U.S. Department of Health and Human Services 
Office of Inspector General 
 
 
 
New York 
Medicaid Fraud 
Control Unit:  
2017 Onsite 
Inspection 
 
Suzanne Murrin 
OEI-12-17-00340 
Deputy Inspector General 
September 2018 
 
oig.hhs.gov  Report in Brief  U.S. Department of Health and Human Services 
September 2018 
Office  of Inspector General 
OEI-12-17-00340 
 
New York Medicaid Fraud Control Unit:  2017 Onsite Inspection 
What OIG Found  
The New York Medicaid Fraud Control Unit (MFCU or Unit) reported 370 indictments;  Unit Case Outcomes 
348 convictions; 211 civil settlements and judgments; and over $670 million in recoveries  FYs  20142016 
for fiscal years (FYs) 20142016.  From  the  data we  reviewed, we found that the Unit 
   370 indictments 
generally operated in accordance with applicable laws, regulations, policy transmittals, 
   348 convictions 
and the MFCU performance standards.  However, we identified five findings involving 
   211 civil settlements 
the Units adherence to program requirements: 
and judgments  
1.   Unit practices left some case files vulnerable to unauthorized access.      $670 million in 
  recoveries  
2.   The Unit did not have  a  written policy for conducting periodic supervisory 
reviews and noting the reviews in the Units case files.  Unit Snapshot   
  The Unit has 299 staff spread 
3.   The Unit did not report all convictions and adverse  actions to  Federal  partners   among  its New York City 
within the appropriate timeframes.   headquarters  and its  7 regional 
  offices. 
4.   The Unit generally exercised proper fiscal controls, but it did not exercise proper 
The Unit is part of  the  Office of 
fiscal controls  over the sale and transfer  of Unit vehicles.  
the New York State Attorney
 
General.  
5.   Three  Unit professional staff temporarily performed non-Unit duties, and the 
Unit did not deduct  the associated costs from claimed Unit expenditures.    The Unit includes a Civil 
Enforcement Division and an 
In addition to  the five  findings, we  made  observations regarding  Unit operations  and 
Electronic Investigative Support 
practices, including the following that  we identified  as  beneficial practices that may be 
Group. 
useful as  a  model to other Units: 
   The Unit developed a strategic plan to increase efficiency in MFCU casework and 
to protect Medicaid program integrity.  
   The Unit established data-analytics working groups to facilitate the  Units data 
mining processes. 
   Unit staff participated in  moot court training to prepare for settlement negotiations and opening statements.   
What OIG Recommends 
We recommend that to address the five  findings, the  Unit (1) take steps to ensure  that MFCU staff adhere to  policies and 
procedures for securing  case files; (2) create policies and procedures for conducting periodic supervisory reviews of Unit case 
files, and take steps to  ensure that case files include  documentation  of periodic supervisory reviews; (3) ensure that the Unit 
consistently reports  convictions and adverse actions to Federal  partners within the appropriate  timeframes; (4) ensure that 
consistent with Unit policythe Unit reimburses the Federal Government its share  of proceeds  received from  the sale and 
transfer of  vehicles and any other equipment; and (5) strengthen  internal controls  to ensure that the Unit excludes from its 
claimed grant expenditures all costs related to time spent by staff on non-Unit activities. 
Full report can be  found at oig.hhs.gov/oei/reports/oei-12-17-00340.asp  TABLE OF CONTENTS 
BACKGROUND  1 
PERFORMANCE ASSESSMENT  7 
Case Outcomes  7 
The Unit reported substantial criminal and civil outcomes 
The Unit developed a written Strategic Plan 
Performance Standard 1: Compliance with requirements  8 
From the information we reviewed, the New York Unit generally complied with applicable 
laws, regulations, and policy transmittals 
Unit practices left some case files vulnerable to unauthorized access 
Performance Standard 2:  Staffing   9 
The Unit did not maintain staff levels in accordance with its approved budget 
Performance Standard 3:  Policies and procedures  10 
The Unit maintained written policies and procedures 
Performance Standard 4:  Maintaining adequate referrals  10 
The Unit conducted outreach to encourage referrals 
The MFCU reported that despite its having taken steps to increase the quantity and quality 
of referrals from MCOs, the quantity of referrals from MCOs was inadequate 
The Unit used data-analytics working groups to facilitate data mining processes 
Performance Standard 5:  Maintaining a continuous case flow  11 
Unit case files exhibited generally contained supervisory approval of case openings and 
closings 
Performance Standard 6:  Case mix  11 
The Units caseload included both cases of fraud and cases of patient abuse or neglect, 
covering a broad mix of provider types 
Performance Standard 7:  Maintaining case information  13 
The Unit did not have a written policy for conducting periodic supervisory reviews and 
noting the reviews in the Units case files 
Performance Standard 8:  Cooperation with Federal authorities on fraud cases  13 
The Unit maintains a positive working relationship with law enforcement partners, but does 
not frequently work joint cases with OIG 
The Unit did not report all convictions and adverse actions to Federal partners within the 
appropriate timeframes   
Performance Standard 9:  Program recommendations   15 
The Unit made program integrity recommendations regarding program deficiencies to the 
State Medicaid agency 
Performance Standard 10:  Agreement with State Medicaid agency    15 
The Units memorandum of understanding with the State Medicaid agency generally 
reflected current practice, policy, and legal requirements 
Performance Standard 11:  Fiscal control  15 
The Unit generally exercised proper fiscal controls, but it did not exercise proper fiscal 
controls over the sale and transfer of Unit vehicles 
Three Unit professional staff temporarily performed non-Unit duties, and the Unit did not 
subtract the associated costs from claimed Unit expenditures 
Performance Standard 12:  Training  17 
Unit staff and management reported excellent training opportunities 
Unit staff participated in moot-court training to prepare for settlement negotiations and 
opening statements 
CONCLUSION AND RECOMMENDATIONS   
Take steps to ensure that MFCU staff adhere to policies and procedures for securing case files   18 
Create policies and procedures for conducting periodic supervisory reviews of Unit case files,  18 
and take steps to ensure that case files include documentation of periodic supervisory reviews 
Ensure that the Unit consistently reports convictions and adverse actions to Federal partners  19 
within the appropriate timeframes  
Ensure thatconsistent with Unit policythe Unit reimburses the Federal Government its  19 
share of proceeds received from the sale and transfer of vehicles and any other equipment 
Strengthen internal controls to ensure that the Unit excludes from its claimed grant  19 
expenditures all costs related to time spent by staff on non-Unit activities 
UNIT COMMENTS AND OIG RESPONSE  20 
APPENDICES   
A.  MFCU Performance Standards  21 
B.  Unit Referrals by Source for Fiscal Years 2014 Through 2016  26 
C.  Detailed Methodology  27 
D.  Unit Comments  30 
ACKNOWLEDGMENTS  36 
 
 
 
