews 
focused on the Units interaction with external agencies. 
Survey of Unit Staff.  We administered an electronic survey of all 
nonmanagerial Unit staff.  We requested and received responses from 
13 nonmanagerial staff members, for a 100-percent response rate.  Our 
questions focused on operations of the Unit, opportunities for 
improvement, and practices that contributed to the efficiency and 
effectiveness of Unit operations and/or performance.  The survey also 
sought information about the Units compliance with applicable laws and 
regulations.   
 
24
 As of February 2012, SRS is called the Department for Children and Families. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  5   
   
Interviews With Unit Management and Staff.  We conducted structured 
interviews with the Unit Director and SAC (Chief Investigator).  We also 
met with the individual who executes the budget.  We asked these 
managers to provide us with additional information to better illustrate the 
Units operations, identify opportunities for improvement, identify 
practices that contributed to the efficiency and effectiveness of Unit 
operations and/or performance, 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 449 cases that were open at some point during 
FYs 2009 through 2011, the most recent complete FYs at the start of our 
review.  We reviewed all of these sampled case files for documentation of 
supervisory approval for the opening and closing of cases, documented 
periodic supervisory reviews, timeliness of case development, and the 
Units processes for monitoring the status and outcomes of cases.  From 
these 100 case files, we selected a further random sample of 50 files for a 
more in-depth review of selected issues, such as the timeliness of 
investigations and case development.  See Appendix B for a distribution of 
case files from the population and sample. 
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.   
Limitations 
We limited our internal control review to the Units procedures related to 
accounting, budgeting, personnel, procurement, and property and 
equipment. 
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. 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  6   
   
FINDINGS 
For FYs 2009 through 2011, the Unit reported 
combined civil and criminal recoveries of nearly 
$66 million and 44 convictions  
The Unit reported combined criminal and civil recoveries of nearly 
$66 million for FYs 2009 through 2011, increasing from $19 million in 
FY 2009 to $25 million in FY 2011 (see Table 1).  Criminal recoveries 
declined from $4.1 million in 2009 to slightly under $1 million in 2011, 
while civil recoveries increased from $15 million to $24 million during the 
same period.  The Unit closed 265 investigations and obtained 44 criminal 
convictions during the review period, along with 4 dismissals and 
1 acquittal.  See Appendix C for details on investigations opened and 
closed by provider category for FYs 2009 through 2011. 
Table 1:  Kansas MFCU Recovered Funds, FYs 2009 Through 2011 
3-Year 
Data Element Description  FY 2009  FY 2010  FY 2011 
Total 
Reported Criminal 
$4,102,312  $240,193  $926,986  $5,269,491 
Recoveries 
Reported Civil Recoveries  $14,856,538  $21,551,436  $23,910,671  $60,318,645 
     Total  $18,958,850  $21,791,629  $24,837,657  $65,588,136 
Source:  OIG analysis of Kansas Unit Quarterly Statistical Reports, FYs 2009 through 2011. 
The Unit increased referrals through education and outreach 
efforts   
The Unit reported 121 referrals in FY 2009, 46 in FY 2010, and 230 in 
FY 2011.  Referrals from private citizens to the Unit represented the 
largest increase in share of referrals.  These referrals increased from 25 in 
FY 2009 to 29 in FY 2010 and to 79 in FY 2011.  Unit management 
attributed the recent increase to the Units public outreach and education 
efforts.  The Unit also reported an overall increase in referrals from State 
agencies (39 in FY 2009, 11 in FY 2010, and 88 in FY 2011).  Unit 
management attributed this increase to the positive professional 
relationships cultivated with external stakeholder agencies.  Throughout 
our interviews, staff from external stakeholder agencies, such as SRS, 
DHCF, and KDOA, were highly complimentary of the Unit staffs 
willingness and ability to maintain effective communication.  See 
Appendix D for details on referrals received by provider category for 
FYs 2009 through 2011. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  7   
   
