Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
W   S M
ASHINGTON  TATE  EDICAID 
 
F C U :  
  RAUD  ONTROL  NIT  
 
2016 O R  
  NSITE  EVIEW
Suzanne Murrin 
Deputy Inspector General for 
Evaluation and Inspections 
 
September 2016 
OEI-09-16-00010 
 
   
   
WASHINGTON STATE MEDICAID FRAUD CONTROL UNIT:  
2016 ONSITE REVIEW 
OEI-09-16-00010 
WHY WE DID THIS STUDY  
The Office of Inspector General (OIG) oversees all State Medicaid Fraud Control Units 
(MFCUs or Units).  As part of this oversight, OIG conducts periodic reviews of all Units 
and prepares public reports based on these reviews.  These reviews assess the Units 
adherence to the 12 MFCU performance standards and compliance with applicable 
Federal statutes and regulations.   
HOW WE DID THIS STUDY 
We conducted an onsite review of the Washington Unit in January 2016.  We analyzed 
data from seven sources:  (1) a review of any documentation related to the Units policies 
and procedures, operations, staffing, and caseload, (2) a review of financial 
documentation for FYs 2013-2015; (3) structured interviews with key stakeholders; (4) a 
survey of Unit staff; (5) structured interviews with the Units management and selected 
staff; (6) an onsite review of a sample of case files associated with cases that were open 
at any point during FYs 2013-2015; and (7) an onsite review of Unit operations. 
WHAT WE FOUND 
During FYs 2013-2015, the Unit generated 39 convictions, 46 civil judgments and 
settlements, and total recoveries of more than $48 million.  Our review of the Unit found 
that it was generally in compliance with applicable laws, regulations, and policy 
transmittals, and that it exercised proper fiscal control of its resources.  However, we 
identified two aspects of Unit operations that should be improved.  The Unit did not fully 
secure some case files, and the Units case management system posed challenges to 
locating and retrieving case information.  We noted two practices that the Unit reported 
were beneficial to its operations:  (1) the Unit took steps to ensure it received fraud 
referrals from managed care organizations, and (2) the Unit made programmatic 
recommendations to State agencies on its case closing forms and tracked these 
recommendations in a database.   
WHAT WE RECOMMEND 
We recommend that the Washington Unit:  1) take steps to ensure that all case files are 
fully secured, and 2) revise its case file management policies and procedures to enable 
Unit staff to more efficiently locate and retrieve case information.  The Unit concurred 
with both recommendations. 
 
   
   
TABLE OF CONTENTS 
Objective ......................................................................................................1 
Background ..................................................................................................1 
Methodology ................................................................................................4 
Findings........................................................................................................5 
From FY 2013 through FY 2015, the Unit reported   
39 convictions, 46 civil judgments and settlements, and   
recoveries of more than $48 million ................................................5 
The Unit did not fully secure some case files or the personally 
identifiable information associated with those case files .................7 
The Units case management system posed challenges to     
locating and retrieving case information ..........................................7 
The Unit exercised proper fiscal control of its resources ................8 
Other observations .......................................................................................8 
The Unit took steps to ensure that MCOs refer fraud allegations  
to the Unit ........................................................................................9 
The Unit made programmatic recommendations to State     
agencies on its case closing forms and tracked these 
recommendations in a database .......................................................9 
Conclusion and Recommendations ............................................................10 
Unit Comments and Office of Inspector General Response .......... 11 
Appendixes ................................................................................................12 
A:  2012 Performance Standards ...................................................12 
B:  Detailed Methodology ..............................................................16 
C:  Investigations Opened and Closed by the Washington  
MFCU, by Case Type, FYs 2013 through 2015 ............................19 
D:  Unit Referrals by Referral Source for FYs 2013 Through 
2015................................................................................................20 
E:  Unit Comments.........................................................................21 
Acknowledgments......................................................................................24 
 
   
 
OBJECTIVE 
To conduct an onsite review of the Washington State Medicaid Fraud 
Control Unit (MFCU or Unit). 
BACKGROUND 
The mission of MFCUs is to investigate and prosecute Medicaid provider 
fraud and patient abuse or neglect under State law.1  The SSA requires 
each State to operate a MFCU, unless the Secretary of Health and Human 
Services (HHS) determines that operation of a Unit would not be 
cost-effective because minimal Medicaid fraud exists in a particular State 
and 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 MFCUs.3   
Each Unit must employ an interdisciplinary staff that consists of at least an 
investigator, an auditor, and an attorney.4  Unit staff review referrals of 
potential fraud and patient abuse or neglect to determine their potential for 
criminal prosecution and/or civil action.  In fiscal year (FY) 2015, the 
50 Units collectively reported 1,553 convictions, 795 civil settlements or 
judgments, and approximately $745 million in recoveries.5, 6   
Units must meet a number of requirements established by the SSA and 
Federal regulations.  For example, each Unit must: 
  be a single, identifiable entity of State government, distinct from 
the single State Medicaid agency;7 
                        ____________________________________________________________ 
1 Social Security Act (SSA)  1903(q).  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. 
2 SSA  1902(a)(61).   
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 SSA  1903(q)(6); 42 CFR 1007.13. 
5 Office of Inspector General (OIG), MFCU Statistical Data for Fiscal Year 2015, 
Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2015-statistical-chart.htm on April 19, 2016. 
6 All FY references in this report are based on the Federal FY (October 1 through 
September 30). 
7 SSA  1903(q)(2); 42 CFR  1007.5 and 1007.9(a). 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  1 
   
