Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
I S M
NDIANA  TATE  EDICAID 
F C U :   
RAUD  ONTROL  NIT   
2013 O R
  NSITE  EVIEW 
 
 
Suzanne Murrin 
Deputy Inspector General for 
Evaluation and Inspections 
 
July 2014 
OEI-07-13-00250   
   
EXECUTIVE SUMMARY:  INDIANA STATE MEDICAID FRAUD CONTROL  
UNIT:  2013 ONSITE REVIEW 
OEI-07-13-00250 
 
WHY WE DID THIS STUDY 
 
The Office of Inspector General (OIG) oversees the activities of all 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.  The reviews  
assess Unit performance in accordance with the 12 MFCU performance standards and 
monitor Unit compliance with Federal grant requirements. 
 
HOW WE DID THIS STUDY  
 
We conducted an onsite review in May 2013. We based our review on an analysis of 
data from seven sources:  (1) a review of policies, procedures, and documentation on the 
Units operations, staffing, and caseload for fiscal years (FYs) 2010 through 2012; 
(2) a review of financial documentation for that timeframe; (3) structured interviews with 
key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the Units 
management; (6) an onsite review of a sample of case files that were open in 
FYs 2010 through 2012; and (7) an onsite observation of Unit operations. 
 
WHAT WE FOUND 
 
From FYs 2010 through 2012, the Unit reported combined civil and criminal recoveries 
exceeding $110 million and 105 convictions.  The Unit did not exercise proper fiscal 
controls over claimed expenditures and program income, and it did not maintain adequate 
internal controls of the equipment in its possession.  Documented supervisory approval to 
open cases was missing in an estimated 77 percent of the case files, and documented 
supervisory approval to close cases was missing in an estimated 18 percent of the 
closed-case files. In addition, the Unit did not maintain a training plan that included an 
annual minimum number of training hours for each professional discipline and the Units 
MOU with Indianas State Medicaid agency did not reflect current law and practice.  
Finally, the Unit did not timely refer 25 convictions to OIG for the purpose of program 
exclusion. 
 
WHAT WE RECOMMEND 
 
We recommend that the Unit work with OIGs MFCU oversight division to ensure 
compliance with the 12 performance standards. The Indiana Unit concurred with all five 
of our recommendations. 
   
     
   
TABLE OF CONTENTS 
Objective......................................................................................................1 

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

Methodology................................................................................................5 

Findings........................................................................................................6 

For FYs 2010 through 2012, the Unit reported combined civil 

and criminal recoveries exceeding $110 million and 

105 convictions ................................................................................6 

The Unit did not exercise proper fiscal controls over claimed 

expenditures and receipt of settlement amounts ..............................7 

The Unit did not maintain adequate internal controls of the 

equipment in its possession ..............................................................7 

Unit case files lacked documented supervisory approvals and 

reviews .............................................................................................8 

The Unit did not maintain a training plan that included an 

annual minimum number of training hours for each 

professional discipline ...................................................................10 

The Units MOU with the State Medicaid agency did not  

reflect current law and practice......................................................10 

The Unit did not timely refer 25 convictions to OIG for the 

purpose of program exclusion ........................................................11 
 
Other observations: Data systems .................................................11 
 
Conclusion and Recommendations ............................................................12 

Unit Comments and Office of Inspector General Response  .....................14 

Appendixes ................................................................................................15 

A: 1994 Performance Standards ...................................................15 

B: 2012 Revised Performance Standards ......................................19 

C: Detailed Methodology..............................................................26 

D: Investigations Opened and Closed by Provider Category  

for Federal Fiscal Years 2010 Through 2012 .................................29 

E: Medicaid Fraud Control Unit Referrals by Provider  

Category for Federal Fiscal Years 2010 Through 2012 .................31 

F: Point Estimates and 95-Percent Confidence Intervals Based  

on Reviews of Case Files...............................................................32 

     
   
G: Unit Comments ........................................................................33 

Acknowledgments......................................................................................37 

     
   
OBJECTIVE 
To conduct an onsite review of the Indiana State Medicaid Fraud Control 
Unit (MFCU or Unit). 
BACKGROUND 
The mission of the State MFCUs, as established by Federal statute, is to 
investigate and prosecute Medicaid provider fraud and patient abuse and 
neglect under State law.1  Under the Medicaid statute, each State must 
maintain a certified Unit, unless the Secretary of Health and Human Services 
determines that operation of a Unit would not be cost-effective because 
(1) minimal Medicaid fraud exists in that State, and (2) the State has other,  
adequate safeguards to protect Medicaid beneficiaries from abuse and 
neglect.2  Currently, 49 States and the District of Columbia (States) have 
created such Units.3  In fiscal year (FY) 2013, combined Federal and State 
grant expenditures for the Units totaled $230 million, of which Federal funds 
represented $172.5 million. 4  That year, the 50 Units employed 
1,912 individuals. 
To carry out its duties and responsibilities in an effective and efficient 
manner, each Unit must employ an interdisciplinary staff that consists of at 
least an investigator, an auditor, and an attorney.5  Unit staff review 
complaints provided by the State Medicaid agency and other sources and 
determine the potential for criminal prosecution.  In FY 2013, the 50 Units 
collectively reported 1,341 convictions and 879 civil settlements or 
judgments.6   That year, the Units reported recoveries of approximately 
$2.5 billion.7  
Units are required to have either Statewide authority to prosecute cases or 
formal procedures to refer suspected criminal violations to an office with 
such authority.8  Units must be located in the State Attorney Generals office 
 
1 Social Security Act (SSA)  1903(q)(3).  

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

responsibilities may include reviewing complaints of misappropriation of patients private 

funds in residential health care facilities. 

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

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

4 FY references in this report are based  on the Federal FY (October  1 through September 30). 

5 SSA  1903(q)(6) and 42 CFR  1007.13. 
 
6 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2013 Grant Expenditures and 

Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/ on 
  
July 16, 2014. 