   
BACKGROUND 
Objective 
To examine the performance and operations of the New York State 
Medicaid Fraud Control Unit 
Medicaid Fraud  The function of Medicaid Fraud Control Units (MFCUs or Units) is to 
investigate Medicaid provider fraud and patient abuse or neglect, and to 
Control Units 
prosecute those cases under State law or refer them to other prosecuting 
offices.1  Under the Social Security Act (SSA), a MFCU is a single, identifiable 
entity of State government, must be separate and distinct from the State 
Medicaid agency, and must employ one or more investigators, attorneys, 
and auditors.2  Each State must operate a MFCU or receive a waiver.3  
Currently, 49 States and the District of Columbia operate MFCUs.4  Each 
Unit receives a Federal grant award equivalent to 75 percent of total 
expenditures.5  In fiscal year (FY) 2016, combined Federal and State 
expenditures for the Units totaled approximately $259 million.6   
OIG Grant   The Office of Inspector General (OIG) administers a grant award to each 
Unit and provides oversight of Units.7, 8  As part of its oversight, OIG reviews 
Administration and 
and recertifies each Unit annually.  The recertification review consists of 
Oversight of the 
examining the following:  the Units annual report; questionnaire responses 
MFCUs  from the Units director and stakeholders; and annual case statistics.  
Through the recertification review, OIG assesses a Units performance, as 
measured by the Units adherence to published performance standards;9 the 
 
1 SSA  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. 
2 SSA  1903(q). 
3 SSA  1902(a)(61). 
4 State refers to the States, the District of Columbia, and the U.S. territories.  The State of 
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.   
5 SSA  1903(a)(6).  For a Units first 3 years of operation, the Federal government contributes 
90 percent of funding and the State contributes 10 percent of Unit funding.  Thereafter, the 
Federal government contributes 75 percent and the State contributes 25 percent.  The SSA 
authorizes the Secretary of Health and Human Services to award grants to the Units.  The 
Secretary has delegated this authority to OIG.       
6 OIG analysis of FY 2016 MFCU annual statistical reporting data. 
7 See footnote 5.     
8 OIGs Office of Management and Policy (OMP) collects and examines a variety of financial 
information from Units.  For example, MFCUs transmit Federal Status Reports to OMP on a 
quarterly and annual basis. These financial reports detail MFCU income and expenditures.        
9 77 Fed. Reg. 32645 (June 1, 2012).   
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Units compliance with applicable laws, regulations, and OIG policy 
transmittals;10 and the Units case outcomes.  See Appendix A for MFCU 
performance standards, including performance indicators for each standard.  
OIG further assesses a Units performance by periodically conducting onsite 
Unit reviews that may identify findings and make recommendations for 
improvement.  During an onsite review, OIG may also make observations 
regarding Unit operations and practices, including identifying beneficial 
practices that may be useful to other Units.  In addition, OIG provides 
training and technical assistance, as appropriate, to Units while onsite and 
on an ongoing basis.  
New York MFCU  The New York MFCU is headquartered in New York City and has seven 
regional offices: Albany, Buffalo, Hauppauge, New York City, Pearl River, 
Rochester, and Syracuse.  The Unit is a division of the New York State 
Attorney Generals Office.  The national MFCU program is modeled after the 
New York Special Prosecutors Office, which was established in the 1970s.  
As with todays MFCUs, the Special Prosecutors Office was staffed by 
coordinated teams of specialists, attorneys, investigators, and auditors, all 
dedicated to the investigation and prosecution of cases of health care fraud 
and patient abuse.11   
 
10 OIG occasionally issues policy transmittals to provide guidance and instruction to MFCUs. 
11 Following widespread and shocking revelations of fraud in the New York nursing home 
industry, an independent Special Prosecutor, Charles J. Hynes, was appointed in January 1975 
to investigate and prosecute health care providers statewide.  In the first 2 years, the Special 
Prosecutors office obtained 50 convictions of nursing home owners and recovered millions 
of dollars in restitution and fines.  Hynes testified before several congressional committees, 
outlining the framework for federally funded State anti-fraud units patterned after the 
New York Special Prosecutors Office.  Each Unit would be separate and distinct from the 
corresponding State Medicaid agency in order to maintain the Units investigative 
independence, and each Unit would have statewide prosecutorial authority. 
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Exhibit 1:  New York MFCU Office Locations
 
Source:  OIG analysis of New York State Medicaid Fraud Control Unit, 2016 Annual Report. 
The New York MFCU includes a Civil Enforcement Division.  The Civil 
Enforcement Division handles civil fraud investigations, including qui tam 
cases (whistleblower actions).  The Civil Enforcement Division is composed 
of 36 Unit staff, including a Civil Enforcement Division Chief, 15 attorneys (in 
addtion to the Chief), 18 auditors, 1 computer program analyst, and 
1 support staffer.  The Unit also plays a significant role in the National 
Association of Medicaid Fraud Control Units (NAMFCU) global cases.  
Global cases are civil cases that involve both the Federal Government and a 
group of States.  A New York MFCU attorney has served on the 
Associations Global Case Committee and has co-chaired the Qui Tam 
Subcommittee since 2008.  A New York MFCU auditor has co-chaired 
NAMFCUs Data Analytic Subcommittee since 2008, and three additional 
Unit auditors have served on the subcommittee since 2013.   
The New York MFCU also includes an Electronic Investigative Support 
Group.  This group organizes and analyzes State Medicaid claims data for 
MFCU investigations and manages the Units computer network.  Further, 
the Units Electronic Investigative Support Group manages NAMFCUs 
Global Case Repository.  The repository is a centralized system that provides 
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NAMFCUs global case teams with the ability to coordinate their 
investigations and avoid duplication of efforts.     
The New York MFCU is the largest of the 50 MFCUs and employed 299 staff 
at the end of FY 2017.  These stafff included a director and deputy director; 
82 investigators; 86 auditors; 55 attorneys (in addition to the director and 
deputy director, who are both attorneys); analysts; and support staff.  The 
Unit director has been employed by the MFCU since 2007 and was 
promoted to acting director in 2013 and director in 2016.  During the review 
period of FYs 20142016, the Unit expended $140 million, with a State share 
of $35 million. 
Referrals.  The Unit receives referrals of fraud and patient abuse or neglect 
primarily from the State Medicaid agency, but also receives many referrals 
from private citizens and other State agencies.  Appendix B lists Unit 
referrals by source for FYs 2014 through 2016.  When the Unit receives 
a referral, the appropriate regional MFCU office determines whether 
to open a preliminary investigation, open a full investigation, or refer it to 
another agency.   
Investigations.  Once the Unit opens a preliminary or full investigation, 
regional managers assign a team to the case.  Teams assigned to fraud 
cases generally include an investigator, attorney, auditor, and, as 
appropriate for the case, a nurse analyst.  Cases of patient abuse or neglect 
are assigned a team consisting of an investigator, attorney, and a nurse 
analyst.   
The Unit does not maintain a written policy requiring a specific frequency 
for supervisory reviews of case files.  Unit management reported that 
regional MFCU directors, who are the first-line supervisors for Unit staff in 
regional offices, are given flexibility regarding the format and frequency of 
supervisory reviews of each case and how those reviews are documented.  
The regional directors are encouraged, but not required, to document the 
reviews through emails and through calendar records.   
Prosecutions.  The New York MFCU has Statewide criminal prosecutorial 
authority.  If a case is not within the Units prosecutorial authority, the MFCU 
typically refers it to either a district attorney or the appropriate United States 
Attorneys Office (Northern, Southern, Eastern, or Western Districts of 
New York).  The Units Civil Enforcement Division works jointly with Federal 
prosecutors on cases brought under the State False Claims Act.   
New York  New York State Department of Health.  The New York Department of Health 
includes the State Medicaid Agency as well as the Office of Medicaid 
Medicaid 
Inspector General (OMIG).  Among other functions, OMIG serves as the 
Program 
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program integrity unit for the States Medicaid program.12  New Yorks 
Medicaid program contracts with 19 mainstream MCOs13 to provide health 
care coverage for over 4 million beneficiaries.14,  In FY 2017, total New York 
Medicaid expenditures were $78.6 billion.15  
MCO Contract.  The New York Medicaid Managed Care model contract 
(adopted for all 19 MCOs in New York State) requires MCOs, upon 
identifying reasonably suspected cases of fraud and abuse, to make 
referrals to the State Medicaid agency and OMIG.  OMIG in turn refers 
such matters to the MFCU when it deems them to be credible 
allegations of fraud.16   
Prior OIG Report  OIG conducted a previous onsite review of the New York Unit in 2011.  In 
that review, OIG found that (1) although the number of referrals to the Unit 
increased during the review period, the number of cases the Unit opened 
and closed decreased; (2) the Unit did not establish annual training plans 
and provided limited training opportunities to staff; (3) the Unit lacked 
policies and procedures to reflect many of its current practices; (4) case files 
lacked consistent documentation of the opening and closing of cases and of 
supervisory reviews; and (5) the Unit lacked internal controls over purchase 
cards, reconciliation of accounting records, and vehicle sale and transfer.17   
OIG recommended that the Unit (1) seek to expand staff sizes to reflect the 
number of staff approved in the Units budget; (2) establish annual training 
plans and increase the number of training opportunities available to staff; 
(3) ensure that its memorandum of understanding (MOU), its policies, and 
its procedures reflect current practices; (4) ensure that its case files are 
 