For FYs 2009 and 2010, the Unit had several internal 
control weaknesses and inadequate policies and 
procedures related to certain expenditures 
According to Performance Standard 11, the Unit Director should exercise 
proper fiscal control over the Units resources.  During FYs 2009 and 
2010, the majority of the expenditures that the Unit claimed represented 
allowable, allocable, and reasonable costs in accordance with applicable 
Federal requirements.25  However, the Unit did not always maintain 
adequate internal controls related to accounting, budgeting, personnel, 
procurement, and property and equipment.  As a result, expenditures 
claimed for Federal reimbursement could not be reconciled with the 
accounting records and some expenditures claimed for vehicle costs were 
not properly allocated.   
Contrary to Federal regulations, expenditures claimed for Federal 
reimbursement on the SF-269 reports in FYs 2009 and 2010 did not 
reconcile to the Units accounting records.  As a result, the Unit 
underclaimed expenditures in FY 2009 by $22,611 ($18,243 Federal 
share) and overclaimed expenditures in FY 2010 by $25,925 ($19,444 
Federal share).  The Unit overclaimed expenditures for vehicle 
maintenance in FY 2011 by an estimated $631 ($473 Federal share).  In 
addition, the Unit did not claim all allowable costs for fringe benefits and 
indirect costs.  The Unit underclaimed fringe benefit expenditures in 
FY 2009 by an estimated $47,982 ($35,986 Federal share).  The Unit 
underclaimed indirect costs in FYs 2009 and 2010 by $16,315 
($12,236 Federal share).  The Unit did not have policies and procedures to 
ensure that all allowable expenditures were claimed for Federal 
reimbursement.  A Unit official stated that policies and procedures are 
being put in place to ensure that all allowable expenditures are claimed in 
the future.  See Appendix E for a comprehensive discussion of internal 
control weaknesses and procedures. 
The Unit did not report the identities of all convicted 
providers to OIG within 30 days of sentencing for the 
purpose of program exclusion 
According to Performance Standard 8, Units should send to OIG, for 
purposes of program exclusions under section 1128 of the SSA, reports of 
convictions and copies of Judgment and Sentence or other acceptable 
documentation within 30 days or other reasonable time period. 
 
25
 No underclaimed or overclaimed expenditures were identified for FY 2011. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  8   
   
During our review, we verified that between November 2008 and 
April 2011, the Kansas Unit failed to report 13 of 39 health care providers 
convicted of fraud, abuse, or neglect within 30 days of sentencing.26  
These individuals could potentially have received reimbursement from 
Medicaid and Medicare after their convictions; however, we identified no 
such payments. 
The Unit director explained that from November 2008 through April 2011, 
the Unit designated an individual to handle the exclusion paperwork and 
submissions to the Healthcare Integrity and Protection Data Bank.  That 
individual left in July 2011.  In April 2012, during our onsite review, the 
failure to report the identities of convicted providers was identified and 
information sent to the OIG for exclusion.   
The Unit did not establish annual training plans for its 
professional disciplines  
According to Performance Standard 12, the Unit should establish annual 
training plans for each professional discipline.  The training provided 
under these plans should aid in the mission of the Unit and could be useful 
in providing a coordinated approach for the professional development of 
staff.  At the time of our onsite review, managers reported that they had 
not established annual training plans for any of the three professional 
disciplines.27  In 2007, the Unit created a training record form for each 
staff member to document completion of individual training.  Unit 
management indicated that the process initially worked well, but the form 
fell out of use.  However, the Unit has provided all staff with training 
opportunities to expand the skills and techniques they need to understand 
and perform their duties.28  All new employees are provided introductory 
Medicaid training through the National Association of Medicaid Fraud 
Control Units Medicaid 101 training, and take advantage of other training 
related to fraud trends and financial investigation techniques as it becomes 
available.  Unit management reported that despite cost concerns and a lack 
of regional training opportunities that fit the unique needs of their staff, all 
 