   
  develop a formal agreement, such as a memorandum of 
understanding, which describes the Units relationship with the 
State Medicaid agency;8 and   
  have either statewide authority to prosecute cases or formal 
procedures to refer suspected criminal violations to an agency with 
such authority.9   
MFCU Funding 
Each MFCU is funded jointly by its State and the Federal government.  
Federal funding for the MFCUs is provided as part of the Federal 
Medicaid appropriation, but it is administered by OIG.10  Each Unit 
receives Federal financial participation equivalent to 75 percent of its total 
expenditures, with State funds contributing the remaining 25 percent.11  In 
FY 2015, combined Federal and State expenditures for the Units totaled 
$251 million, $188 million of which represented Federal funds.12 
Oversight of the MFCU Program 
The Secretary of HHS delegated to OIG the authority to administer the 
MFCU grant program.13  To receive Federal reimbursement, each Unit 
must submit an initial application to OIG for approval and be recertified 
each year thereafter.    
In annually recertifying the Units, OIG evaluates MFCU compliance with 
Federal requirements and adherence to performance standards.  The Federal 
requirements for the Units are contained in the SSA, regulations, and policy 
guidance.14  In addition, OIG has published 12 performance standards that it 
uses to assess whether a Unit is effectively performing its responsibilities.15  
The standards address topics such as staffing, maintaining adequate referrals, 
and cooperation with Federal authorities.  Appendix A contains the 
performance standards.  
OIG also performs periodic onsite reviews of the Units, such as this review 
of the Washington MFCU.  During these onsite reviews, OIG evaluates 
                        ____________________________________________________________ 
8 42 CFR  1007.9(d).  
9 SSA  1903(q)(1). 
10 SSA  1903(a)(6)(B). 
11 Ibid. 
12 OIG, MFCU Statistical Data for Fiscal Year 2015.  Accessed at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2015-statistical-chart.htm on April 19, 2016. 
13 The SSA authorizes the Secretary of HHS to award grants to the Units.  
SSA  1903(a)(6)(B).  The Secretary delegated this authority to the OIG.   
14 On occasion, OIG issues policy transmittals to provide guidance and instructions to 
MFCUs. 
15 77 Fed. Reg. 32645 (June 1, 2012).  
 
 
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Units compliance with laws, regulations, and policies, as well as adherence 
to the 12 performance standards.  OIG also makes observations about best 
practices, provides recommendations to the Units, and monitors the 
implementation of the recommendations.  These evaluations differ from 
other OIG evaluations as they support OIGs direct administration of the 
MFCU grant program.  These evaluations are subject to the same internal 
quality controls as other OIG evaluations, including internal peer review.     
Additional oversight includes the collection and dissemination of data about 
MFCU operations and the provision of training and technical assistance.  
Washington MFCU  
The Washington Units headquarters office is located in Olympia; the Unit 
also has a regional office in Spokane.  The Unit is an autonomous entity 
within the States Office of the Attorney General, and it has the authority 
to investigate and prosecute cases of Medicaid fraud and cases of patient 
abuse or neglect.16  Unit management reported that Unit investigators do 
not have the law enforcement authority to serve search warrants, arrest 
suspects, or carry firearms.  At the time of our review, the Units 
management was composed of a director, a chief investigator, a chief civil 
attorney, and a chief criminal attorney.  
The Unit receives referrals of provider fraud and patient abuse and neglect 
primarily from the Washington State Department of Social and Health 
Services.  The Unit also receives referrals from other sources, including 
Washingtons State Medicaid Agency, which is known as the Health Care 
Authority (HCA).  The Units intake unit conducts a preliminary 
assessment of all referrals to determine whether the allegation has the 
potential for a full investigation and is within the Units grant authority.  
Management and other staff then discuss referrals that appear to have 
investigation potential and that are within the Units grant authority at 
bi-weekly case intake meetings to determine whether to open a case. 
The Unit may open a case and pursue it through criminal investigation and 
prosecution and/or civil action, and then close it upon resolution.   
Previous Review 
In 2010, OIG issued a report regarding its onsite review of the 
Washington Unit.  The review found that the Unit was in full compliance 
with all applicable Federal rules and regulations that govern the grant and 
the 12 performance standards.  
                        ____________________________________________________________ 
16 For the purposes of this report, the misappropriation or theft of residential health care 
facility patients private funds is included in the category of patient abuse and neglect. 
 
 
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METHODOLOGY 
We conducted an onsite review in January 2016.  We based our review on 
analysis of data from seven sources:  (1) a review of policies, procedures, 
and documentation related to the Units operations, staffing, and caseload; 
(2) a review of financial documentation for FYs 2013 through 2015; 
(3) structured interviews with key stakeholders; (4) a survey of Unit staff; 
(5) structured interviews with the Units management; (6) an onsite review 
of files for cases that were open in FYs 2013 through 2015; and (7) onsite 
observation of Unit operations.  Appendix B provides details of our 
methodology.   
Standards 
These reviews are conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General 
on Integrity and Efficiency. 
 