7 Ibid. 

8  SSA  1903(q)(1). 
  
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   1   
   
or another State government office with Statewide prosecutorial authority, or 
operate under a formal arrangement with the State Attorney Generals office.9    
In Indiana and 43 other States, the Units are located within offices of State 
Attorneys General that have prosecutorial authority.  In the remaining six 
States, the Units are located in other State agencies.10 Generally, Units within 
other State agencies must refer cases to other offices with prosecutorial 
authority, such as an Attorney General or States Attorney.11  
Each Unit must be a single, identifiable entity of the State government, 
distinct from the State Medicaid agency, and each Unit must develop a 
formal agreementi.e., a Memorandum of Understanding (MOU)that 
describes the Units relationship with that agency.12   
Oversight of the MFCU Program 
The Secretary of Health and Human Services delegated to the Office of 
Inspector General (OIG) the authority to both annually certify the Units and to 
administer grant awards to reimburse States for a percentage of their costs of 
operating certified Units.13   All Units are currently funded by the Federal 
Government on a 75-percent matching basis, with the States contributing the 
remaining 25 percent.14  To receive Federal reimbursement, each Unit must 
submit an application to OIG.15  OIG reviews the application and notifies the 
Unit of its approval and certification.  Approval and certification are for a 
1-year period; the Unit must be recertified each year thereafter.16   
Under the Medicaid statute, States must operate Units that effectively carry out 
their statutory functions and meet program requirements.17   OIG developed and 
issued 12 performance standards to define the criteria it applies in assessing  
whether a Unit is effectively carrying out statutory functions and meeting 
 
9  SSA  1903(q)(1).  59  Fed. Reg. 49080  (Sept. 26, 1994).   Accessed at  
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/files/Performance%20Standards.pdf  on May 15, 2013.  

10 The Units share responsibility for protecting  the integrity of the Medicaid  program with 
 
the section of the State Medicaid agency that functions as the Program Integrity Unit.  Some 

States also employ a Medicaid Inspector General  who conducts and coordinates the State 

agencys activities to combat fraud, waste, and abuse in this area. 

11  SSA  1903(q). 
 
12  SSA  1903(q)(2); 42  CFR  1007.5  and 1007.9(d).  

13 The portion of funds reimbursed to States by the Federal  government for  its share of 
 
expenditures for the Federal  Medicaid program, including  the MFCUs, is  called Federal 
 
Financial Participation  (FFP). 

14  SSA  1903(a)(6)(B). 
 
15 42 CFR   1007.15(a). 

16 42 CFR   1007.15(b) and  (c). 

17  SSA  1902(a)(61). 
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   2   
   
program requirements.18  Examples of criteria include maintaining an adequate 
caseload through referrals from several sources, maintaining an annual training 
plan for all professional disciplines (i.e., for attorneys, investigators, and 
auditors), and establishing policy and  procedure manuals to reflect the Units 
operations. (See Appendixes A and B for complete listings of the performance 
standards from 1994 and of the revised standards from 2012, respectively.)  
Indiana State MFCU 
The Indiana Medicaid Fraud Control Unit is a component of the Office of the 
Indiana Attorney General. At the time of our review, the Units 
49 employees worked from the Units central office in Indianapolis, as well 
as 9 regional offices located throughout the State.19, 20 The Unit director, 
deputy director, and three of the Units five supervisors work in the central 
office, while two supervisors work from regional offices. 
The Unit staff is divided into two sections:  Litigation and Investigations. 
The Unit director directly supervises the Unit attorneys, who are assigned to 
the Litigation section.21 The Unit deputy director, who reports to the Unit 
director, is also the chief investigator and is responsible for managing the 
four supervisors within the Investigations section.  Each supervisor manages 
the day-to-day activities of an assigned team of investigators, auditors, and 
support staff. Two supervisors work from Indianapolis and manage staff in 
that office. Another supervisor works from Hobart, and a fourth supervisor 
works from New Albany.  The Hobart supervisor manages the staff in the 
northern regional offices, and the New Albany supervisor manages the staff 
in the southern regional offices. 
For FY 2012, the Indiana Unit expended all but $600 of its $3.4 million in  
authorized Federal funds and an additional $1.1 million in State matching  
funds.22  Total combined Federal and State Medicaid expenditures in the 
   
 
18 59 Fed. Reg. 49080 (Sept. 26, 1994).  Accessed at http://oig.hhs.gov/fraud/medicaid-
fraud-control-units-mfcu/files/Performance%20Standards.pdf  on  May 15, 2013.  OIG 
published revised performance standards on June 1, 2012,  at  77  Fed. Reg. 32645  (online at  
http://oig.hhs.gov/authorities/docs/2012/PerformanceStandardsFinal060112.pdf).  
19 The Units central office is located in the State capital of Indianapolis. Regional offices  
are located in Angola, Danville, Evansville, Hobart, Mishawaka, Muncie, New Albany, 
Warsaw, and Westville.  
20 OIG analysis of the 2012 Indiana Recertification Questionnaire to MFCU Director.  
Review Period  April 1, 2011, through March  31, 2012. 
21 One Litigation section attorney supervises the sections interns and legal support staff.  
22 OIG analysis of State form SF-425  for FY  2012. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   3   
   
State of Indiana increased from $6.2 billion in FY 2010 to $7.9 billion in 
FY 2012.23  
For FYs 2010 through 2012, the Unit received an average of 1,912 referrals 
per year. The Indiana State Department of Health (ISDH) is the State agency 
responsible for licensing and surveying long-term care facilities and is the 
most significant source of referrals received by the Unit.  ISDH forwards to 
the Unit every complaint that it receives.  The Office of Medicaid Policy and 
Planning (OMPP) is the State Medicaid agency that houses the Medicaid 
Program Integrity Unit, which referred 66 prescreened cases to the Unit 
during FYs 2010 through 2012.  Additional referral sources include calls to 
the Unit hotline; a complaint form located on the Web site of the Office of 
the Indiana Attorney General; OIG; other State agencies; and providers. 
Unit staff enter every referral into the Units case management and tracking  
system.  Duplicate referrals are combined into a single complaint to preserve 
information.  An Investigations section supervisor determines whether the 
Unit has jurisdiction and whether an investigation is warranted.  Depending 
on the available facts and circumstances, the supervisor may elect to close a 
case without an investigation, initiate a preliminary investigation to obtain 
more information, or authorize a full investigation.  Once an investigation is 
complete, the case is reviewed by a supervisor who determines whether to 
close the matter or refer the case to a prosecutor.  
The Office of the Indiana Attorney General does not have authority to initiate 
prosecution for health care crimes.  Therefore, the Unit refers cases for 
prosecution to one of the two United States (U.S.) Attorneys Offices in 
Indiana or to the appropriate county prosecutor.  County prosecutors may 
elect to prosecute a case, decline it, or  refer it back to the MFCU to pursue in 
the local jurisdiction.  
The Litigation section is responsible for prosecuting cases jointly with county 
prosecutors and for tracking and prosecuting global24 and State-only25  qui 
tam (whistleblower) cases. Unit attorneys may also be asked to provide legal 
advice regarding cases under investigation.   
 