26 
We included all referrals received within 30 business days as meeting the performance 
standard.  One of the 13 health care providers not reported was referred 55 days after 
sentencing; the others were referred later.  All referrals were made by the conclusion of the 
onsite review. 
27 
Although we reviewed training records, we did not evaluate the staffs professional 
qualifications.  Rather, we applied the performance standards to evaluate whether the Unit 
maintained a formal training plan for each professional discipline and assessed training 
opportunities specific to Unit operations.  We recognize that attorneys, investigators, and 
auditors receive professional and law enforcement training, and that the lack of an annual 
training plan does not suggest that professional staff are unqualified. 
28 
Kansas Attorney Generals Medicaid Fraud and Abuse Division Annual Report 201011. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  9   
   
law enforcement training hours were met.  The Units annual report also 
demonstrated that attorneys received necessary continuing legal education. 
Case files had inconsistent documentation of 
supervisory approval for key stages of investigations, 
yet cases generally proceeded timely 
According to Performance Standard 6, the Unit should have a continuous 
case flow and cases should be completed in a reasonable time.  As a part 
of this effort, managers should approve the opening and closing of cases 
and document any supervisory case reviews in the case file.  Twenty-three 
percent of case files lacked documented supervisory approval detailing the 
opening of the investigation, and 16 percent of closed files were missing 
documented supervisory approval for closing the case.  Unit management 
stated that Pharmaceutical Average Wholesale Price and Global 
Pharmaceutical cases did not have signed supervisory approval due to the 
nature of the cases (i.e., these cases were typically nationwide cases).  
Excluding these types of cases, 11 percent of opening investigations and 
5 percent of closed cases lacked supervisory approval.  The performance 
standard does not differentiate between types of cases requiring 
supervisory approval.   
Performance Standard 6 also states that supervisory reviews should be 
conducted periodically and noted in the case file.  The Units policy is to 
conduct a periodic supervisory review every 6 months on all open cases.  
Of the 42 percent of cases open longer than 6 months, 19 percent lacked 
documentation of periodic 6-month supervisory reviews.29  See 
Appendix F for sample sizes and 95-percent confidence intervals 
associated with point estimates.    
Although several of the case files lacked opening or closing approvals and 
supervisory reviews, only one of the cases we reviewed experienced 
unreasonable delays.  Criminal investigations, including filing of criminal 
charges, seeking restitution without filing criminal charges, and closing 
the case without filing criminal charges or seeking restitution, were all 
processed timely.  Criminal and civil prosecutions were also processed 
timely. 
   
 
29 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 the opening and closing of the case. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  10   
   
CONCLUSION AND RECOMMENDATIONS 
For FYs 2009 through 2011, the Unit reported combined civil and criminal 
recoveries of nearly $66 million and 44 convictions.  The Unit increased 
referrals through education and outreach efforts.  Our review found no 
evidence of significant noncompliance with applicable laws, regulations, 
or policy transmittals.   
However, our review found opportunities for improvement and instances 
in which the Unit did not fully meet the performance standards.  
Specifically, for FYs 2009 and 2010, the Unit had several internal control 
weaknesses and inadequate policies and procedures related to certain 
expenditures.  For FYs 2009 through 2011, the Unit did not report the 
identities of all convicted providers to OIG within 30 days of sentencing 
for the purpose of program exclusion, and did not establish annual training 
plans.  Similar to the findings from 2007, the Units case files lacked 
documentation of supervisory approval for key stages of the investigative 
process, although the cases were adequately developed.     
Based on these findings, we recommend that the Kansas Unit: 
Develop Policies and Procedures To Address Internal Control 
Weaknesses 
The Unit should ensure that expenditures claimed are reconciled to 
accounting records, and that expenditures are allocated and claimed in 
accordance with Federal regulations.  
Develop a Protocol To Ensure Identities of Convicted 
Providers Are Reported to OIG 
The Unit should ensure that individuals convicted of fraud, abuse, and 
neglect are reported within 30 days of their sentencing.  
Establish Annual Training Plans for Professional Disciplines 
The Unit should develop plans that indicate the type and duration of 
training for each professional discipline.  The Unit may work with OIG to 
identify additional relevant training opportunities for staff. 
Ensure That All Case Files Contain Opening and Closing 
Investigative Memoranda, Documented Supervisory Approval, 
and Documented Periodic Supervisory Reviews   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
The Unit concurred with the four report recommendations.  Regarding our 
first recommendation, the Unit has been working to identify and improve 
internal control weaknesses, including:  reconciling expenditures, vehicle 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  11   
   