 
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FINDINGS 
From FY 2013 through FY 2015, the Unit reported 
39 convictions, 46 civil judgments and settlements, 
and recoveries of more than $48 million  
During FYs 2013-2015, the Unit reported 39 convictions and 46 civil 
judgments and settlements.  These outcomes were relatively consistent 
over the 3-year period (see Table 1). 
Table 1:  Washington MFCU Convictions and Civil Judgments and 
Settlements, FYs 2013 through 2015 
3-Year 
Case Outcomes  FY 2013  FY 2014  FY 2015 
Total 
Convictions  11  13  15  39 
Civil Judgments and Settlements  16  17  13  46 
Source:  OIG review of MFCU self-reported quarterly statistical reports and other data, 2016. 
During this period, the Unit reported total criminal and civil recoveries of 
more than $48 million (see Table 2).17  Of the $48 million in total 
recoveries, $43 million were from global cases, which are civil False 
Claims Act (FCA) cases that are litigated in Federal courts by the U.S. 
Department of Justice and involve a group of State MFCUs.18, 19  Of the 
$5 million in recoveries from non-global cases, $4 million was from civil 
cases and $1 million was from criminal cases.   
The Units civil recoveries increased significantly each year, from 
$169,000 in FY 2013, to $645,000 in FY 2014, to $3.7 million in 
FY 2015.  According to Unit management, the enactment of a State FCA 
in FY 2012 was the primary reason for the increase in civil recoveries.20   
A State funding appropriation passed in conjunction with the State FCA 
provided the Unit with financial resources to hire approximately 
14 full-time employees, who now comprise the Units civil team.  
                        ____________________________________________________________ 
17 Figures in this paragraph and Table 2 are rounded. 
18 The National Association of Medicaid Fraud Control Units facilitates the settlement of 
global cases on behalf of the States. 
19 Global cases accounted for 265 of the Units 858 cases over the 3-year period. 
20 The Unit testified in support of the Washington State FCA and provided input on the 
related bills language.  The Washington State FCA provides for increased fraud 
penalties, authorizes the MFCU to recoup costs spent on civil actions, and provides 
protection for whistleblowers.  Revised Code of Washington, Title 74, Chapter 74.66. 
 
 
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Table 2: Washington MFCU Reported Recoveries and Total Expenditures, 
by Year, FYs 2013 through 2015  
Recovery  Types   FY 2013   FY 2014   FY 2015   3-Year Total  
Criminal Recoveries  $300,246  $272,920  $160,593  $733,759 
Global Civil Recoveries  $16,200,726  $24,750,805  $2,151,942   $43,103,473 
Nonglobal Civil Recoveries  $169,262  $644,518  $3,664,430  $4,478,210 
Total Civil and Criminal 
$16,670,234  $25,668,243  $5,976,965   $48,315,442 
Recoveries  
Total Expenditures   $3,596,829  $3,905,815  $4,136,216   $11,638,860  
    
Source:  OIG review of MFCU self-reported quarterly statistical reports and other data, 2016. 
During FYs 2013-2015, the Unit received a total of  
6,716 referrals1,184 referrals of provider fraud and 5,532 referrals of 
patient abuse and neglect.21  During the same time, the Unit opened 
360 cases337 cases of provider fraud and 23 cases of patient abuse and 
neglect.22  Unit management explained that it opens relatively few patient 
abuse and neglect cases because the majority of these referrals concern 
allegations that do not rise to the level of criminal misconduct.  In 
addition, Unit management explained that other State agencies investigate 
most of the cases that do rise to this level.  The Unit closed 733 cases 
during the same time370 cases of provider fraud and 363 cases of 
patient abuse and neglect.23, 24 The Unit closed 343 (of the 363) patient 
abuse and neglect cases in FY 2013, compared to 12 in FY 2014 and 8 in 
FY 2015. Unit management reported that the FY 2013 closures involved 
cases that were opened for monitoring purposes, whereby the Unit 
monitored patient abuse and neglect cases being worked by other entities, 
such as local law enforcement.  Because the Unit was not actively 
investigating monitoring cases, and no longer engaged in such 
monitoring, the Unit director decided to stop tracking them in the Unit 
case management system.  This resulted in the large number of case 
closures in FY 2013.25   
 ____________________________________________________________ 
21 The Unit received a relatively high number of patient abuse and neglect referrals 

because the Department of Social and Health Services sends the Unit a copy of all patient 

abuse and neglect referrals, pursuant to  State mandatory reporting requirements.  For 
 
additional information  on Unit referrals, see Appendix  D. 

22 The averages in this paragraph are rounded. 
 
23 Closures include multiple cases opened before FY 2013. 

24 For additional information on the Units opened and closed investigations, including a 

breakdown by  case type and provider category, see Appendix C. 
 
25 The practice of monitoring  cases was implemented by a  previous director. 

 
 
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The Unit did not fully secure some case files or the 
personally identifiable information associated with 
those case files 
During the onsite review, OIG observed that some Unit case files labeled 
with personally identifiable information (PII) were visible and not secured 
from access by non-Unit individuals.  Specifically, we observed that 
several boxes labeled with PII were located in an open area, and that 
cabinets containing case files were unlocked, with the keys in the locks.  
According to Federal regulations, a Unit must safeguard the privacy 
rights of all individuals and will provide safeguards to prevent the misuse 
of information under the Units control.26  This includes securing case 
files containing potentially sensitive PII about witnesses, victims, 
suspects, and informants.  In addition, the Units policies and procedures 
manual requires that all case files containing PII be secured by Unit staff 
at the end of their work day, or during periods when they will be leaving 
their work station unattended.27  Although Unit staff use a card access 
system to enter the general office space and visitors are required to sign in, 
the Unit allowed some non-Unit individuals to have unsupervised access 
to the office for various reasons (e.g., cleaning, and information 
technology services).   
The Units case management system posed 
challenges to locating and retrieving case information  
As we conducted case file reviews, we observed three conditions that 
inhibited the effectiveness of the Units case management system:  
(1) limited policies and procedures for using the case management system, 
(2) inconsistent document storage practices across repositories within the 
system, and (3) inconsistent naming conventions for files stored within the 
system.28  In addition to our observations, some Unit staff reported 
difficulties finding certain information on specific cases when using the 
system and that the system was not user-friendly.  According to 
Performance Standard 7, Units should maintain their case files in an 
                        ____________________________________________________________ 
26 42 CFR  1007.11(f); OIG State Fraud Transmittal 99-02, Public Disclosure Requests 
and Safeguarding of Privacy Rights (December 22, 1999). 
27 WA Medicaid Fraud Control Unit Operations Manual,  2.06. 
28 The Unit stores its case file information and supporting documents in four separate 
repositories: (1) paper case files, (2) an electronic case tracking system, (3) a shared 
electronic hard drive, and (4) case file folders in Microsoft Outlook.  These four 
repositories collectively comprise the Units case management system.  Civil case 
information is not stored in paper case files, but it is stored in the other three repositories. 
 