23 OIG, State Medicaid Fraud Control Units  Fiscal Year 2012 Grant Expenditures and 
Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/expenditures_statistics/fy2012-statistical-chart.htm on May  15, 2013.  
24 Global cases are civil false-claims actions  involving the U.S. Department of Justice and  
other State MFCUs.  The National Association of Medicaid Fraud Control Units facilitates 
the coordination of global cases.  
25 Indiana False Claims and Whistleblower Protection Act, Indiana Code   5-11-5.5-4  (c).  
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   4   
   
METHODOLOGY 
We conducted the onsite review in May 2013.  We based our review on an 
analysis of data from seven sources:  (1) a review of policies, procedures, and 
documentation on the Units operations, staffing, and caseload for 
FYs 2010 through 2012; (2) a review of financial documentation for that 
timeframe; (3) structured interviews with key stakeholders; (4) a survey of 
Unit staff; (5) structured interviews with the Units management; (6) an  
onsite review of a sample of case files that were open in FYs 2010 through 
2012; and (7) an onsite observation of Unit operations. (Appendix C 
contains the details of our methodology.)  
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. 
 
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   5   
   
FINDINGS 
For FYs 2010 through 2012, the Unit reported combined 
civil and criminal recoveries exceeding $110 million and 
105 convictions 
The Unit reported total combined criminal and civil recoveries of nearly 
$110 million for FYs 2010 through 2012.  Recoveries decreased from  
$33 million in FY 2010 to $29 million in FY 2011, then increased to 
$47 million in FY 2012.  Settlements for global cases accounted for 
$91 million of the total $110 million in Unit recoveries over the 3-year 
period. (See Table 1 for details regarding criminal and civil recoveries.) 
During our review period, the Unit opened 4,089 cases and closed 
3,975 cases. The Unit specified that 2,371 referrals lacked sufficient 
indication of a crime to warrant a full investigation and that 130 referrals 
were duplicate complaints that were combined into another matter.  (See 
Appendix D for more information on investigations opened and closed by 
provider category.) The Unit reported 133 referrals for prosecution, with 
105 convictions of 94 individuals and entities for health care fraud, patient 
abuse and neglect, or financial exploitation.  
The Unit reported 1,187 abuse and neglect referrals from ISDH in 2010, 
1,074 in 2011, and 500 in 2012.  With regard to the much-lower number for 
2012, the Unit director stated that because of a lack of resources, the Unit had 
not recorded all referrals received from ISDH that year.  The Unit director  
also stated that subsequent to 2012, the Unit had recorded and reported 
correctly to OIG the number of referrals received from ISDH.  (For 
additional information on Unit referrals, see Appendix E.)  
Table 1: Indiana MFCU Criminal and Civil Recoveries, FYs 20102012  
Type of  Total  
FY 2010   FY 2011   FY 2012  
Recovery   Recoveries  
Criminal 
$2,302,000   $3,238,390   $5,595,123   $11,135,513  
Recoveries 
Global 
$28,443,364   $24,946,873 $37,416,777 $90,807,014  
Recoveries  
Nonglobal 
$2,359,058   $1,702,126   $4,142,286   $8,203,470 
Civil Recoveries  
 Total     
$33,104,422  $29,887,389   $47,154,186   $110,145,997  
     Recoveries  
Source:  OIG review of Unit self-reported data and Quarterly Statistical Reports, FYs 20102012. 
 
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   6   
   
The Unit did not exercise proper fiscal controls over 
claimed expenditures and receipt of settlement amounts 
According to the 1994 and 2012 Performance Standard 11, the Unit should 
exercise proper fiscal control over Unit resources.  However, we found that 
during the review period of FYs 2010 through 2012, the Unit lacked 
adequate fiscal internal controls related to claimed expenditures and 
settlement amounts.  We also found evidence that the Unit lacked adequate 
fiscal internal controls in FY 2013, a period subsequent to our review 
timeframe. 
We found several examples of inadequate fiscal internal controls related to 
expenditures. First, we were unable to reconcile $4,900 of the Units 
$13.2 million in claimed costs reported on the Units Financial Status 
Reports (FSRs) for the review period.  Second, the Units financial 
reconciliation process did not appear to be subject to a second level of 
review. Third, during the course of our review the Unit had difficulty 
locating requested financial information and providing it to OIG; the Unit 
attributed this to the retirement of the Units controller in August 2013.  
Also, for FY 2013, subsequent to our review period, the Units FSR reported 
expenditures of nearly $78,000 more in Federal funds than authorized on the 
Units notice of award. To cover funds that the Unit had overspent, OIG 
provided the Unit with a supplement, which the Unit was required to match 
with $25,896 of its own funds. 
Finally, for FY 2010, we found instances of inadequate fiscal internal 
controls related to settlement amounts.  We identified civil settlement funds 
that the Unit received directly and retained.  Per OIGs State Fraud Policy 
Transmittal Number 10-01, Program Incomewhich reiterated the Centers 
for Medicare & Medicaid Services (CMS) policy26  regarding the reporting of 
program income and settlementsthe Unit should have instead sent these 
funds, along with other civil settlement amounts, to the State Medicaid 
agency to calculate the Federal share and return the appropriate portion to the 
Federal government. 
The Unit did not maintain adequate internal controls of 
the equipment in its possession  
According to 1994 and 2012 Performance Standard 11(b), the Unit should 
maintain an equipment inventory that is updated regularly to reflect all 
property in the Units possession. Federal regulations require a physical 
inventory of property (i.e., equipment) to be conducted at least once every 
 
26 CMS State Health Official Letter #08-004. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   7   
   
2 years.27  State guidelines also require a documented physical inventory to 
be conducted annually.28    
We found that the Unit did not conduct physical inventories of its property 
during our review period and lacked policies and procedures to ensure that 
annual physical inventories were conducted and maintained for auditing 
purposes. Consequently, the Unit was unable to locate a lateral file valued at 
$947, purchased in FY 2010. Additionally, the Unit had five computers with 
State of Indiana property tag numbers that did not correspond to numbers on 
its  equipment  inventory.   The lack of physical inventories could result in the 
inability to identify additional property and equipment purchased with Federal 
funds. 
Unit case files lacked documented supervisory 
approvals and reviews  
According to 1994 Performance Standard 6(b) and 2012 Performance 
Standard 5(b), Unit supervisors should approve the opening and closing of 
cases to ensure a continuous case flow and timely completion of cases.  
Supervisory approval to open and close cases demonstrates that Unit 
supervisors are monitoring the intake  of cases and the timeliness of case 
resolutions, thereby promoting the efficiency and effectiveness of Unit staff.  
During our onsite review, Unit management and supervisory staff specified 
that authorization to open and close cases is documented by email and 
uploaded to the Units electronic case management system.  From our case 
file review, we estimate that 77 percent of the case files lacked documented 
supervisory approval to open cases and an estimated 18 percent of 
closed-case files lacked documented supervisory approval to close cases.  
Global cases and cases closed without investigation composed an 
estimated 52 percent of the case population and were not included in our 
review, as the Unit did not have a formal process of supervisory approval for 
the opening or closing of these types of cases. 
According to 1994 Performance Standard 6(c) and 2012 Performance 
Standard 7(a), supervisory reviews should be conducted periodically and 
noted in the case file to ensure timely case completion.29  An estimated 
69 percent  of case files lacked documentation indicating one or more 
supervisory reviews. (See Appendix F for all estimates and 95-percent 
confidence intervals for projections.) 
 