costs, fringe benefits, and indirect costs.  With respect to reconciling 
expenditures, changes have been made and implemented by the Attorney 
Generals Office and the Unit to avoid this reporting situation in the 
future.  Further, the Unit is working to reconcile FYs 2009 and 
2010 expenditures and is working with OIG to amend its financial 
reporting accordingly.  With respect to vehicle costs, as of June 2012,  
non-Unit employees are no longer permitted to use Unit vehicles for any 
purpose.  With respect to fringe benefits, the Unit has worked closely with 
the Budget Division of the Attorney Generals Office to develop a system 
of checks and balances to ensure that receipts and expenditures are 
properly accounted.  With respect to indirect costs, efforts are underway to 
train current Unit and Budget Division staff to ensure that proper indirect 
cost rates are utilized and that all allowable expenditures are claimed for 
the Unit.  The Unit and Budget Division staff will work closely to ensure 
that proper indirect costs are submitted. 
Regarding our second recommendation, the Unit acknowledged that there 
were a number of providers for which exclusion paperwork was not 
submitted to OIG timely.  A report will be provided to the Unit director 
monthly allowing for verification that each conviction is being reported in 
a timely fashion or that there is a satisfactory explanation for any delay.   
Regarding our third recommendation, the Unit is currently working with 
the administration to develop a training plan that will not only serve to 
meet the demands of the performance standards, but may also be utilized 
by the Attorney Generals Office for other professional staff. 
Regarding our fourth recommendation, the Unit will prepare opening and 
closing memoranda, as well as periodic case file reviews for all Global 
and Average Wholesale Price cases.  Opening memoranda will be created 
for all cases currently open.  A staff member has been assigned to develop 
a case file review form that can be automatically generated for each case.    
The full text of the Units comments is provided in Appendix G.  We 
modified the number of exclusions not reported timely to the OIG from 
30 to 13 based on additional documentation that the Unit provided.  One 
of the 13 health care providers not reported was referred 55 days after 
sentencing; the rest were referred during our onsite review. 
 
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  12   
   
APPENDIX A 
Performance Standards  
[59 Fed. Reg. 49080, Sept. 26, 1994] 
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 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? 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  13   
   
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? 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  14   
   
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 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? 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  15   
   
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 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?  
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  16   
   
APPENDIX B 
Population and Sample Distribution of Case Files Open Any 
Time During Fiscal Years 2009 Through 2011 
 
   
Population  Sample  Population  Sample 
Data Element Description 
(number)  (number)  (percentage)  (percentage) 
FraudCivil (Open)  29  5  6.5%  5% 
FraudCivil (Closed)  21  5  4.7%  5% 
FraudCriminal (Open)  76  15  16.9%  15% 
FraudCriminal (Closed)  165  39  36.7%  39% 
FraudGlobal (Open)  41  9  9.1%  9% 
FraudGlobal (Closed)  37  6  8.2%  6% 
AbuseCriminal (Open)  0  0  0.0%  0% 
AbuseCriminal (Closed)  28  6  6.2%  6% 
Patient Funds-Criminal (Open)  9  1  2.0%  2% 
Patient FundsCriminal (Closed)  43  14  9.6%  14% 
     Total  449  100  100%  100% 
 
Source:  Kansas Medicaid Fraud Control Unit, 2012. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  17   
   