 
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effective manner and [develop] a case management system that allows 
efficient access to case information and other performance data.   
The Units case management policies and procedures provided limited 
direction for ensuring that Unit staff maintained case files in an effective 
manner.  For example, the policies did not specify in which of the four 
repositories certain types of case information should be stored.  In 
addition, policies did not contain naming conventions for criminal case 
file information stored on the shared electronic hard drive.  Finally, 
policies did not specify how to organize or label pertinent emails within 
Microsoft Outlook folders specific to individual cases.  
The combination of a multiple-repository case management system and 
limitations in policies and procedures resulted in the inconsistent storage 
of Unit case file information.  Consequently, documentation of periodic 
supervisory reviews of specific cases could be located in one, some, or all 
of the repositories.   
In addition, although each case had a unique identification number in the 
electronic case tracking system that could be used to track case 
information across all four repositories, the Unit did not always use this 
identification number to label or track case information.  In some 
instances, instead of using the identification number to label and track case 
information on the shared electronic hard drive, the Unit used the name or 
initials of the entity under investigation.  This practice made it difficult to 
readily cross-reference case information between repositories.  
Additionally, although each case had its own Microsoft Outlook folder, we 
noted that the folders often contained a large number of emails that were 
not clearly labeled to identify case information contained in the emails. 
The Unit exercised proper fiscal control of its 
resources 
Consistent with Performance Standard 11, the Unit exercised proper fiscal 
control of its resources related to accounting, budgeting, personnel, 
procurement, and equipment.  This performance standard states that a Unit 
should promptly submit financial reports to OIG, maintain an accurate 
equipment inventory and personnel activity records, apply generally 
accepted accounting principles, and employ a financial system that 
complies with Federal financial management system standards. 
Other observations 
During our onsite review, Unit management reported that two practices 
were particularly beneficial to its operations:  (1) the Unit took steps to 
 
 
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ensure that managed care organizations (MCOs) refer fraud allegations to 
the Unit, and (2) the Unit consistently made and monitored programmatic 
recommendations to State agencies and the State legislature.   
The Unit took steps to ensure that MCOs refer fraud allegations 
to the Unit 
The Unit took several steps to ensure that MCOs and HCA refer credible 
managed care fraud allegations to the Unit.29  The Unit reported that, as a 
result of these steps, MCO fraud referrals to the Unit increased from 4 in 
FYs 2013-14 to 12 in FY 2015.  In 2014, Unit management worked with 
HCA to incorporate language into State contracts with MCOs that requires 
MCOs to send the Unit a copy of all fraud referrals sent to HCA.  In 
addition, the Unit and HCA incorporated language into their most recent 
memorandum of understanding that requires HCA to refer all fraud 
allegations within MCOs to the Unit.  Finally, Unit management and HCA 
stakeholders hosted a 2015 training symposium for program integrity staff 
from all MCOs operating in Washington.   
The Unit made programmatic recommendations to State 
agencies on its case closing forms and tracked these 
recommendations in a database 
At the conclusion of every criminal case, the Unit provided a case closing 
report to the referring State agency that, when appropriate, included 
programmatic recommendations based on an analysis of the circumstances 
underlying the fraud.30  After making the recommendation to a State 
agency, Unit staff noted and tracked the recommendation in a database, 
which maintains a summary of each recommendation, the intended 
recipient(s), and any responses received.31  For example, according to 
database records, the Unit made and monitored more than 
20 recommendations to external agencies in FY 2015. 
 
 
                        ____________________________________________________________ 
29 The Units actions relate to Performance Standard 4(a), which states that a Unit should 
take steps to ensure that MCOs refer all suspected Medicaid provider fraud cases to the 
Unit.   
30 This practice relates to Performance Standard 9(b), which states that a Unit should 
make regulatory or administrative recommendations, when warranted and appropriate, 
regarding program integrity issues to the State Medicaid agency and to other agencies 
responsible for Medicaid operations or funding. 
31 This practice relates to Performance Standard 9(b), which states that a Unit should 
monitor actions taken by the State legislature and the State Medicaid agency in response 
to Unit recommendations. 
 
 
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CONCLUSION AND RECOMMENDATIONS 
During FYs 2013-2015, the Unit generated 39 convictions, 46 civil 
judgments and settlements, and total recoveries of more than $48 million.  
Our review found that the Unit was generally in compliance with 
applicable laws, regulations, and policy, and that it exercised proper fiscal 
control of its resources.  However, in two areas of its operations, the Unit 
did not comply with Federal laws and regulations and/or adhere to 
performance standards.  Specifically, the Unit did not fully secure some of 
its case files, and the Units case management system posed challenges to 
locating and retrieving case information.   
We recommend that the Washington Unit:   
Take steps to ensure that all case files are secure 
The Unit should take appropriate steps to ensure that Unit staff use the 
safeguards contained in the Units policies and procedures manual to 
secure all case files and PII associated with those case files. 
Revise its case file management policies and procedures to 
enable Unit staff to more efficiently locate and retrieve case 
information 
The Unit should revise its case file management policies and procedures to 
make the storage and retrieval of case information more efficient.  As part 
of this effort, the Unit should specify the storage location of all criminal 
and civil case file information and adopt a case file naming convention to 
uniquely identify case information stored in the four case information 
repositories.   
 