27 45 CFR   92.32(d)(2).
  
28 Section 6 of the State of Indianas Capital Asset Policy (July 1,  2009, Revision).  

29 For the purposes of this report, supervisory approval to  open and close a case does not 
 
constitute a supervisory review.  Periodic supervisory review indicates that a supervisor 
 
reviewed a case more than once between the cases opening and closing. 

Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   8   
   
The Units deputy director reported that each supervisor decides how often to 
conduct periodic reviews of case filesone supervisor conducts reviews on a 
regular basis, while the other three supervisors conduct their reviews on an 
informal basis.  One supervisor conducts his case file reviews every 6 months 
via email; during our onsite review, he shared copies of those documents 
with the review team.  The review team noted that investigators assigned to 
this supervisor selected the cases for supervisory review during each review 
period. A second supervisor reported that his team conducts quarterly case 
file reviews as a group, where the team provides feedback on each 
investigators cases. A third supervisor reported daily reviews of the latest 
entries recorded in the case management and tracking system.  The remaining 
supervisor reported that his case file reviews are less formal because he 
works cases with [investigators] every day and is familiar with each 
investigation. The Unit director also acknowledged that the supervisors 
have not been making [supervisory review] entries into the case 
management and tracking system. 
Although we found no evidence to suggest that supervisors lacked awareness 
of the cases assigned to their teams, the lack of a formalized supervisory case 
review process may be problematic.  For example, we noted one case in our 
sample that lacked evidence of investigative progress for an extended period 
of time.  Entries into the case management and tracking system reflect that 
the complaint was received in early 2006 and was later combined with a 
duplicate case in mid-2007.  No activity was recorded until 2009, when a 
series of case notes was entered into the system.  No further activity occurred 
until 2012, when the case was referred to State Medicaid agency.  The lack of 
progress on the case was attributed to the investigators working on another 
important case with an external agency.  In another example, a case was 
declined for prosecution in 2011 but was never closed.  The lack of case 
closings in these examples was identified only after the review team provided 
the list of sampled case files selected for review.  One case was closed just 
prior to our onsite review, and the case supervisor closed the second case 
while the review team was onsite.  
The first case example cited above did not adhere to 1994 Performance 
Standard 6(a) and 2012 Performance Standard 5(a), which state that each 
stage of an investigation and prosecution is to be completed in an appropriate 
timeframe.  In both instances, the cases were not closed appropriately and did 
not adhere to 2012 Performance Standard 5(b), which states:  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.  
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   9   
   
The Unit did not maintain a training plan that included 
an annual minimum number of training hours for each
professional discipline 
According to 1994 Performance Standard 12(b) and 2012 Performance 
Standard 12(a), the Unit should maintain an annual training plan for each 
professional discipline that includes an annual minimum number of training 
hours. The Unit did not have an annual training plan.  However, the Units 
policies and procedures manual specifies that all new staff members are 
required to attend basic Medicaid training and all new investigators must also 
complete a weeklong training course at the Indiana Law Enforcement 
Academy.  Further, all employees are encouraged to attend one out-of-State 
training annually, to obtain training that is unavailable locally.  Each 
employees performance plan includes an annual development component for 
identifying needs related to professional development, continuing education, 
and other types of training. All staff who answered the training-related 
questions on the staff survey reported that the Unit provided training 
opportunities and that the training they received aided the mission of the 
Unit.30  
The Units MOU with the State Medicaid agency did not 
reflect current law and practice 
According to 2012 Performance Standard 10, the Unit is to ensure that its 
MOU reflects current practice, policy, and legal requirements.  The Units 
MOU did not include a provision describing the referral process between the 
Unit and the State Medicaid agency for providers who are subject to a 
payment suspension on the basis of a credible allegation of fraud.31   
Therefore, the Unit did not meet 2012 Performance Standard 10(b).  
Subsequent to our onsite review, the Unit incorporated payment-suspension  
provisions into a revised MOU.  
   
 
30  Although we reviewed Unit training,  we  did not evaluate the staffs professional 
qualifications.  Rather, we applied the performance standards to evaluate whether the Unit 
maintained a formal training  plan for each professional discipline and assessed training 
opportunities specific to Unit operations.  We recognize that attorneys, investigators, and 
auditors receive professional and/or law enforcement training, and that the lack of an annual 
training plan does not suggest that professional staff are unqualified. 
31 The Affordable Care Act,   6402(h)(2), requires State Medicaid programsas a condition  
of receiving FFPto suspend payments to providers for whom there is a credible allegation 
of fraud, unless good  cause exists to  not suspend payments.  One way to establish good  
cause is for the MFCU to inform the Medicaid agency that the suspension would 
compromise or jeopardize its investigation of the provider.  CMS and  OIG implemented this 
provision in revisions to 42  CFR  455.23 and 1007.9(e) effective March 25, 2011 (76 Fed.  
Reg. 5862). 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   10   
   
The Unit did not timely refer 25 convictions to OIG for 
the purpose of program exclusion 
According to 1994 Performance Standard  8(d), the Unit has the responsibility  
to transmit to OIG reports of convictions, and copies of Judgment and 
Sentence or other acceptable documentation within 30 days or other reasonable 
time period.32   The 2012 revised Performance Standard 8(f) states that it is 
the Units responsibility to transmit all pertinent information on MFCU 
convictions within 30 days of sentencing, including charging documents, 
plea agreements, and sentencing orders, and does not add or other 
reasonable time period to the 30-day timeframe.  Of the 105 convictions, 
25 were not referred timely to OIG for exclusion.  The Unit never referred 
11 convictions to OIG, and it referred 14 convictions after the 30-day 
timeframe.  One referral that OIG received in 2012 had been forwarded 
468 days after sentencing. 
 