APPENDIX C 
Investigations Opened and Closed by Provider Category for 
Fiscal Years 2009 Through 2011 
Table C-1:  Fraud Investigations  
Provider Category  FY 2009  FY 2010  FY 2011 
Facilities  Opened  Closed  Opened  Closed  Opened  Closed 
     Hospitals   1  0  1  2  0  0 
     Nursing Facilities  0  0  1  2  0  0 
     Other Long-Term Care Facilities  0  0  0  0  0  0 
     Substance Abuse Treatment            
1  0  1  2  1  0 
     Centers  
     Other   1  3  0  0  0  0 
Practitioners  Opened  Closed  Opened  Closed  Opened  Closed 
     Doctors of Medicine or  
2  1  1  2  1  1 
     Osteopathy 
     Dentists  1  2  0  1  0  0 
     Podiatrists  0  0  0  0  0  0 
     Optometrists/Opticians  0  0  0  0  0  0 
     Counselors/Psychologists  1  1  0  1  1  0 
     Chiropractors  0  0  0  0  0  0 
     Other   1  0  1  1  0  0 
Medical Support  Opened  Closed  Opened  Closed  Opened  Closed 
     Pharmacies  3  3  0  1  2  0 
     Pharmaceutical Manufacturers  38  1  34  22  15  19 
     Durable Medical Equipment  
0  0  3  3  2  2 
     and/or Supplies 
     Labs  0  0  0  0  0  0 
     Transportation Services  4  8  0  5  2  4 
     Home Health Care Agencies  5  3  8  9  5  4 
     Home Health Care Aides  31  22  22  26  48  38 
     Nurses, Physician Assistants,  
     Nurse Practitioners, Certified   1  1  7  7  1  2 
     Nurse Aides 
     Radiologists  0  0  0  0  0  0 
     Medical SupportOther   2  0  0  0  1  1 
Program Related  Opened  Closed  Opened  Closed  Opened  Closed 
     Managed Care   0  0  0  0  1  0 
     Medicaid Program  
0  0  0  0  0  0 
     Administration 
     Billing Company  1  2  1  1  15  0 
     Other  0  0  0  0  0  0 
        Total Provider Categories  93  47  80  85  95  71 
Source:  Kansas Medicaid Fraud Control Unit (Unit). 
FY = fiscal year. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  18   
   
 
  Table C-2:  Patient Abuse, Neglect, and Funds Investigations  
Provider Category  FY 2009  FY 2010  FY 2011 
  Opened  Closed  Opened  Closed  Opened  Closed 
     Nursing Facility  0  1  0  1  1  0 
     Nondirect Care  3  2  1  3  5  3 
     Other Long-Term Care  0  0  0  1  0  0 
     Nurses/Physicians  
     Assistant/Nurse Practitioner/   12  2  3  12  0  2 
     Certified Nurse Aides 
     Home Health Aides  0  0  0  0  1  0 
     Other  13  8  12  11  8  16 
       Total  28  13  16  28  15  21 
 Source:  Kansas Unit. 
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  19   
   
APPENDIX D 
Medicaid Fraud Control Unit Referrals by Provider Category 
for Fiscal Years 2009 Through 2011 
FY 2009  FY 2010  FY 2011 
 
Abuse  Abuse  Abuse 
Patient  Patient  Patient 
Referral Source  Fraud  &  Fraud  &  Fraud  & 
Funds  Funds  Funds 
Neglect  Neglect  Neglect 
Kansas  
Department of Social 
and Rehabilitation 
12  0  0  2  0  1  3  0  0 
Services  
Surveillance and 
Utilization Review Unit 
Kansas  
Department of Social 
14  6  3  3  0  1  39  2  2 
and Rehabilitation 
Services  Other 
State Survey & 
0  0  0  0  0  0  0  0  0 
Certification 
Other State Agencies  0  4  0  1  3  0  17  22  3 
Licensing Board  1  0  0  0  0  0  0  0  0 
Law Enforcement  2  0  9  0  0  4  5  1  3 
Office of Inspector 
0  0  0  1  0  0  1  0  0 
General (OIG) 
Prosecutors  3  0  1  0  0  1  5  0  3 
Providers  3  0  0  0  0  0  22  0  0 
Provider Associations  0  0  0  0  0  0  3  0  0 
Private Health Insurer  0  0  0  0  0  0  0  0  0 
Long Term Care 
0  0  0  0  0  0  0  0  0 
Ombudsman 
Adult Protective 
1  0  3  0  0  0  4  0  2 
Services 
Private Citizens  24  0  1  26  2  1  69  3  7 
MFCU Hotline  0  0  0  0  0  0  0  0  0 
Other  32  2  0  0  0  0  13  1  0 
   Total  92  12  17  33  5  8  181  29  20 
   Annual Total  121  46  230 
Source:  OIG analysis of Kansas Medicaid Fraud Control Unit (MFCU) Quarterly Statistical Reports, fiscal years 2009 through 2011. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  20   
   