 
 
 
 
 
 
 
 
 
 
 
 
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UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL 
RESPONSE 
The Unit concurred with both report recommendations. 
The Unit concurred with our recommendation to take steps to ensure all 
case files are fully secured.  The Unit reported that it implemented 
procedures to secure all paper files containing PII.  Specifically, the Unit 
modified its policies and procedures to mandate that staff lock cabinets 
that have files containing PII.  The Unit also noted that it provided keys to 
select administrative staff who will be responsible for maintaining security 
of the files.  The Unit further explained that it is moving to eliminate all 
paper case files, which will lessen storage security challenges.  The Unit 
anticipates that these measures will be fully implemented by October 1, 
2016. 
The Unit concurred with our recommendation to revise its case file 
management policies and procedures to enable Unit staff to more 
efficiently locate and retrieve case information.  The Unit noted that it is 
working with the Attorney Generals Office Information Services Division 
staff to adapt the Units case file management system to allow for easier 
access to case information.  The Unit explained that it will update its case 
management policies and procedures to standardize case file naming 
conventions and locations of electronic documents.  The Unit anticipates 
that these measures will be fully implemented by June 15, 2017. 
The full text of the Units comments is provided in Appendix E. 
 
 
 
 
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APPENDIX A 
2012 Performance Standards32  
1.  A UNIT CONFORMS WITH ALL APPLICABLE STATUTES, REGULATIONS, AND POLICY DIRECTIVES, 
INCLUDING: 
A.  Section 1903(q) of the Social Security Act,  containing the basic requirements for operation of a MFCU; 
B.  Regulations for operation of a MFCU contained in 42 CFR part 1007; 
C.  Grant administration requirements at 45 CFR part 92 and Federal cost principles at 2 CFR part 225; 
D.  OIG policy transmittals as maintained on the OIG Web site; and  
E.  Terms and conditions of the notice of the grant award. 
2.  A UNIT MAINTAINS REASONABLE STAFF LEVELS AND OFFICE LOCATIONS IN RELATION TO THE 
STATES MEDICAID PROGRAM EXPENDITURES AND IN ACCORDANCE WITH STAFFING 
ALLOCATIONS APPROVED IN ITS BUDGET.   
A.  The Unit employs the number of staff that is included in the Units budget estimate as approved by OIG. 
B.  The Unit employs a total number of professional staff that is commensurate with the States total Medicaid 
program expenditures and that enables the Unit to effectively investigate and prosecute (or refer for 
prosecution) an appropriate volume of case referrals and workload for both Medicaid fraud and patient abuse 
and neglect. 
C.  The Unit employs an appropriate mix and number of attorneys, auditors, investigators, and other 
professional staff that is both commensurate with the States total Medicaid program expenditures and that 
allows the Unit to effectively investigate and prosecute (or refer for prosecution) an appropriate volume of case 
referrals and workload for both Medicaid fraud and patient abuse and neglect. 
D.  The Unit employs a number of support staff in relation to its overall size that allows the Unit to operate 
effectively. 
E.  To the extent that a Unit maintains multiple office locations, such locations are distributed throughout the 
State, and are adequately staffed, commensurate with the volume of case referrals and workload for each 
location. 
3. A UNIT ESTABLISHES WRITTEN POLICIES AND PROCEDURES FOR ITS OPERATIONS AND 
ENSURES THAT STAFF ARE FAMILIAR WITH, AND ADHERE TO, POLICIES AND PROCEDURES.   
A.  The Unit has written guidelines or manuals that contain current policies and procedures, consistent with 
these performance standards, for the investigation and (for those Units with prosecutorial authority) prosecution 
of Medicaid fraud and patient abuse and neglect.  
B.  The Unit adheres to current policies and procedures in its operations. 
C.  Procedures include a process for referring cases, when appropriate, to Federal and State agencies.  
Referrals to State agencies, including the State Medicaid agency, should identify whether further investigation 
or other administrative action is warranted, such as the collection of overpayments or suspension of payments. 
D.  Written guidelines and manuals are readily available to all Unit staff, either online or in hard copy. 
E.  Policies and procedures address training standards for Unit employees. 
4. A UNIT TAKES STEPS TO MAINTAIN AN ADEQUATE VOLUME AND QUALITY OF REFERRALS FROM 
THE STATE MEDICAID AGENCY AND OTHER SOURCES.   
A.  The Unit takes steps, such as the development of operational protocols, to ensure that the State Medicaid 
agency, managed care organizations, and other agencies refer to the Unit all suspected provider fraud cases.  
Consistent with 42 CFR 1007.9(g), the Unit provides timely written notice to the State Medicaid agency when 
referred cases are accepted or declined for investigation. 
                        ____________________________________________________________ 
32 77 Fed. Reg. 32645, June 1, 2012. 
 