Other observations:  Data systems 
In its 2012 Annual Report to OIG, the Unit reported an issue of concern 
regarding electronic medical records and other potential digital evidence  
seized during the course of an investigation.  The Unit described a situation 
in which investigators seized more than one million computer files and 
required the resources of a U.S. Attorneys Offices data management 
system to search, sort, and organize the data.  The Unit also noted that it is 
impractical to rely on the Offices of the U.S. Attorneys for data management 
capabilities in all such cases and that it would need additional funding from 
the State to obtain an in-house system capable of storing and effectively 
managing large volumes of electronic records and evidence.  This issue 
remains unresolved.    
 
32 Under 42  U.S.C.  1320a-7(a), OIG is  required to exclude from participation in Federal  
health care programs any person or entity convicted of a criminal offense related to the 
delivery  of an item or service under the Medicaid program or to the neglect or abuse of  
patients in residential health care facilities.  See also 42 CFR   1001.1901. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   11   
   
CONCLUSION AND RECOMMENDATIONS 
For FYs 2010 through 2012, the Unit reported combined civil and criminal 
recoveries of more than $110 million, of which $91 million represented 
global case recoveries. The Unit referred 133 cases for prosecution, which 
resulted in 105 convictions against 94 individuals and entities for health care  
fraud, patient abuse and neglect, or financial exploitation. 
The Unit lacked sufficient fiscal internal control policies and procedures to 
ensure the proper reporting of its income and expenditures.  Further, internal  
controls regarding the inventory of property (i.e., equipment) had weaknesses 
that resulted in our inability to locate and identify ownership of equipment  
under the Units control.   
Seventy-seven percent of case files lacked documentation of supervisory 
approval to open a case, and 18 percent of closed case files lacked 
documentation of supervisory approval to close a case.  Additionally, 
69 percent of case files reviewed lacked documentation of at least one 
supervisory review. Our review also found that the Unit lacks a formalized 
supervisory case review process. 
The Unit did not maintain a training plan that included an annual minimum 
number of training hours for each professional discipline.  The Units MOU 
with the State Medicaid agency did not include language regarding the 
suspension of payments in cases of fraud.  The Unit did not timely refer the 
convictions of 25 providers to OIG for the purpose of program exclusion, in 
accordance with the Performance Standards.  
We recommend that the Indiana Unit: 
Develop policies and procedures to address fiscal internal 
control weaknesses 
The Unit should implement policies and procedures to correct fiscal internal 
control weaknesses affecting reconciliation reporting, second level financial 
management reviews, grant funds expenditures, and the allocation of civil 
settlement proceeds.  Finally, the Unit should work with the Indiana 
Medicaid program to calculate and return the appropriate, if any, Federal 
share of civil settlement amounts to the Federal government. 
Establish policies and procedures to ensure annual physical  
inventories of Unit property  
Ensure that all case files contain opening and closing 
supervisory approvals and documented supervisory reviews  
The Unit should take action to ensure that all case files include documented 
supervisory approvals for the opening and closing of cases.  Additionally, the 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   12   
   
Unit should incorporate a periodic supervisory review policy into the policies 
and procedures manual. 
Establish a training plan that includes an annual minimum 
number of training hours for each professional discipline  
Refer individuals for program exclusion to OIG within 30 days of 
sentencing 
The Unit should make certain that all individuals and entities convicted of 
fraud, abuse, or neglect are reported within 30 days of their sentencing, in 
accordance with Performance Standard 8(f) of the 2012 Performance 
Standards. 
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   13   
   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
The Unit concurred with the five report recommendations.  
Regarding the first recommendation, the Unit partially concurred with the 
finding, and concurred with the recommendation.  The Unit reported that 
claimed expenditures will be subjected to a second-level review to ensure 
accounting accuracy.  The Unit explained that the retirement of the Units 
controller during the review was a contributing factor in the difficulty in 
providing requested information, which should not be a concern in the future.  
Also, the Unit acknowledged that any future requests for supplemental 
funding will be submitted prior to the end of the grant period.  Finally, the 
Unit reported that it will work with the State Medicaid agency to return any  
Federal civil share of settlement amounts that may be due to the Federal 
Government.    
Regarding the second recommendation, the Unit concurred and noted that 
following our onsite review, staff located a file cabinet that exactly matched 
the description of the item that was not found during the onsite review.  
However, the equipment was missing an inventory tag.  
Regarding the third recommendation, the Unit concurred and reported having 
implemented a new standardized procedure for the documentation of 
supervisory approvals and reviews. 
Regarding the fourth recommendation, the Unit concurred and has reported 
having developed a written training plan that includes a minimum number of 
training hours for each professional discipline.  
Regarding the fifth recommendation, the Unit concurred. The Unit explained 
that it does not possess independent prosecution authority, and as such must 
rely on county prosecutors to report when a plea is negotiated and entered.  
The Unit stated that nevertheless, it will strive to report all convictions as 
required. 
The full text of the Units comments is provided in Appendix G.  We did not 
make any changes to the report as a result of the Units comments. 
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   14   
   
APPENDIX A 
1994 Performance Standards33  
1. 	A Unit will be in conformance with all applicable statutes, regulations 
and policy transmittals.   In meeting this standard, the Unit must meet, 
but is not limited to, the following requirements:  
a. 	  The Unit professional staff must consist of permanent employees 
working full-time on Medicaid fraud and patient abuse matters. 
b. 	  The Unit must be separate and distinct from the single State Medicaid 
agency.  
c. 	  The Unit must have prosecutorial authority or an approved formal 
procedure for referring cases to a prosecutor. 
d. 	  The Unit must submit annual reports, with appropriate certifications, 
on a timely basis. 
e. 	  The Unit must submit quarterly reports on a timely basis. 
f. 	  The Unit must comply with the Americans with Disabilities Act, the 
Equal Employment opportunity requirements, the Drug Free 
workplace requirements, Federal lobbying restrictions, and other such 
rules that are made conditions of the grant. 
2. 	A Unit should maintain staff levels in accordance with staffing 
allocations approved in its budget. In meeting this standard, the 
following performance indicators will be considered: 
a. 	  Does the Unit employ the number of staff that was included in the 
Unit's budget as approved by the OIG? 
b. 	  Does the Unit employ the number of attorneys, auditors, and 

investigators that were approved in the Unit's budget? 

c. 	  Does the Unit employ a reasonable size of professional staff in 
relation to the State's total Medicaid program expenditures?   
d. 	  Are the Unit office locations established on a rational basis and are 
such locations appropriately staffed? 
3. 	A Unit should establish policies  and procedures for its operations, and 
maintain appropriate systems for case management and case 
tracking.  In meeting this standard, the following performance indicators 
will be considered: 
 
33 59 Fed. Reg. 49080, Sept. 26, 1994.  These performance standards were in  effect for a 
portion of our review period, and were superseded by the performance standards published 
in June 2012. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   15   
   
a. 	  Does the Unit have policy and procedure manuals? 
b.	   Is an adequate, computerized case management and tracking system  
in place? 
4. 	A Unit should take steps to ensure that it maintains an adequate 
workload through referrals from the single State agency and other 
sources.  In meeting this standard, the following performance indicators 
will be considered:  
a. 	  Does the Unit work with the single State Medicaid agency to ensure 
adequate fraud referrals? 
b.	   Does the Unit work with other agencies to encourage fraud referrals? 
c. 	  Does the Unit generate any of its own fraud cases? 
d.	   Does the Unit ensure that adequate referrals of patient abuse 

complaints are received from all sources? 