12 OMIG has the authority to pursue civil and administrative actions against Medicaid 
providers and recipients engaged in fraud, abuse, or illegal practices. 
13 Mainstream managed care provides comprehensive medical services including hospital 
care, physician services, dental services, pharmacy benefits, and many others.  New York 
State Office of the State Comptroller, Mainstream Managed Care Organizations
Administrative Costs Used in Premium Rate Setting.  October 2016.  Accessed at 
https://osc.state.ny.us/audits/allaudits/093017/14s55.pdf on September 17, 2018. 
14 New York State Department of Health, Recipients Enrolled in Mainstream Medicaid 
Managed Care by County, Plan, Aid Category, and NYSoH.  Accessed at 
https://www.health.ny.gov/health_care/managed_care/reports/enrollment/monthly/2018/doc
s/en06_18.pdf on July 2, 2018.  NYSoH is New York State of Healththe States health 
insurance marketplace, created in accordance with the Patient Protection and Affordable 
Care Act. 
15 OIG, MFCU Statistical Data for FY 2017.  Accessed at https://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/expenditures_statistics/fy2017-statistical-chart.pdf on March 30, 
2018.  
16 According to the MFCUs Memorandum of Understanding with the Department of Health 
and OMIG, a credible allegation of fraud means an allegation that has indicia of reliability 
and has been verified by the State Medicaid agency, OMIG, the MFCU, another State 
agency, or law enforcement organization.   
17 OIG, New York State Medicaid Fraud Control Unit: 2011 Onsite Review.  Accessed at 
https://oig.hhs.gov/oei/reports/oei-02-11-00440.pdf on February 1, 2018. 
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maintained with greater consistency and reviewed more frequently; and 
(5) establish written policies and procedures for certain controls.  In 
response to the recommendations, the Unit (1) hired 75 new employees; 
(2) established a training plan covering all disciplines and support staff and 
increased training opportunities for Unit staff; (3) updated its MOU and its 
policies and procedures to reflect its current practices; (4) adopted an 
electronic case-management system to maintain case files and instructed 
supervisors to document case file reviews; and (5) implemented internal 
controls over purchase cards, assigned two supervisors to oversee the Units 
financial systems, and reimbursed the Federal Government for the Federal 
portion of funds received from the transfer of vehicles.  On the basis of 
information that OIG received from the Unit, OIG considered these 
recommendations implemented.       
Methodology  We conducted the onsite inspection of the New York MFCU in August 2017.  
Our review covered the 3-year period of FYs 20142016.  We analyzed data 
from eight sources:  (1) Unit documentation; (2) financial documentation; 
(3) structured interviews with key stakeholders; (4) structured interviews with 
the Units managers and selected staff; (5) a survey of Unit staff; (6) a review 
of a purposive sample of 20 case files that were open at some point during 
the review period; (7) a review of all convictions submitted to OIG for 
program exclusion and all adverse actions submitted to the National 
Practitioner Data Bank (NPDB) during the review period; and 
(8) observations of Unit operations.  (See Appendix C for a detailed 
methodology.)  In examining the Units operations and performance, we 
applied the published performance standards, but we did not consider 
every performance indicator for every standard. 
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.  These inspections differ from other OIG evaluations 
in that they support OIGs direct administration of the MFCU grant program, 
but they are subject to the same internal quality controls as other OIG 
evaluations, including internal peer review. 
   
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PERFORMANCE ASSESSMENT 
We reviewed the New York Units compliance with applicable laws, 
regulations,  and policy transmittals,  and adherence to each of the MFCU 
performance standards.  For this review, we observed the Units substantial 
case outcomes, identified  some opportunities for  improvement, and made 
observations regarding the Units adherence to each of the performance 
standards.  The observations include three beneficial practices that may be 
of particular interest to other MFCUs.   
CASE OUTCOMES   
 
Observation  The Unit reported substantial criminal and civil case outcomes.  From  
FYs 2014 through 2016, the Unit reported 370 indictments; 348 convictions; 
and 211 civil settlements and judgments.   
 
 
Additionally, the Unit  reported total recoveries of over $670 million for 
FYs 20142016.  See Exhibit 2 for a breakdown of the Units recoveries.  
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Exhibit 2:  The Unit reported combined civil and criminal recoveries 
 
of over $670 million  (FYs 20142016) 
 
Source:  OIG analysis of Unit statistical data,  FYs  20142016.  
Note:  Global  cases are those  that involve  both the Federal Government  and  a  group  of States and 
are coordinated  by the National Association of Medicaid  Fraud  Control Units.  
 
Beneficial Practice  The Unit developed a written Strategic Plan.   In early 2015, the Unit 
developed a written Strategic Plan for 2015 through 2019.  The Plan 
outlines the Units mission and goals and includes highly detailed 
strategies for meeting  particular goals.  Among other strategies, the Plan 
prioritizes certain types of investigations such as (1) criminal investigations 
into violent patient abuse and patient death, and  obtaining stronger 
sentences in such cases; (2) fraud allegations directly against managed 
care companies, including those that provide long-term care; (3) fraud 
investigations involving nursing home  owners and  management 
responsible for systemic causes of resident abuse  and neglect; and 
(4) fraud investigations of other large  providers.  For civil fraud, the Plan 
establishes a  priority for false claims investigations with higher potential for 
monetary recoveries or risk of patient harm and establishes an approach 
to triage the high volume  of qui tam complaints that the Unit  receives.  
Unit management stated its belief  that the Strategic Plan helps Unit  staff 
make informed decisions regarding the optimal use of resources as they 
conduct their work.  One Unit investigator expressed the view that the 
Strategic Plan provides a general plan for how Unit staff can efficiently 
conduct casework.  
 
STANDARD 1   A Unit conforms with all applicable statutes, regulations, and policy 
  directives.  
Observation  From the information we reviewed, the New York Unit generally 
complied with applicable laws, regulations, and policy transmittals.  
In the data we reviewed, we identified only one compliance concern related 
to the security of Unit case files, as explained below.    
 