 
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B.  The Unit provides periodic feedback to the State Medicaid agency and other referral sources on the 
adequacy of both the volume and quality of its referrals. 
C.  The Unit provides timely information to the State Medicaid or other agency when the Medicaid or other 
agency requests information on the status of MFCU investigations, including when the Medicaid agency 
requests quarterly certification pursuant to 42 CFR 455.23(d)(3)(ii). 
D.  For those States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and 
neglect cases, the Unit takes steps, such as the development of operational protocols, to ensure that pertinent 
agencies refer such cases to the Unit, consistent with patient confidentiality and consent.  Pertinent agencies 
vary by State but may include licensing and certification agencies, the State Long Term Care Ombudsman, and 
adult protective services offices.  
E.  The Unit provides timely information, when requested, to those agencies identified in (D) above regarding 
the status of referrals. 
F.  The Unit takes steps, through public outreach or other means, to encourage the public to refer cases to the 
Unit. 
5. A UNIT TAKES STEPS TO MAINTAIN A CONTINUOUS CASE FLOW AND TO COMPLETE CASES IN AN 
APPROPRIATE TIMEFRAME BASED ON THE COMPLEXITY OF THE CASES. 
A.  Each stage of an investigation and prosecution is completed in an appropriate timeframe. 
B.  Supervisors approve the opening and closing of all investigations and review the progress of cases and take 
action as necessary to ensure that each stage of an investigation and prosecution is completed in an 
appropriate timeframe. 
C.  Delays to investigations and prosecutions are limited to situations imposed by resource constraints or other 
exigencies.   
6.  A UNITS CASE MIX, AS PRACTICABLE, COVERS ALL SIGNIFICANT PROVIDER TYPES AND 
INCLUDES A BALANCE OF FRAUD AND, WHERE APPROPRIATE, PATIENT ABUSE AND NEGLECT 
CASES.   
A.  The Unit seeks to have a mix of cases from all significant provider types in the State. 
B.  For those States that rely substantially on managed care entities for the provision of Medicaid services, the 
Unit includes a commensurate number of managed care cases in its mix of cases.  
D.  As part of its case mix, the Unit maintains a balance of fraud and patient abuse and neglect cases for those 
States in which the Unit has original jurisdiction to investigate or prosecute patient abuse and neglect cases. 
C.  The Unit seeks to allocate resources among provider types based on levels of Medicaid expenditures or 
other risk factors.  Special Unit initiatives may focus on specific provider types. 
E.  As part of its case mix, the Unit seeks to maintain, consistent with its legal authorities, a balance of criminal 
and civil fraud cases. 
7.  A UNIT MAINTAINS CASE FILES IN AN EFFECTIVE MANNER AND DEVELOPS A CASE 
MANAGEMENT SYSTEM THAT ALLOWS EFFICIENT ACCESS TO CASE INFORMATION AND OTHER 
PERFORMANCE DATA.   
A.  Reviews by supervisors are conducted periodically, consistent with MFCU policies and procedures, and are 
noted in the case file. 
B.  Case files include all relevant facts and information and justify the opening and closing of the cases. 
C.  Significant documents, such as charging documents and settlement agreements, are included in the file.  
D.  Interview summaries are written promptly, as defined by the Units policies and procedures. 
E.  The Unit has an information management system that manages and tracks case information from initiation to 
resolution. 
F. The Unit has an information management system that allows for the monitoring and reporting of case 
information, including the following:  
1. The number of cases opened and closed and the reason that cases are closed. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  13 
   
   
2.  The length of time taken to determine whether to open a case referred by the State Medicaid agency or other 
referring source. 
3.  The number, age, and types of cases in the Units inventory/docket 
4.  The number of referrals received by the Unit and the number of referrals by the Unit to other agencies. 
5.  The number of cases criminally prosecuted by the Unit or referred to others for prosecution, the number of 
individuals or entities charged, and the number of pending prosecutions. 
6.  The number of criminal convictions and the number of civil judgments. 
7.  The dollar amount of overpayments identified. 
8.  The dollar amount of fines, penalties, and restitution ordered in a criminal case and the dollar amount of 
recoveries and the types of relief obtained through civil judgments or prefiling settlements. 
8.  A UNIT COOPERATES WITH OIG AND OTHER FEDERAL AGENCIES IN THE INVESTIGATION AND 
PROSECUTION OF MEDICAID AND OTHER HEALTH CARE FRAUD.   
A.   The Unit communicates on a regular basis with OIG and other Federal agencies investigating or 
prosecuting health care fraud in the State. 
B.  The Unit cooperates and, as appropriate, coordinates with OIGs Office of Investigations and other Federal 
agencies on cases being pursued jointly, cases involving the same suspects or allegations, and cases that have 
been referred to the Unit by OIG or another Federal agency.  
C.  The Unit makes available, to the extent authorized by law and upon request by Federal investigators and 
prosecutors, all information in its possession concerning provider fraud or fraud in the administration of the 
Medicaid program. 
D.  For cases that require the granting of extended jurisdiction to investigate Medicare or other Federal health 
care fraud, the Unit seeks permission from OIG or other relevant agencies under procedures as set by those 
agencies.  
E.  For cases that have civil fraud potential, the Unit investigates and prosecutes such cases under State 
authority or refers such cases to OIG or the U.S. Department of Justice. 
F.  The Unit transmits to OIG, for purposes of program exclusions under section 1128 of the Social Security Act, 
all pertinent information on MFCU convictions within 30 days of sentencing, including charging documents, plea 
agreements, and sentencing orders. 
G.  The Unit reports qualifying cases to the Healthcare Integrity & Protection Databank, the National Practitioner 
Data Bank, or successor data bases. 
9. A UNIT MAKES STATUTORY OR PROGRAMMATIC RECOMMENDATIONS, WHEN WARRANTED, TO 
THE STATE GOVERNMENT.   
A.  The Unit, when warranted and appropriate, makes statutory recommendations to the State legislature to 
improve the operation of the Unit, including amendments to the enforcement provisions of the State code. 
B.  The Unit, when warranted and appropriate, makes other regulatory or administrative recommendations 
regarding program integrity issues to the State Medicaid agency and to other agencies responsible for Medicaid 
operations or funding.  The Unit monitors actions taken by the State legislature and the State Medicaid or other 
agencies in response to recommendations.  
10. A UNIT PERIODICALLY REVIEWS ITS MEMORANDUM OF UNDERSTANDING (MOU) WITH THE 
STATE MEDICAID AGENCY TO ENSURE THAT IT REFLECTS CURRENT PRACTICE, POLICY, AND 
LEGAL REQUIREMENTS.   
A.  The MFCU documents that it has reviewed the MOU at least every 5 years, and has renegotiated the MOU 
as necessary, to ensure that it reflects current practice, policy, and legal requirements. 
B.  The MOU meets current Federal legal requirements as contained in law or regulation, including 42 CFR  
455.21, Cooperation with State Medicaid fraud control units, and 42 CFR  455.23, Suspension of payments 
in cases of fraud. 
C.  The MOU is consistent with current Federal and State policy, including any policies issued by OIG or the 
Centers for Medicare & Medicaid Services (CMS). 
D.  Consistent with Performance Standard 4, the MOU establishes a process to ensure the receipt of an 
adequate volume and quality of referrals to the Unit from the State Medicaid agency. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  14 
   