5. 	A Units case mix, when possible,  should cover all significant provider 
types.  In meeting this standard, the following performance indicators 
will be considered:  
a. 	  Does the Unit seek to have a mix of cases among all types of 

providers in the State? 

b.	   Does the Unit seek to have a mix of Medicaid fraud and Medicaid 
patient abuse cases? 
c. 	  Does the Unit seek to have a mix of cases that reflect the proportion 
of Medicaid expenditures for particular provider groups? 
d.	   Are there any special Unit initiatives targeting specific provider types 
that affect case mix? 
e. 	  Does the Unit consider civil and administrative remedies when  
appropriate? 
6. 	A Unit should have a continuous case flow, and cases should be 
completed in a reasonable time. In meeting this standard, the following 
performance indicators will be considered:  
a. 	  Is each stage of an investigation and prosecution completed in an 
appropriate time frame?  
b.	   Are supervisors approving the opening and closing of investigations?  
c. 	  Are supervisory reviews conducted periodically and noted in the case 
file? 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   16   
   
7. 	A Unit should have a process for monitoring the outcome of cases.  In 
meeting this standard, the following performance indicators will be 
considered:  
a. 	  The number, age, and type of cases in inventory. 
b. 	  The number of referrals to other agencies for prosecution. 
c. 	  The number of arrests and indictments. 
d. 	  The number of convictions. 
e. 	  The amount of overpayments identified. 
f. 	  The amount of fines and restitution ordered. 
g. 	  The amount of civil recoveries. 
h. 	  The numbers of administrative sanctions imposed. 
8. 	A Unit will cooperate with the OIG and other Federal agencies, 
whenever appropriate and consistent with its mission, in the 
investigation and prosecution of health care fraud.  In meeting this 
standard, the following performance indicators will be considered: 
a. 	  Does the Unit communicate effectively with the OIG and other 
Federal agencies in investigating or prosecuting health care fraud in 
their State? 
b. 	  Does the Unit provide OIG regional management, and other Federal 
agencies, where appropriate, with timely information concerning 
significant actions in all cases being pursued by the Unit? 
c. 	  Does the Unit have an effective procedure for referring cases, when 
appropriate, to Federal agencies for investigation and other action? 
d. 	  Does the Unit transmit to the OIG, for purposes of program  
exclusions under section 1128 of the Social Security Act, reports of 
convictions, and copies of Judgment and Sentence or other acceptable 
documentation within 30 days or other reasonable time period? 
9. 	A Unit should make statutor y or programmatic recommendations, 
when necessary, to the State government. In meeting this standard, the 
following performance indicators will be considered:  
a. 	  Does the Unit recommend amendments to the enforcement provisions 
of the State's statutes when necessary and appropriate to do so? 
b. 	  Does the Unit provide program recommendations to single State 
agency when appropriate? 
c. 	  Does the Unit monitor actions taken by State legislature or State 
Medicaid agency in response to recommendations? 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   17   
   
10. 	A Unit should periodica lly review its memorandum of 

understanding (MOU) with the single State Medicaid agency and 

seek amendments, as necessary, to ensure it reflects current law 
 
and practice.  In meeting this standard, the following performance 

indicators will be considered: 
 
a. 	  Is the MOU more than 5 years old? 
b.	   Does the MOU meet Federal legal requirements? 
c. 	  Does the MOU address cross-training with the fraud detection staff of 
the State Medicaid agency? 
d.	   Does the MOU address the Units responsibility to make program  
recommendations to the Medicaid agency and monitor actions taken 
by the Medicaid agency concerning those recommendations? 
11. 	The Unit director should exercise proper fiscal control over the Unit 
resources. In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit director receive on a timely basis copies of all fiscal 
and administrative reports concerning Unit expenditures from the 
State parent agency? 
b.	   Does the Unit maintain an equipment inventory?  
c. 	  Does the Unit apply generally accepted accounting principles in its 
control of Unit funding? 
12. 	A Unit should maintain an annual  training plan for all professional 
disciplines.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit have a training plan in place and funds available to 
fully implement the plan? 
b.	   Does the Unit have a minimum number of hours training requirement 
for each professional discipline, and does the staff comply with the 
requirement? 
c. 	  Are continuing education standards met for professional staff? 
d. 	  Does the training undertaken by staff aid to the mission of the Unit?   
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   18   
   
APPENDIX B 
2012 Revised Performance Standards34  
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. 
 
34  77  Fed.  Reg. 32645 (June 1, 2012).   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   19   
   
3. 	A Unit establishes written policies and procedures for its operations 
and ensures that staff are familiar with, and adhere to, policies and 
procedures.  
a. 	  The Unit has written guidelines or manuals that contain current 
policies and procedures, consistent with these performance standards, 
for the investigation and (for those Units with prosecutorial authority) 
prosecution of Medicaid fraud and patient abuse and neglect. 
b. 	  The Unit adheres to current policies and procedures in its operations. 
c. 	  Procedures include a process for referring cases, when appropriate, to 
Federal and State agencies.  Referrals to State agencies, including the 
State Medicaid agency, should identify whether further investigation 
or other administrative action is warranted, such as the collection of 
overpayments or suspension of payments. 
d. 	  Written guidelines and manuals are readily available to all Unit staff,  
either online or in hard copy. 
e. 	  Policies and procedures address training standards for Unit 

employees. 