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Unit practices left some case files vulnerable to unauthorized access.  
Finding 
During our onsite review at the MFCUs headquarters location, we observed 
that the Unit did not fully secure some paper case files, which could leave 
case files vulnerable to unauthorized access.  OIG observed that the Unit 
stored the unsecured files in unlocked office spaces and in boxes on top of 
file cabinets where non-MFCU staff might have access.  Unit management 
explained that the location of the boxes was temporary while the Unit was 
preparing for an upcoming move that occurred shortly after our onsite 
inspection.  According to Performance Standard 1, a Unit must conform with 
all applicable statutes, regulations, and policy transmittals, including 
regulations regarding the security of case files.18   
Unit management explained that individuals must use a coded access card 
to enter the Units general office area.  However, janitorial staff routinely 
accessed the Units office during nonbusiness hours when Unit staff were 
not present.  The Unit had a policy related to case file security, which 
directed Unit staff to never leave PHI [protected health information] on 
your desk or elsewhere in your office where it can be viewed by persons not 
authorized to see it.19   
STANDARD 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. 
 
Observation  The Unit did not maintain staff levels in accordance with its approved 
budget.  As a part of its oversight role, OIG approves the number of staff 
requested by the Unit in its annual budget.  During OIGs 2011 onsite review, 
OIG found that the Unit employed 306 staff members although the Unit 
requested and OIG approved funding for 380 positions.20  Further, Unit 
managers acknowledged that the decline in staff levels led to a decline in 
the Units overall caseload.  According to one manager, There are cases we 
probably should do but cant because we dont have the manpower; we 
have to refer them back.  As a result, the OIG recommended that the Unit 
 
18 42 CFR  1007.11(f). 
19 The policy defines PHI as any (1) individually identifiable health information, including 
demographic data, that is (2) created or received by a health care provider, health plan, 
employer, or health care clearinghouse, and (3) relates to (a) the individuals past, present or 
future physical or mental health condition; (b) the provision of health care to the individual; 
(c) the past, present, or future payment for the provision of health care to the individual.  
Additionally, citing 45 CFR  160.103, the policy states:  Health information is individually 
identifiable if it includes common identifiers such as name, address, birth date, and social 
security number, or if there is a reasonable basis to believe that the information available 
could be used to identify the individual.  In addition to containing PHI, MFCU case files may 
contain sensitive law enforcement information.   
20 OIG, New York State Medicaid Fraud Control Unit: 2011 Onsite Review.  Accessed at 
https://oig.hhs.gov/oei/reports/oei-02-11-00440.pdf on February 1, 2018. 
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seek to expand staff sizes to reflect the number of staff approved in the 
Units budget.  Since OIGs 2011 onsite review, the Unit reported that it had 
hired 169 employees, but had also lost employees to retirement and natural 
attrition. 
At the end of FY 2017, the Unit was approved for 340 staff but employed 
only 299, meaning that 12 percent of the Units approved positions were 
vacant.  On average, 12 percent of all other MFCUs approved positions 
were also vacant at the end of FY 2017.  Unit management reported that it 
continues to fill vacant positions as current employees retire or resign.  
Additionally, Unit management reported that its current number of 
professional staff is reasonable in comparison to the States total Medicaid 
program expenditures and the volume of referrals that the Unit receives. 
STANDARD 3  A Unit establishes written policies and procedures for its operations 
  and ensures that staff are familiar with, and adhere to, policies and 
procedures. 
 
Observation  The Unit maintained written policies and procedures.  The Unit reported 
that, since 2013, it has maintained policy and procedure manuals as part of 
its Intranet systemknown as MFCUnetand that it continues to update 
its policy and procedure manuals as necessary.     
Additionally, the Unit maintains an audit manual that is intended to ensure 
that MFCU staff of all disciplines comply with the OIG Performance 
Standards and Unit policies and procedures.  Unit management reported 
that the manual includes guidance to help MFCU teams identify and 
investigate Medicaid fraud. The manual also includes MFCU reference and 
resource materials; legal terminology, principles, processes, and resources; 
auditor guidelines; an audit plan; investigation tip sheets; and reference 
materials on managed care.  A committee of Unit staff meets quarterly to 
update the manual. 
STANDARD 4  A Unit takes steps to maintain an adequate volume and quality of 
  referrals from the State Medicaid agency and other sources. 
 
Observations  The Unit conducted outreach to encourage referrals.  The Unit took steps 
to maintain volume and quality of referrals through a number of outreach 
efforts.  The Unit reported that to encourage referrals, it has regular 
meetings and contact with agencies, prosecutors, and law enforcement 
across the State and country.  For example, the Unit reported having regular 
meetings and contact with the New York City Health and Hospitals 
Corporation, the New York State Department of Health, and the U.S. Food 
and Drug Administration, among others, to encourage referrals.  The Unit 
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also reported meeting with prosecutors from the Northern, Eastern, 
Southern, and Western Districts of New York and with local and Federal law 
enforcement to discuss referrals and collaboration.21 
The MFCU reported that despite its having taken steps to increase the 
quantity and quality of referrals from MCOs, the quantity of referrals 
from MCOs was inadequate.  MFCU staff reported taking steps to increase 
the quantity and quality of referrals from MCOs.  Specifically, the Unit 
reported hosting meetings with New York MCOs to discuss specific 
investigations of fraud, common fraud schemes, and how to facilitate 
communication between MCOs and the Unit.  The Unit also worked with the 
State Medicaid agency to revise the New York Medicaid Managed Care 
Model Contract to require MCOs to broaden the scope of referrals made by 
MCOs to the State Medicaid agency.  Unit management reported that 
despite the MFCUs having taken these steps. MCOs in New York are not 
providing sufficient referrals.  The Unit reported that it received 13 MCO 
fraud referrals during the review period. 
Beneficial Practice  The Unit used data-analytics working groups to facilitate data mining 
processes.  Data mining is the process of identifying fraud through the 
screening and analysis of data.  In 2013, OIG issued a regulation that permits 
Federal financial participation for costs of data mining if the Unit is granted 
a waiver after meeting certain criteria.22  OIG granted data-mining approval 
to the Unit in 2016.  Since receiving approval, the Unit has created 
data-analytics working groups to provide guidance, training, and 
assessment of the Units data mining efforts.  The groups include (1) the 
Data Analytics Tools group; (2) the Data Sources group; (3) the Fraud and 
Abuse group; and (4) the Governance group.  One Unit staff member 
described the Units use of working groups as a practice that is particularly 
beneficial to Unit operations and which may be useful for other Units as 
well. 
 
21 We were unable to determine from the data collected by OIG whether the steps taken by 
the Unit resulted in a greater number of referrals from these sources. 
22 42 CFR  1007.20.  To conduct data mining, MFCUs must receive preapproval from OIG. 
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Source:  New York  MFCU application for  data mining, July  2016.  
STANDARD 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.  
FOibnsdeinrvga tion  Unit case files generally contained supervisory approval of case 
Finding 
openings and closings.   According to Performance Standard 5(b), 
supervisors should approve the opening and closing of all investigations, 
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.  Our review  found that the sampled case files 
generally contained supervisory approval of case  opening and closings.  
However, the Unit did not have a written policy regarding supervisory 
reviews, including the frequency of such reviews and how the reviews 
should be documented in the Units case files.  See page 12 for OIGs 
finding regarding supervisory reviews.   
STANDARD 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.  
 
Observation  The Units caseload included both cases of fraud and cases of patient 
abuse or neglect,  covering a broad mix of  provider types.   At the end of 
FY 2016, the Units cases were distributed among 55 provider types.  During 
the review period, 83 percent of the Units cases involved fraud, and 
17 percent involved patient abuse or neglect. 
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STANDARD 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. 
 