APPENDIX E 
Expanded Information on Internal Control Weaknesses and 
Inadequate Policies and Procedures Related to Certain 
Expenditures 
The following material describes in detail the internal control weaknesses 
identified. 
Expenditures Claimed for Federal Reimbursement Did Not 
Reconcile to the Accounting Records  
Federal regulations (45 CFR  92.20(a)) state:  Fiscal control and 
accounting procedures of the State ... must be sufficient to 
(1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and 
(2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes. 
Federal regulations (45 CFR  92.20(b)) require financial management 
systems to meet the following standards:  
(1) Financial reporting.  Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be 
made in accordance with the financial reporting requirements of 
the grant or subgrant.   
(2) Accounting records.  Grantees and subgrantees must maintain 
records which adequately identify the source and application of 
funds provided for financially-assisted activities.  These records 
must contain information pertaining to grant or subgrant awards 
and authorizations, obligations, unobligated balances, assets, 
liabilities, outlays or expenditures, and income. 
Contrary to Federal regulations, expenditures claimed for Federal 
reimbursement on the SF-269 reports in fiscal years 2009 and 2010 did not 
reconcile to the Medicaid Fraud Control Units (Unit) accounting records.  
As a result, the Unit underclaimed expenditures in FY 2009 by $22,611 
($18,243 Federal share) and overclaimed expenditures in FY 2010 by 
$25,925 ($19,444 Federal share).  
The Unit did not have policies and procedures in place to ensure that the 
expenditures claimed on the SF-269 reports reconciled to its accounting 
records.  A Unit official stated that policies and procedures are being put 
in place to ensure expenditures claimed in the future reconcile to the 
accounting records. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  21   
   
Expenditures Claimed for Vehicle Costs Were Not Properly 
Allocated 
Federal regulations at 2 CFR pt. 225, Appendix A, (C)(3)(a), state:  A 
cost is allocable to a particular cost objective if the goods or services 
involved are chargeable or assignable to such cost objective in accordance 
with relative benefits received.   
Contrary to Federal regulations, the Unit did not properly allocate vehicle 
maintenance costs.  Specifically, the Unit allowed the State Attorney 
Generals Office to use the Units vehicles during FY 2011; this use 
totaled approximately 25 percent of the mileage accumulated on these 
vehicles.  However, the Unit claimed all the vehicle maintenance costs for 
Federal reimbursement instead of allocating 25 percent of the costs to the 
State Attorney Generals Office.  As a result, the Unit overclaimed 
expenditures for vehicle maintenance in FY 2011 by an estimated 
$631 ($473 Federal share).   
The Unit did not have policies and procedures in place to ensure that 
expenditures were allocated in accordance with Federal regulations.  A 
Unit official said that the State Attorney Generals Office paid for fuel and 
tolls when using the Units vehicles and therefore, the Unit did not believe 
it was necessary to allocate the costs. 
Expenditures for Fringe Benefits Not Claimed 
Federal regulations (45 CFR  92.20(b)) require financial management 
systems to meet the following standards:  
(1) Financial reporting.  Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be 
made in accordance with the financial reporting requirements of 
the grant or subgrant.   
(2) Accounting records.  Grantees and subgrantees must maintain 
records which adequately identify the source and application of 
funds provided for financially-assisted activities.  These records 
must contain information pertaining to grant or subgrant awards 
and authorizations, obligations, unobligated balances, assets, 
liabilities, outlays or expenditures, and income. 
Contrary to Federal regulations, the Unit did not claim all allowable fringe 
benefit expenditures.  Specifically, the Unit did not claim expenditures for 
fringe benefits (employer portion of health benefits) for 3 months during 
FY 2009.  As a result, the Unit underclaimed fringe benefit expenditures 
in FY 2009 by an estimated $47,982 ($35,986 Federal share).   
The Unit did not have policies and procedures in place to ensure that all 
allowable expenditures were claimed for Federal reimbursement.  A Unit 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  22   
   