   
E.  The MOU incorporates by reference the CMS Performance Standard for Referrals of Suspected Fraud from 
a State Agency to a Medicaid Fraud Control Unit. 
11. A UNIT EXERCISES PROPER FISCAL CONTROL OVER UNIT RESOURCES.   
A.  The Unit promptly submits to OIG its preliminary budget estimates, proposed budget, and Federal financial 
expenditure reports.   
B.  The Unit maintains an equipment inventory that is updated regularly to reflect all property under the Units 
control. 
C.  The Unit maintains an effective time and attendance system and personnel activity records. 
D.  The Unit applies generally accepted accounting principles in its control of Unit funding. 
E.  The Unit employs a financial system in compliance with the standards for financial management systems 
contained in 45 CFR 92.20. 
12. A UNIT CONDUCTS TRAINING THAT AIDS IN THE MISSION OF THE UNIT.   
A.  The Unit maintains a training plan for each professional discipline that includes an annual minimum number 
of training hours and that is at least as stringent as required for professional certification.  
B.  The Unit ensures that professional staff comply with their training plans and maintain records of their staffs 
compliance. 
C.  Professional certifications are maintained for all staff, including those that fulfill continuing education 
requirements. 
D.  The Unit participates in MFCU-related training, including training offered by OIG and other MFCUs, as such 
training is available and as funding permits. 
E.  The Unit participates in cross-training with the fraud detection staff of the State Medicaid agency.  As part of 
such training, Unit staff provide training on the elements of successful fraud referrals and receive training on the 
role and responsibilities of the State Medicaid agency.  
 
 
 
 
 
 
 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  15 
   
   
APPENDIX B 
Detailed Methodology 
Data collected from the seven sources below were used to describe the 
caseload and assess the performance of the Washington MFCU. 
Data Collection 
Review of Unit Documentation.  Prior to the onsite visit, we analyzed 
information regarding the Units investigation of Medicaid cases, 
including information about the number of referrals the Unit received, the 
number of investigations the Unit opened and closed, the outcomes of 
those investigations, and the Units case mix.  We also collected and 
analyzed information about the number of cases that the Unit referred for 
prosecution and the outcomes of those prosecutions.   
We gathered this information from several sources, including the Units 
quarterly statistical reports, its annual reports, its recertification 
questionnaire, its policy and procedures manuals, and its memorandum of 
understanding with the State Medicaid agency.  We requested any 
additional data or clarification from the Unit as necessary. 
Review of Financial Documentation.  To evaluate internal control of fiscal 
resources, we reviewed policies and procedures related to the Units 
budgeting, accounting systems, cash management, procurement, property, 
and staffing.  We reviewed records in the Payment Management 
System (PMS) 33 and revenue accounts to determine the accuracy of the 
Federal Financial Reports (FFRs) for FYs 2013 through 2015.  We also 
obtained the Units claimed grant expenditures from its FFRs and the 
supporting schedules.  From the supporting schedules, we requested and 
reviewed supporting documentation for the selected items.  We noted any 
instances of noncompliance with applicable regulations.   
We selected three purposive samples to assess the Units internal control 
of fiscal resources.  The three samples included the following:   
1.  To assess the Units expenditures, we selected a purposive sample 
of 26 items from 4,133 accounting records.  We selected routine 
and nonroutine transactions representing a variety of budget 
categories and payment amounts.   
                        ____________________________________________________________ 
33 The PMS is a grant payment system operated and maintained by the Department of 
Health and Human Services, Program Support Center, Division of Payment 
Management.  The PMS provides disbursement, grant monitoring, reporting, and case 
management services to awarding agencies and grant recipients, such as MFCUs. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  16 
   
   
2.  To assess inventory, we selected and verified a purposive sample 
of 10 items from the current inventory list of 81 items.  To ensure a 
variety in our inventory sample, we included items that were 
portable, high value, or unusual in nature (e.g., vehicles, 
communication equipment).   
3.  To assess employee time and effort, we selected purposive samples 
of 5 of 36 Unit employees who were paid during the review period.  
We then requested and reviewed documentation (e.g., time card 
records) to support the employees time and effort in the selected 
pay period. 
Interviews with Key Stakeholders.  In December 2015 and               
January 2016, we interviewed eight individual stakeholders from five 
agencies who were familiar with MFCU operations.  Specifically, we 
interviewed one program integrity manager from HCA; three Assistant 
U.S. Attorneys; the Corrections Division chief for the Washington 
Attorney Generals Office;34 two managers from the Department of Social 
and Health Services; and one OIG Assistant Special Agent in Charge for 
the State of Washington.  We focused these interviews on the Units 
relationship and interaction with OIG and other Federal and State 
authorities, and we identified opportunities for improvement.  We used the 
information collected from these interviews to develop subsequent 
interview questions for Unit management. 
Survey of Unit Staff.  In December 2015, we conducted an online survey 
of all 30 nonmanagerial staff within each professional discipline (i.e., 
investigators, auditors, and attorneys) as well as support staff.  The 
response rate was 100 percent.  Our questions focused on Unit operations, 
opportunities for improvement, and practices that contributed to the 
effectiveness and efficiency of Unit operations and/or performance.  The 
survey also sought information about the Units compliance with 
applicable laws and regulations. 
Onsite Interviews with Unit Management.  We conducted structured 
interviews with the MFCUs director, chief investigator, chief criminal 
attorney, and chief civil attorney in January 2016.  We asked these 
individuals to provide information related to (1) the Units operations, 
(2) Unit practices that contributed to the effectiveness and efficiency of 
Unit operations and/or performance, (3) opportunities for the Unit to 
improve its operations and/or performance, and (4) clarification regarding 
information obtained from other data sources. 
                        ____________________________________________________________ 
34 The division chief supervises the MFCU director. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  17 
   