FFininddiningg   The Unit did not have a written policy for conducting periodic 
supervisory reviews or noting the reviews in the Units case files.  During 
OIGs 2011 onsite review of the Unit, we recommended that the Unit ensure 
that case files be maintained with greater consistency and reviewed more 
frequently.  In response to OIGs recommendation, the Unit instructed 
supervisors to record supervisory reviews in Unit case files.  Unit 
management reported that they instructed supervisors and staff to 
memorialize, in a simplified manner, discussions with significant case 
implications, and to file such notes electronically.   
According to Performance Standard 7(a), reviews by supervisors should be 
conducted periodically, consistent with the Units policies and procedures, 
and should be noted in the case file.  However, at the time of OIGs review, 
the Unit did not have a written policy for periodic supervisory review of 
criminal cases that specified how frequently such reviews should be 
conducted or instructed staff to document such reviews in the Units case 
files.23  Unit management explained that supervisors in each regional office 
are permitted to schedule supervisory case reviews at their discretion.  
Regional Unit supervisors explained that, to the extent that case files are 
periodically reviewed by regional supervisors, the nature and frequency of 
supervisory case file reviews are different in each of their offices.  Regional 
Unit supervisors stated that they may review cases monthly, every 6 weeks, 
once every two months, or twice a year, depending on the regional offices 
practice. 
STANDARD 8  A Unit cooperates with OIG and other Federal agencies in the 
investigation and prosecution of Medicaid and other health care fraud. 
 
 
Observation 
The Unit maintains a positive working relationship with law 
enforcement partners, but does not frequently work joint cases with 
OIG.  OIG maintains a positive working relationship with Unit staff and 
meets with the Unit monthly to discuss new cases, initiatives, and future 
areas of work.  However, according to Unit management, the Unit pursues 
 
23 The Units Procedures for MFCU Qui Tam False Claims Act Cases requires Unit attorneys to 
report to the Chief of the Units Civil Enforcement Division on the progress of qui tam 
investigations at regular intervals or at 6-month intervals if the seal is to be extended or the 
action is administratively suspended.  OIG was unable to determine whether the policy was 
being implemented during the review period. 
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most cases independently from OIG.  Thus, there were few joint cases 
during the review period.   
The U.S. Attorneys Offices have also reported positive interactions with 
MFCU staff.  Federal prosecutors at the New York U.S. Attorneys Offices 
reported pursuing Federal civil cases jointly with the Unit.  For example, one 
Federal prosecutor stated that the U.S. Attorneys Offices collaborate 
successfully with the Unit on Federal False Claims Act qui tam cases.  The 
Unit generally investigates and prosecutes criminal cases without assistance 
from the U.S. Attorneys Offices.   
Finding  The Unit did not report all convictions and adverse actions to Federal 
partners within the appropriate timeframes.  Although the Unit had 
procedures in place for reporting convictions to OIG, the Unit did not report 
six of its convictions to OIG.  Additionally, the Unit did not report 13 percent 
of its convictions (34 of 305) to OIG within 30 days of sentencing.  The Unit 
reported 10 of these convictions to OIG more than 60 days after sentencing.  
Although the Unit had procedures in place for reporting adverse actions to 
the National Provider Data Bank (NPDB), the Unit did not report 15 of its 
adverse actions to the NPDB.  Additionally, the Unit did not report 
26 percent of its adverse actions (80 of 307) to the NPDB within 30 days of 
sentencing.  The Unit reported 47 of these adverse actions to the NPDB 
more than 60 days after sentencing.     
Performance Standard 8(f) states that the Unit should transmit reports to 
OIG of all convictions for the purpose of exclusion from Federal health care 
programs within 30 days of sentencing.  Federal regulations require that 
Units report any adverse actions resulting from investigations or 
prosecutions of healthcare providers to the NPDB within 30 calendar days of 
the date of the final adverse action.24  Performance Standard 8(g) also states 
that the Unit should report qualifying cases to the NPDB.25   
Unit management offered that one possible explanation for the delayed 
reporting is the Units internal practice regarding the sharing of case 
information.  Unit documents that include conviction and sentencing 
information may be designated as NOT FOR USE OUTSIDE OF MFCU to 
alert staff that information should not be shared outside of the Unit.  
However, Unit management stated that there is no process in place for 
unchecking the alert box when it is time to send the information to OIG or 
 
24 45 CFR  60.5. 
25 Performance Standard 8(g) states that the Unit should report qualifying cases to the 
Healthcare Integrity & Protection Databank [HIPDB], the National Practitioner Data Bank, or 
successor data bases. The HIPDB and the NPDB merged in 2013; therefore, we reviewed the 
reporting of adverse actions under NPDB requirements. See 78 Fed. Reg. 20473 (April 5, 
2013). Examples of final adverse actions include, but are not limited to, convictions, civil 
judgments (but not civil settlements), and program exclusions. See 45 CFR  60.3. 
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the NPDB.  As a result, the Unit did not report some convictions and 
adverse  actions to Federal partners within the appropriate timeframes. 
STANDARD 9   A Unit makes statutory or programmatic recommendations, when 
  warranted, to the State government.  
Observation  The Unit made recommendations  regarding  program deficiencies to the 
State Medicaid agency.   The Unit informed the  State Medicaid agency of 
potential program deficiencies identified through MFCU investigations.  For  
example, during the review period, the Unit proposed amendments to the 
MCO contracts, intended  to improve the timeliness of referrals  from  MCOs 
to the State Medicaid agency.  According to Unit management, the Unit 
makes such recommendations through a series of privileged emails with 
attachments.  The Unit then follows up with phone conversations with 
counsel for the State Medicaid agency and OMIG, the program integrity unit 
for New  Yorks Medicaid program.    
STANDARD 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.  
 
Observation  The Units MOU with the State Medicaid agency reflected current 
practice,  policy, and legal requirements.  The Units MOU with the State 
Medicaid agency is a three-party agreement among the MFCU, the State 
 
Medicaid agency, and OMIG.  The MOU was executed in January 2014 and 
was amended in July 2016 as part of the MFCUs application to OIG for a 
waiver to  conduct data mining.   
STANDARD 11   A Unit exercises proper  fiscal control over its resources.  
 
 
Findings   The Unit generally exercised proper fiscal control, but it did  not exercise 
proper controls over the sale and  transfer of  Unit vehicles.   In the course  
of our review, the Unit identified and alerted OIG to an accounting issue 
relating to the sale and transfer of Unit vehicles.  During the review period, 
the Unit sold  19 vehicles that it no longer needed through auction and 
transferred 5 additional vehicles that it no longer needed to other State 
agencies.  The Unit had written policies and procedures in place for 
determining and documenting the value of vehicles and for accounting for 
their sale or transfer to  ensure that the Federal  Government was reimbursed 
accordingly.  However, the Unit did not reimburse  the Federal Government 
its share  of proceeds received from  the sale and transfer of the  vehicles.  
After discovering this error, the Unit reimbursed the Federal Government 
accordingly.  The Unit also reported that it had taken steps to strengthen its  
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procedures related to its disposition of vehicles and to retrain its staff in the 
vehicle acquisition and surplus process.  
The Unit disclosed similar issues regarding the sale and transfer of vehicles 
on a previous occasion.  In 2009, the Unit transferred vehicles that were no 
longer needed to the New York State Department of General Services for 
auction or transfer to another State agency.  However, the Unit did not 
receive the proceeds of the sale or transfer or reimburse the Federal 
government for the vehicles.  At that time, the Unit lacked written policies 
and procedures for determining and documenting the value of vehicles for 
purposes of reimbursing the Federal Government.  The Unit worked with 
OIG to develop a method for determining the value of vehicles and 
reimbursed the Federal Government in 2011. 
Three Unit professional staff temporarily performed non-Unit duties, 
and the Unit did not subtract the associated costs from claimed Unit 
expenditures.  During the review period, three Unit staff members were 
temporarily reassigned to other Office of Attorney General law enforcement 
duties, and the associated costs were not subtracted from claimed Unit 
expenditures.  Federal regulations state that Federal reimbursement is 
limited to costs attributable to the establishment and operation of the 
Unit.26  Although OIG guidance permits Unit staff to engage in temporary 
non-Unit activities, the Unit must document and maintain records of the 
time spent on these activities, and exclude related costs from the Units 
claimed expenditures.27   
The Units policy and procedures for ensuring that costs associated with 
non-MFCU activities are not charged to the grant are set forth in the 
New York Office of State Comptrollers Guide to Financial Operations.  The 
Guide includes terminology, policies, and procedures used in connection 
with Federal grants and links to the Federal regulations regarding 
reimbursement of costs for the MFCU grant program.  However, we 
determined that the Unit improperly claimed approximately $26,503 (with a 
Federal share of $19,877) in salaries, fringe costs,28 and related indirect costs 
for these employees while they were assigned to non-Unit duties.  After our 
review, the Unit worked with OIG to return these funds. 
   