4. 	A Unit takes steps to maintain an adequate volume and quality of 
referrals from the State Medicaid agency and other sources. 
a. 	  The Unit takes steps, such as the development of operational 
protocols, to ensure that the State Medicaid agency, managed care 
organizations, and other agencies refer to the Unit all suspected 
provider fraud cases. Consistent with 42 CFR 1007.9(g), the Unit 
provides timely written notice to the State Medicaid agency when 
referred cases are accepted or declined for investigation.  
b. 	  The Unit provides periodic feedback to the State Medicaid agency 
and other referral sources on the adequacy of both the volume and 
quality of its referrals.  
c. 	  The Unit provides timely information to the State Medicaid or other 
agency when the Medicaid or other agency requests information on 
the status of MFCU investigations, including when the Medicaid 
agency requests quarterly certification pursuant to 42 CFR 
455.23(d)(3)(ii). 
d. 	  For those States in which the Unit has original jurisdiction to 
investigate or prosecute patient abuse and neglect cases, the Unit 
takes steps, such as the development of operational protocols, to 
ensure that pertinent agencies refer such cases to the Unit, consistent  
with patient confidentiality and consent.  Pertinent agencies vary by 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   20   
   
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. 
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.  
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   21   
   
7. 	A Unit maintains case files in an effective manner and develops a case 
management system that allows efficient access to case information 
and other performance data. 
a. 	  Reviews by supervisors are conducted periodically, consistent with 
MFCU policies and procedures, and are noted in the case file.  
b.	   Case files include all relevant facts and information and justify the 
opening and closing of the cases. 
c. 	  Significant documents, such as charging documents and settlement 
agreements, are included in the file.  
d.	   Interview summaries are written promptly, as defined by the Units 
policies and procedures. 
e. 	  The Unit has an information management system that manages and 
tracks case information from initiation to resolution. 
f. 	  The Unit has an information management system that allows for the 
monitoring and reporting of case information, including the 
following: 
1.	   The number of cases opened and closed and the reason that 
cases are closed. 
2.	   The length of time taken to determine whether to open a case 
referred by the State Medicaid agency or other referring 
source. 
3.	   The number, age, and types of cases in the Units 
inventory/docket. 
4.	   The number of referrals received by the Unit and the number 
of referrals by the Unit to other agencies.  
5.	   The dollar amount of overpayments identified. 
6.	   The number of cases criminally prosecuted by the Unit or 
referred to others for prosecution, the number of individuals or 
entities charged, and the number of pending prosecutions. 
7.	   The number of criminal convictions and the number of civil 
judgments. 
8.	   The dollar amount of fines, penalties, and restitution ordered 
in a criminal case and the dollar amount of recoveries and the 
types of relief obtained through civil judgments or prefiling 
settlements. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   22   
   
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 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   23   
   
the State legislature and the State Medicaid or other agencies in 
response to recommendations. 
10. 	A Unit periodically reviews  its Memorandum of Understanding 

(MOU) with the State Medicaid agency to ensure that it reflects 

current practice, policy, and legal requirements. 

a. 	  The MFCU documents that it has reviewed the MOU at least every 
5 years, and has renegotiated the MOU as necessary, to ensure that it 
reflects current practice, policy, and legal requirements. 
b.	   The MOU meets current Federal legal requirements as contained in 
law or regulation, including 42 CFR 455.21, Cooperation with State 
Medicaid fraud control units, and 42 CFR 455.23, Suspension of 
payments in cases of fraud. 
c. 	  The MOU is consistent with current Federal and State policy, 
including any policies issued by OIG or the Centers for Medicare & 
Medicaid Services (CMS). 
d.	   Consistent with performance standard 4, the MOU establishes a 
process to ensure the receipt of an adequate volume and quality of  
referrals to the Unit from the State Medicaid agency. 
e. 	  The MOU incorporates by reference the CMS performance standard 
for Referrals of Suspected Fraud from a State Agency to a Medicaid 
Fraud Control Unit. 
11. 	A Unit exercises proper fiscal  control over Unit resources.  
a. 	  The Unit promptly submits to OIG its preliminary budget estimates, 
proposed budget, and Federal financial expenditure reports. 
b. 	  The Unit maintains an equipment inventory that is updated regularly 
to reflect all property under the Units control. 
c. 	  The Unit maintains an effective time and attendance system and 
personnel activity records. 
d. 	  The Unit applies generally accepted accounting principles in its 
control of Unit funding. 
e. 	  The Unit employs a financial system in compliance with the standards 
for financial management systems contained in 45 CFR 92.20. 
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. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   24   
   
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.  
 
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   25   
   
APPENDIX C 
Detailed Methodology 
Data collected from the seven sources below was used to describe the 
caseload and assess the performance of the Unit.   
Data Collection 
Review of Unit Documentation.  Prior to the onsite review, we analyzed  
information from several sources regarding the Units investigations and 
referrals for prosecution of Medicaid cases.  Specifically, we collected and 
analyzed 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 Status Reports, annual reports, 
recertification questionnaire, policy and procedures manuals, and the MOU 
with the State Medicaid agency.  Additionally, we confirmed with the Unit 
director that the information we had was current as of May 2013.  As 
necessary, we requested any additional data or clarification. 
Review of Financial Documentation.  We reviewed Unit policies and 
procedures related to budgeting, accounting systems, cash management, 
procurement, property, and personnel to evaluate internal controls and design 
our tests for financial documentation.  We reviewed the Units claimed 
$13.2 million ($9.7 million Federal share and $3.5 million State share) in  
grant expenditures for FYs 2010 through 2012 to (1) reconcile final Financial 
Status Reports and the supporting documentation; (2) purposively select and 
review transactions within direct cost categories to determine whether costs 
were allowable; and (3) verify that no indirect costs were reported during the 
period. We reviewed records from the Payment Management System to 
identify any unusual patterns of drawdowns (withdrawals from the grant 
funds). Finally, we reviewed revenue accounts to identify program income 
amounts. 
Interviews with Key Stakeholders. In April 2013, we conducted structured 
interviews with key stakeholders who were familiar with the operations of 
the Unit. Specifically, we interviewed officials in the U.S. Attorneys 
Offices from the Northern and Southern districts of Indiana, and staff from  
the following agencies under the umbrella of Indianas Family and Social 
Services Administration (FSSA):  OMPP, and its Program Integrity Unit; the 
Division of Aging; the Office of General Counsel; the State Long-Term Care 
Ombudsman; and Adult Protective Services.  We also interviewed staff from  
the Division of Long-Term Care within the Indiana Department of Health.  
Additionally, we interviewed Special Agents from OIGs Chicago regional 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   26   
   