official stated that policies and procedures are being put in place to ensure 
that all allowable expenditures are claimed in the future. 
Expenditures for Indirect Costs Not Claimed 
Federal regulations at 2 CFR pt. 225, Appendix E (B)(7), states:  
Provisional rate means a temporary indirect cost rate applicable to a 
specified period which is used for funding, interim reimbursement, and 
reporting indirect costs on Federal awards pending the establishment of a 
final rate for that period.    
With respect to the final rate, 2 CFR pt. 225, Appendix E (B)(8),  
states:  Final rate means an indirect cost rate applicable to a specified 
past period which is based on the actual allowable costs of the period.  A 
final audited rate is not subject to adjustment. 
Contrary to Federal regulations, the Unit did not claim all allowable 
indirect costs.  Specifically, the Unit used the provisional rate of 
16.2 percent and did not change to the final rate of 18.3 percent during 
FYs 2009 and 2010.  As a result, the Unit underclaimed indirect costs in 
FYs 2009 and 2010 by $16,315 ($12,236 Federal share).    
The Unit did not have policies and procedures in place to ensure that all 
allowable expenditures were claimed for Federal reimbursement.  A Unit 
official stated that policies and procedures are being put in place to ensure 
that all allowable expenditures are claimed in the future.  
Internal Control Weaknesses 
Although the Units internal controls were adequate to ensure that the 
majority of the expenditures that the Unit claimed and that we reviewed 
for this audit period were claimed correctly, we noted some internal 
control weaknesses and inadequate policies and procedures as described 
throughout the report.  These could result in the Units reporting incorrect 
expenditures for Federal reimbursement. 
 
 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  23   
   
APPENDIX F 
Point Estimates and Confidence Intervals Based on Case File 
Reviews 
We calculated confidence intervals for key data points for the case file 
reviews.  The sample sizes, point estimates, and 95-percent confidence 
intervals are given for the each of the following:  
 
Table F-1:  Confidence Intervals for Case File Review Data 
Point 
Sample  95-Percent Confidence 
Data Element Description  Estimate 
Size  Interval 
(percentage) 
Case files missing supervisory 
approval for the opening of  100  23.0  16.431.2 
investigations 
Case files missing documented 
supervisory approval for the  70  15.7  9.525.0 
closing of investigations 
Case files missing documented 
periodic supervisory reviews (for 
42  19.1  10.631.2 
cases open longer than 
6 months) 
Case files missing supervisory 
approval for the opening of 
investigations (excluding Global  76  10.5  5.818.5 
and Average Wholesale Price 
cases) 
Case files missing documented 
supervisory approval for the 
closing of investigations  59  5.1  1.913.2 
(excluding Global and Average 
Wholesale Price cases) 
Source:  Office of Inspector General analysis of Medicaid Fraud Control Unit case files, 2012. 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  24   
   
APPENDIX G 
Unit Comments 
 
 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  25   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  26   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  27   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  28   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  29   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  30   
   
 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  31   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  32   
   
 
   
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  33   
   
 
 
 
 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  34   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T. Pattison, Regional 
Inspector General for Evaluation and Inspections in the Kansas City 
regional office.   
Brian T. Whitley served as the team leader for this study.  Other Office of 
Evaluation and Inspections staff who conducted the study include 
Michael J. Brown, Susan Burbach, Teresa Dailey, and Julie Dusold 
Culbertson.  Office of Audit Services staff who conducted the study 
include Ann Lowe, Ryan Moul, and Julie Wiser.  Office of Investigations 
staff who conducted the study include Randall House.  Central office staff 
who provided support include Kevin Farber, Debra Roush, Richard Stern, 
and Jason Weinstock.   
 
Kansas State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00200)  35   
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.