 
26 42 CFR  1007.19(d). 
27 OIG, OIG State Fraud Policy Transmittal Number 2014-1.  Accessed at 
https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/policy_transmittals/ 
State%20Fraud%20Policy%20Transmittal%20No%20%202014-1.pdf on February 2, 2018.   
28 Fringe costs are the costs for fringe benefits (i.e., the nonwage compensation that 
an employer provides to an employee). 
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STANDARD 12  A Unit conducts training that aids in the mission of the Unit. 
Observation  Unit staff and management reported excellent training opportunities.  
During OIGs 2011 onsite review, we recommended that the Unit establish 
annual training plans and increase the number of training opportunities 
available to staff.  In response, the Unit reported that it made training a key 
priority and established a training plan for all professional and 
administrative staff.  Since 2013, the Unit has offered a multiday 
Medicaid fraud training program designed for investigators, auditors, 
attorneys, and paralegals who were hired in the preceding year.   
The Unit reported that in FY 2016, staff attended over 200 different training 
courses.  The Unit holds annual regional training in both the downstate 
and upstate areas, as well as biannual training for all Unit staff.  Unit staff 
also reported attending courses provided by the National Association of 
Medicaid Fraud Control Units, the National Association of Attorneys 
General, and other organizations.  One regional manager stated:  The level 
of training given here is amazing.  It is beneficial, useful, and very relevant. 
Beneficial Practice  Unit staff participated in moot-court training to prepare for settlement 
negotiations and opening statements.  Approximately 3 years ago, the 
Unit began moot-court training.  Prior to beginning a trial, Unit attorneys 
practice opening arguments and settlement negotiations in front of other 
Unit staff.  Staff propose questions about the case to prepare Unit attorneys 
for the actual trial.  Unit staff reported that this training has been very 
successful at preparing Unit attorneys for litigation.   
 
    
   
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CONCLUSION AND RECOMMENDATIONS 
The New York Unit reported substantial case outcomes for FYs 2014-2016.  
A number of practices may have contributed to the New York Units success, 
including a commitment to training and the Units Strategic Plan.  OIG also 
identified three beneficial practices that the Unit employed that may serve 
as a model for other States:  the use of moot-court training, the use of data 
analytics working groups, and the development of a Strategic Plan.   
From the information we reviewed, we determined that the New York Unit 
also generally adhered to applicable legal requirements and performance 
standards, but we identified five findings.   
In evaluating adherence to program requirements, we found that Unit 
practices left some case files vulnerable to unauthorized access.  We also 
found that the Unit did not have a written policy for conducting periodic 
supervisory reviews and noting the reviews in the Units case files.   
We also found that the Unit had not always reported its convictions and 
adverse actions to Federal partners within established timeframes.  Finally, 
from the information we reviewed, we found that the Unit generally 
exercised proper fiscal controls.  However, we found two areas in which the 
Unit should strengthen its financial controls.   
We recommend that to address these findings, the New York Unit: 
Take steps to ensure that Unit staff adhere to policies and 
procedures for securing case files 
The Unit should take steps to ensure that Unit staff adhere to Unit policies 
and procedures specifying how and where to securely store paper files.  The 
Unit should take steps to ensure that all case files and any associated 
personally identifiable information are secured from access by non-Unit 
staff.  For example, the Unit could take steps to include file security as part 
of staff training, or it could remind Unit staff to store paper case files and 
other documentation containing personally identifiable information in 
locked offices or file cabinets to prevent access by janitorial staff during 
nonbusiness hours.  Specifically, the Unit should make staff aware that 
leaving case files in unsecured locations, even on a temporary basis, is not 
an acceptable practice. 
Create policies and procedures for conducting periodic 
supervisory reviews of Unit case files, and take steps to ensure 
that case files include documentation of periodic supervisory 
reviews  
The Unit should create policies and procedures for conducting and 
documenting periodic supervisory reviews of Unit case files.  The Unit could 
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use automated reminders to ensure that documentation is maintained.  The 
Unit could consider standardizing supervisory review policies and 
procedures across regional offices to ensure that all case files include 
documentation of periodic supervisory reviews.   
Ensure that the Unit consistently reports convictions and 
adverse actions to Federal partners within the appropriate 
timeframes  
The Unit should ensure that it consistently reports convictions to OIG within 
30 days of sentencing and adverse actions to the NPDB within 30 days of 
the action, or as soon as practicable if the Unit encounters delays in 
receiving the necessary information from the sentencing court.  The Unit 
could implement automated reminders that alert Unit staff when to report 
convictions and adverse actions to Federal partners.   
Ensure thatconsistent with Unit policythe Unit reimburses 
the Federal Government its share of proceeds received from the 
sale and transfer of vehicles and any other equipment 
In accordance with Unit policy, the Unit should ensure that it reimburses the 
MFCU grant the Federal share of proceeds from the sale and transfer of 
vehicles and any other equipment.  To promote future compliance, the Unit 
could also provide administrative staff with training regarding the vehicle 
disposition and surplus process. 
Strengthen internal controls to ensure that the Unit excludes 
from its claimed grant expenditures all costs related to time 
spent by staff on non-Unit activities 
The Unit should strengthen internal controls to ensure that if Unit 
employees engage in temporary non-MFCU duty assignments, the Unit 
does not charge the wages and other expenses associated with those 
activities to the grant. 
   