   
Onsite Review of Case Files.  We requested that the Unit provide us with a 
list of cases that were open at any point during FYs 2013-2015.  We 
requested data on the 858 open cases that included, but was not limited to, 
the current status of the case; whether the case was criminal, civil, or 
global; and the date on which the case was opened.  Because global cases 
are civil false claims actions that typically involve multiple agencies, such 
as the U.S. Department of Justice and a group of State MFCUs, we 
exclude those cases from our review of a Units case files.  Therefore, we 
excluded 265 cases that were categorized as global from the list of 
cases.  The remaining number of case files was 593. 
We then selected a simple random sample of 100 cases from the 
population of 593 cases.  We determined that 98 of these 100 sampled 
cases were open longer than 90 days, and 65 were open longer than 1 year.  
We reviewed the 98 sampled case files that were open for at least 90 days 
to determine whether documentation for required supervisory reviews was 
present.  Additionally, we reviewed the 65 of those sampled case files that 
were open for at least a year to determine whether there were investigation 
or prosecution delays of 1 year or more that were not explained in the case 
files.  Because our case file review generated no findings, we do not report 
estimates of the number of case files for these subpopulations, nor do we 
report point estimates and their 95-percent confidence intervals. 
From the initial sample of 100 case files, we selected a further simple 
random sample of 50 files for a qualitative review of selected issues, such 
as case development.  While onsite, we consulted with MFCU staff to 
address any apparent issues with individual case files, such as missing 
documentation.  We did not estimate any population or subpopulation 
proportions from this additional sample of 50 case files. 
Onsite Review of Unit Operations.  During our January 2016 onsite visit, 
we reviewed the Units workspace and operations.  Specifically, we 
visited the Unit headquarters in the State capital.  While onsite, we 
observed the Units offices and meeting spaces, security of data and case 
files, location of select equipment, and the general functioning of the Unit. 
Data Analysis 
We analyzed 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, or policy 
transmittals.35 
                        ____________________________________________________________ 
35 All relevant regulations, statutes, and policy transmittals are available online at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  18 
   
   
APPENDIX C 
Investigations Opened and Closed by the Washington MFCU, 
by Case Type, FYs 2013 through 2015 
 
  Annual    
  Case Type  FY 2013  FY 2014  FY 2015  3-Year Total  Average* 
  Opened  107  119  134  360  120 
Patient Abuse and 
8  9  6  23  8 
Neglect 
Provider Fraud  99  110  128  337  112 
Closed  511  100  122  733  244 
Patient Abuse and 
343  12  8  363  121 
Neglect 
Provider Fraud  168  88  114  370  123 
Source:   OIG analysis of Unit Quarterly and Annual Statistical Reports, 2016. 
*Averages in this column are rounded. 
 
 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  19 
   
   
APPENDIX D 
Unit Referrals by Referral Source for FYs 2013 Through 2015 
   
FY 2013  FY 2014  FY 2015 
Abuse &  Abuse &  Abuse & 
Referral Source  Fraud  Fraud  Fraud  Total 
Neglect1  Neglect  Neglect 
Medicaid agency  
148  949  257  2,596  107  1,903  5,960 
other 
Private citizens  85  2  139  6  106  8  346 
Other  6  3  48  10  15  2  84 
Other State 
24  1  47  5  5  0  82 
agencies 
Adult protective 
10  2  16  35  12  3  78 
services 
Office of Inspector 
3  0  13  1  35  0  52 
General 
State Medicaid 
3  0  20  0  14  0  37 
agency 
Law enforcement  2  1  10  3  14  1  31 
Managed Care 
3   0   1   0   12  0  16 
Organizations 
Providers  4  0  8  1  1  0  14 
Provider 
0  0  1  0  4  0  5 
associations 
Private health 
1  0  2  0  1  0  4 
insurer 
Anonymous3  N/A  N/A   N/A   N/A  4  0  4 
Prosecutors  0  0  1  0  1  0  2 
MFCU hotline2  0  0  1  0  N/A  N/A  1 
   Total  289  958  564  2,657  331  1,917  6,716 
 
   Annual Total  1,247  3,221  2,248 
Source:  OIG analysis of Unit Quarterly and Annual Statistical Reports, 2016. 
1 The category of abuse & neglect referrals includes patient funds referrals. 
2 The referral source MFCU hotline was not a category reported on the FY 2015 Annual Statistical Report. 
3 The referral source Anonymous was not a category reported on the FY 2013 and FY 2014 Quarterly Statistical 
Reports. 
 
 
 
 
 
 
 
 
 
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APPENDIX E 
Unit Comments 
 
 
 
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Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  22 
   
   
 
 
 
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ACKNOWLEDGMENTS 
This report was prepared under the direction of Blaine Collins, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Michael Henry, Deputy Regional Inspector General; and 
in consultation with Richard Stern, Director of the Medicaid Fraud Policy 
and Oversight Division. 
Matthew DeFraga, of the San Francisco regional office, served as the project 
leader for the study.  Other Office of Evaluation and Inspections staff who 
conducted the review include Rosemary Rawlins.  Other Medicaid Fraud 
Policy and Oversight Division staff who participated in the review include 
Susan Burbach.  Office of Investigations staff also participated in the review.  
Office of Audit Services staff who conducted a financial review include 
Stacy DeWeber and Jen St. Mary.  Other central office staff who contributed 
to this review include Kevin Farber, Joanne Legomsky, and Lonie Kim. 
 
 
Washington State Medicaid Fraud Control Unit:  2016 Onsite Review (OEI-09-16-00010)  24 
   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95452, 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 individuals 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 individuals.  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.