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UNIT COMMENTS AND OIG RESPONSE 
The New York Unit concurred with all five of our recommendations. 
First, the Unit concurred with our recommendation to take steps to ensure 
that Unit staff adhere to policies and procedures for securing case files.  The 
Unit stated that it has implemented revised policy and procedures to ensure 
security of Unit case files. 
Second, the Unit concurred with our recommendation to create policies and 
procedures for conducting periodic supervisory reviews of Unit case files 
and to take steps to ensure that case files include documentation of 
periodic supervisory reviews.  The Unit stated that it has developed a written 
policy for consistent documentation of periodic supervisory reviews and has 
a plan to assess its implementation in each of its regional offices.   
Third, the Unit concurred with our recommendation to ensure that the Unit 
consistently reports convictions and adverse actions to Federal partners 
within the appropriate timeframes.  The Unit stated that it has updated its 
internal guidance to emphasize the Federal timeframes and to encourage 
other State or local agencies to provide information that the Unit needs 
before it reports convictions and adverse actions to its Federal partners.  
The Unit also stated that it has corrected certain forms that may have 
caused reporting delays.   
Fourth, the Unit concurred with our recommendation to ensure that
consistent with Unit policythe Unit reimburses the Federal Government its 
share of proceeds received from the sale and transfer of vehicles and any 
other equipment.  The Unit stated that it has updated procedures regarding 
how vehicles and other items are surplussed to properly account for any 
impact on Federal grant funding to the Unit.   
Finally, the Unit concurred with our recommendation to strengthen internal 
controls to ensure that the Unit excludes from its claimed grant 
expenditures all costs related to time spent by staff on non-Unit activities.  
The Unit stated that it modified its electronic time and attendance system to 
facilitate the tracking and charging of employee time on temporary 
assignments.  The Unit stated that it will also train Unit staff to use the 
system.  
For the full text of the Units comments, see Appendix D. 
 
   
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APPENDIX A:  MFCU Performance 
Standards29 
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; 30 
D)  OIG policy transmittals as maintained on the OIG website; 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 Unite 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 
 
29 77 Fed. Reg. 32645, June 1, 2012. 
30 For FYs 2016 and later, grant administration requirements and cost principles are found at 
45 CFR part 75. 
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investigation and (for those Units with prosecutorial authority) prosecution 
of Medicaid fraud and patient abuse and neglect. 
B)  The Unit adheres to current policies and procedures in its operations. 
C)  Procedures include a process for referring cases, when appropriate, to 
Federal and State agencies.  Referrals to State agencies, including the State 
Medicaid agency, should identify whether further investigation or other 
administrative action is warranted, such as the collection of overpayments 
or suspension of payments. 
D)  Written guidelines and manuals are readily available to all Unit staff, either 
online or in hard copy. 
E)  Policies and procedures address training standards for Unit employees. 
4)  A Unit takes steps to maintain an adequate volume and quality of 
referrals from the State Medicaid agency and other sources. 
A)  The Unit takes steps, such as the development of operational protocols, to 
ensure that the State Medicaid agency, managed care organizations, and 
other agencies refer to the Unit all suspected provider fraud cases.  
Consistent with 42 CFR 1007.9(g), the Unit provides timely written notice to 
the State Medicaid agency when referred cases are accepted or declined 
for investigation. 
B)  The Unit provides periodic feedback to the State Medicaid agency and 
other referral sources on the adequacy of both the volume and quality of 
its referrals. 
C)  The Unit provides timely information to the State Medicaid or other agency 
when the Medicaid or other agency requests information on the status of 
MFCU investigations, including when the Medicaid agency requests 
quarterly certification pursuant to 42 CFR 455.23(d)(3)(ii). 
D)  For those States in which the Unit has original jurisdiction to investigate or 
prosecute patient abuse and neglect cases, the Unit takes steps, such as the 
development of operational protocols, to ensure that pertinent agencies 
refer such cases to the Unit, 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. 
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6)  A Units case mix, as practicable, covers all significant providers types 
and includes a balance of fraud and, where appropriate, patient abuse 
and neglect cases. 
A)  The Unit seeks to have a mix of cases from all significant provider types in 
the State. 
B)  For those States that rely substantially on managed care entities for the 
provision of Medicaid services, the Unit includes a commensurate number 
of managed care cases in its mix of cases. 
C)  The Unit seeks to allocate resources among provider types based on levels 
of Medicaid expenditures or other risk factors.  Special Unit initiatives may 
focus on specific provider types. 
D)  As part of its case mix, the Unit maintains a balance of fraud and patient 
abuse and neglect cases for those States in which the Unit has original 
jurisdiction to investigate or prosecute patient abuse and neglect cases. 
E)  As part of its case mix, the Unit seeks to maintain, consistent with its legal 
authorities, a balance of criminal and civil fraud cases. 
7)  A Unit maintains case files in an effective manner and develops a case 
management system that allows efficient access to case information and 
other performance data. 
A)  Reviews by supervisors are conducted periodically, consistent with MFCU 
policies and procedures, and are noted in the case file. 
B)  Case files include all relevant facts and information and justify the opening 
and closing of the cases. 
C)  Significant documents, such as charging documents and settlement 
agreements, are included in the file. 
D)  Interview summaries are written promptly, as defined by the Units policies 
and procedures. 
E)  The Unit has an information management system that manages and tracks 
case information from initiation to resolution. 
F)  The Unit has an information management system that allows for the 
monitoring and reporting of case information, including the following: 
1)  The number of cases opened and closed and the reason that 
cases are closed. 
2)  The length of time taken to determine whether to open a case 
referred by the State Medicaid agency or other referring 
source. 
3)  The number, age, and types of cases in the Units 
inventory/docket. 
4)  The number of referrals received by the Unit and the number 
of referrals by the Unit to other agencies. 
5)  The dollar amount of overpayments identified. 
6)  The number of cases criminally prosecuted by the Unit or 
referred to others for prosecution, the number of individuals 
or entities charged, and the number of pending prosecutions. 
7)  The number of criminal convictions and the number of civil 
judgments. 
8)  The dollar amount of fines, penalties, and restitution ordered 
in a criminal case and the dollar amount of recoveries and the 
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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, 
case 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 
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fraud control units, and 42 CFR 455.23, Suspension of payments in cases 
of fraud. 
C)  The MOU is consistent with current Federal and State policy, including any 
policies issued by OIG or the Centers for Medicare & Medicaid Services 
(CMS). 
D)  Consistent with Performance Standard 4, the MOU establishes a process to 
ensure the receipt of an adequate volume and quality of referrals to the 
Unit from the State Medicaid agency. 
E)  The MOU incorporates by reference the CMS Performance Standard for 
Referrals of Suspected Fraud From a State Agency to a Medicaid Fraud 
Control Unit. 
11)  A Unit exercises proper fiscal control over Unit resources. 
A)  The Unit promptly submits to OIG its preliminary budget estimates, 
proposed budget, and Federal financial expenditure reports. 
B)  The Unit maintains an equipment inventory that is updated regularly to 
reflect all property under the Units control. 
C)  The Unit maintains an effective time and attendance system and personnel 
activity records. 
D)  The Unit applies generally accepted accounting principles in its control of 
Unit funding. 
E)  The Unit employs a financial system in compliance with the standards for 
financial management systems contained in 45 CFR 92.20. 
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. 
 
 
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APPENDIX B:  Unit Referrals by Source for Fiscal 
Years 2014 Through 2016 
  FY 2014  FY 2015  FY 2016 
Abuse &  Abuse &  Abuse & 
Referral Source  Fraud  Fraud  Fraud 
Neglect1  Neglect  Neglect 
Medicaid agency  PI/SURS2  82  12  85  1  64  2 
Medicaid agency  other  103  1,503  77  1,415  87  1,456 
Managed care organizations  0  0  74  0  35  0 
State survey and certification agency  0  0  0  0  0  0 
Other State agencies  40  18  35  8  27  15 
Licensing board  1  0  4  0  0  0 
Law enforcement  28  9  36  5  22  7 
Office of Inspector General  6  0  4  2  4  1 
Prosecutors  0  0  0  0  0  1 
Providers  15  3  31  5  19  6 
Provider associations  0  0  2  0  0  0 
Private health insurer  4  0  6  0  7  0 
Long-term-care ombudsman  0  1  1  3  4  3 
Adult protective services  0  0  0  0  0  0 
Private citizens  249  102  262  111  253  93 
Other  122  27  56  12  57  12 
     Total  650  1,675  673  1,562  579  1,596 
     Annual Total  2,325  2,235  2,175 
Source:  OIG analysis of Unit Quarterly and Annual Statistical Reports, FYs 2014-2016. 
1 The category of abuse & neglect referrals includes referrals involving misappropriation of patient funds. 
2 The abbreviation PI stands for program integrity; the abbreviation SURS stands for Surveillance and Utilization Review Subsystem. 
. 
 
   
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APPENDIX C:  Detailed Methodology 
Data Collection and Analysis 
We collected and analyzed data from the eight sources below to identify 
any opportunities for improvement and instances in which the Unit did not 
adhere to the performance standards or was not operating in accordance 
with laws, regulations, or policy transmittals.31  We also used the data 
sources to make observations about the Units case outcomes as well as the 
Units operations and practices concerning the performance standards. 
Review of Unit Documentation.  Prior to the onsite inspection, we reviewed 
the recertification analysis for FYs 20142016 which included examining the 
Units recertification materials, including (1) the annual reports, (2) Unit 
Directors recertification questionnaires, (3) the Units memorandum of 
understanding with the State Medicaid agency, (4) the Program Integrity 
Directors questionnaires, and (5) the OIG Special Agent-in-Charge 
questionnaires.  We also reviewed the Units self-reported FY 2014 quarterly 
statistical reports and the FY 2015 and FY 2016 annual statistical reports 
about case outcomes.  We reviewed the 2011 OIG onsite review 
recommendations and the Units implementation of those 
recommendations.  Finally, while onsite, we reviewed the Units policies and 
procedures. 
Review of Unit 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)32 and revenue accounts to determine the accuracy of the Federal 
Financial Reports (FFRs) for FYs 2014 through 2016.  We also obtained the 
Units claimed grant expenditures from its FFRs and the supporting 
schedules.  
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 
30 transactions totaling $1,894,90933 within the direct cost categories 
 
31 All relevant regulations, statutes, and policy transmittals are available online at 
https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp.  
32 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.  
33 The transaction detail included multiple lines relating to accounting entries which 
comprised the reported expenditures. We selected 5 transactions from each of the 6 Federal 
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across the 3 years of the review period.  We reviewed supporting 
documentation to determine whether the costs claimed were allowable, 
allocable, and reasonable, in accordance with Federal regulations.   
2.  To assess inventory, we selected and verified a purposive sample of 
30 items from the current inventory list of 2,078 fixed assets.   
3.  To assess employee time and effort, we reconciled Unit payroll registers 
to payroll expenditures.  We then reviewed timecard records from five 
pay periods across the 3 years of the review period for nine Unit 
employees on staff.34   
Interviews with Key Stakeholders.  In July 2017, we interviewed key 
stakeholders, including officials in the New York State Medicaid Office of 
Inspector General (OMIG); the New York Department of Health; the 
New York City Human Resources Administration; the U.S. Attorneys Office; 
and the Federal Bureau of Investigation.  We also interviewed the supervisor 
from OIGs Region II Office of Investigations, which works regularly with the 
Unit.  We focused these interviews on the Units relationship and interaction 
with OIG and other Federal and State authorities, and we identified findings.  
We used the information collected from these interviews to develop 
subsequent interview questions for Unit management. 
Onsite Interviews with Unit Management and Selected Staff.  We 
conducted structured onsite interviews with the Units management in 
August 2017.  We interviewed the Unit Director, Deputy Director, and 
Regional Office Directors; the Chief of the Units Civil Enforcement Division; 
the two Chiefs of Criminal Investigations; the Units Chief Auditor; and the 
Director of the Units Electronic Investigation Support Group.  We asked 
these individuals to provide information related to (1) Unit 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.   
Survey of Unit Staff.  In June 2017, we conducted an online survey of 
75 Unit staff members within the professional disciplines (i.e., 
investigators, auditors, and attorneys) and support staff.  We received 
responses from 61 staff members.  Our questions focused on operations 
of the Unit, opportunities for improvement, and practices that 
contributed to the effectiveness and efficiency of Unit operations and/or 
 
cost categories, which contained 6,303 transactions, to review 30 transactions in total.  
Selections varied in amount from $961 to $616,863. 
34 We randomly selected six Unit employees for review from the payroll registers. The 
remaining three Unit employees were selected because the Unit notified us that they were 
temporarily reassigned to work for another State agency. 
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performance. The survey also sought information about the Units 
compliance with applicable laws and regulations.  
Onsite Review of Case Files.  To craft a sampling frame, we requested that 
the Unit provide us with a list of cases that were open at any time during 
FYs 2014 through 2016, as well as the current status of the case; case 
opening and closing dates, if applicable; whether the case was criminal, civil, 
or global; the provider type involved in the case; and whether the case was 
worked jointly with OIG.  The total number of cases was 1,827.   
We excluded all global cases from our review of the Units case files 
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 excluded 332 global cases, leaving 1,495 case files.   
We then selected a purposive sample of 20 cases from the population of 
1,495 cases to obtain a mix of status (open/closed), by the type of provider 
being investigated, and by whether the case was an independent Unit case 
or worked jointly with OIG.  We reviewed the 20 case files for adherence to 
the relevant performance standards and compliance with statute, regulation, 
and policy transmittals.  During the review of the sampled cases, we 
consulted MFCU staff to address any apparent issues with individual case 
files, such as missing documentation.   
Review of Unit Submissions to OIG and the NPDB.  We also reviewed all 
convictions submitted to OIG for program exclusion during the review 
period (299), and all adverse actions submitted to the National Practitioner 
Data Bank (NPDB) during the review period (291).  We reviewed whether the 
Unit submitted information on all sentenced individuals to OIG for program 
exclusion and all adverse actions to the NPDB for FYs 20142016.  We also 
assessed the timeliness of the submissions to OIG and the NPDB.  
Onsite Review of Unit Operations.  During our 2017 onsite inspection, we 
reviewed the Units workspace and operations.  To conduct this review, we 
visited the Unit headquarters in New York City, New York.  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.  
We did not visit the Units regional offices. 
   
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APPENDIX D:  Unit Comments
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ACKNOWLEDGMENTS 
Jordan Clementi of the Medicaid Fraud Policy and Oversight Division served 
as the team leader for this inspection.  Additional Medicaid Fraud Policy and 
Oversight Division staff who participated include Susan Burbach and 
Frantzy Clement.  Office of Audit Services staff who conducted a financial 
review include Julio Agosto and Rafael Echevarria.  Office of Investigations 
staff also participated in the inspection.  Office of Evaluation and Inspections 
staff who provided support include Kevin Farber and Christine Moritz.   
This report was prepared under the direction of Richard Stern, Director of 
the Medicaid Fraud Policy and Oversight Division.   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
To obtain additional information concerning this report or to obtain copies, 
contact the Office of Public Affairs at Public.Affairs@oig.hhs.gov
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ABOUT THE OFFICE OF INSPECTOR GENERAL 
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  The Office of Audit Services (OAS) provides auditing services for HHS, either 
by conducting audits with its own audit resources or by overseeing audit 
Services 
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  The Office of Evaluation and Inspections (OEI) conducts national evaluations 
and Inspections  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  The Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of fraud and misconduct related to HHS programs, 
Investigations 
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 Office of Counsel to the Inspector General (OCIG) provides general 
the Inspector  legal services to OIG, rendering advice and opinions on HHS programs and 
operations and providing all legal support for OIGs internal operations.  
General 
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. 
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