office who work regularly with the Unit.  Each of these interviews focused 
on the Units interaction with external agencies.  We used the information 
collected from these interviews to develop subsequent questions for 
interviews with Unit management. 
Survey of Unit Staff.  In April 2013, we conducted an online survey of all 
nonmanagerial Unit staff within each professional discipline (i.e., 
investigators, auditors, and attorneys) as well as support staff and the support 
staff supervisor in the Litigation section.35   We requested and received 
responses from each of the 43 staff members, a 100-percent response rate.  
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 performance.  The survey also sought 
information about the Units compliance with applicable laws and 
regulations. 
Interviews with Unit Management. During our May 2013 onsite review, we 
conducted structured interviews with the Unit director, deputy director, and 
the four supervisors in the Investigations section.  We asked these individuals 
to provide additional information to better illustrate the Units operations,  
identify opportunities for improvement, identify practices that contributed to 
the effectiveness and efficiency of Unit operations and/or performance, and 
clarify information obtained from other data sources. 
Onsite Review of Case Files. The Unit provided a list of 4,886 cases that 
were open at any point during FYs 2010 through 2012.  We excluded from 
our analysis 2,469 of these cases that the Unit had categorized as global or 
closed without investigation. We then selected a simple random sample of 
100 cases from the remaining 2,417 cases.  From these 100 cases, we 
selected a simple random sample of 50 cases for a more in-depth review of 
selected issues, such as the timeliness of investigations and case 
development.  We excluded an additional three ineligible cases in our sample 
that were not initially identified by the Unit as global cases.  In our final case 
file analysis, we reviewed the remaining 97 cases for documentation of 
supervisory approval for the opening of cases, documentation of the closing 
of cases (if applicable), and documentation of supervisory case file reviews.  
Finally, we projected the results of our case file reviews to an estimated 
population of 2,344 Unit cases categorized as nonglobal, of which an 
estimated 1,595 represented closed case files.   
Onsite Review of Unit Operations. As part of our May 2013 onsite visit, we 
reviewed the Units workspace and operations.  Specifically, we visited the 
 
35 The supervisor within the Litigation  section supervises support staffnot investigators, 
auditors, or attorneys.  Therefore,  we included this individual in our staff survey. 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   27   
   
Units central office in Indianapolis.  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, and policy 
transmittals.36  In addition, we noted practices that appeared to be beneficial 
to the Unit. We based these observations on statements from Unit staff, data 
analysis, and our own judgment.  We did not independently verify the 
effectiveness of these practices, but included the information because it may 
be useful to other Units in their operations. 
   
 
36 All relevant  regulations, statutes, and  policy transmittals are available online at 
http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu.  
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   28   
   
APPENDIX D 
Investigations Opened and Closed by Provider Category for 
Federal Fiscal Years 2010 Through 2012 
Table D-1: Fraud Investigations  
Provider Category   FY 2010   FY 2011   FY 2012  
Facilities   Opened  Closed   Opened  Closed   Opened   Closed 
 Hospitals  14  11  12  20  14  14 
     Nursing Facilities   21  18  19  13  22  21 
     Other Long-Term Care   
5  4  3  2  8  7 
     Facilities  
     Substance Abuse Treatment     
0  0  0  0  0  0 
Centers  
     Other   2  5  10  38  7  2 
   Subtotal   42  38  44  73  51  44 
Practitioners   Opened  Closed  Opened  Closed  Opened   Closed 
     Doctors of Medicine or  
23  29  26  22  24  18 
     Osteopathy  
Dentists  25  26  15  12  11  9 
Podiatrists  2  3  0  1  0  1 
     Optometrists/Opticians  2  3  1  2  2  1 
     Counselors/Psychologists  2  3  2  2  2  2 
Chiropractors  3  4  1  5  4  1 
     Other   1  2  2  0  0  1 
   Subtotal   58  70  47  44  43  33 
Medical Support  Opened   Closed   Opened   Closed   Opened   Closed 
 Pharmacies  7  12  10  13  16  6 
Pharmaceutical 
74  22  94  29  39  11 
     Manufacturers  
     Durable Medical Equipment  
14  9  17  12  16  5 
     and/or Supplies 
     Laboratories  11  0  3  4  3  0 
     Transportation Services  12  29  13  18  13  11 
     Home Health Care Agencies   10  10  7  6  8  6 
     Home Health Care Aides   2  1  0  1  2  1 
     Nurses/Physician Assistants/ 
 Nurse Practitioners/Certified   10  16  13  15  9  18 
Nurse Aides 
Radiologists  1  0  1  0  0  2 
     Medical SupportOther   29  37  18  16  29  18 
   Subtotal   170  136  176  114  135  78 
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   29   
   
 Table D-1 (Continued):  Fraud Investigations  
Provider Category   FY 2010   FY 2011   FY 2012  
Program-Related   Opened  Closed  Opened  Closed  Opened   Closed 
     Managed Care    1  0  0  0  0  0 
Medicaid Program  
0  0  0  0  1  0 
Administration 
Billing Company   0  0  0  0  0  0 
 Other Program Related   4  2  3  2  1  0 
     OtherGlobal  31  8  27  11  14  4 
   Subtotal   36  10  30  13  16  4 
   Total Provider Categories   306  254  297  244  245  159 
Source:  Unit response to OIG data request.  
Table D-2: Patient Abuse, Neglect, and Funds Investigations  
Provider Category   FY 2010   FY 2011   FY 2012  
  Opened  Closed  Opened  Closed  Opened   Closed 
     Nursing Facility   1,148   1,184   1,088   1,048   441  492 
     Other Long-Term Care   92  87  82  84  204  177 
     Nurses/Physician Assistants/ 
 Nurse Practitioners/Certified   15  36  8  20  8  30 
Nurse Aides 
     Home Health Aides  2  0  0  1  1  2 
     Other  58  63  50  49  44  45 
Total   1,315   1,370   1,228   1,202   698  746 
Source:  Unit response to OIG data request.  
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   30   
   
APPENDIX E 
Medicaid Fraud Control Unit Referrals by Provider Category for 
Federal Fiscal Years 2010 Through 2012 
FY 2010   FY 2011   FY 2012  
Abuse  Abuse  Abuse 
Patient  Patient  Patient 
Referral Source   Fraud   and  Fraud   and  Fraud   and 
Funds   Funds   Funds  
Neglect   Neglect   Neglect  
Medicaid Agency  
Program Integrity 
Unit / Surveillance 
and Utilization 
Review Unit (Family   21  1  0  14  5  0  25  0  0 
and Social Services 
Administration, 
Office of Medicaid 
Policy and Planning)  
Medicaid Agency  
3  7  0  3  2  0  1  0  0 
Other  
State Survey  and  
Certification 
(Indiana State  5  1,187   0  7  1,074   3  17  500*  5 
Department of 
Health)  
Other State 
5  6  0  10  6  0  2  9  0 
Agencies 
Licensing Board  6  1  0  2  0  0  1  0  0 
Law Enforcement  13  34  0  15  22  1  13  22  2 
Office of Inspector 
1  2  0  12  9  0  5  1  0 
General 
Prosecutors  2  1  1  0  4  2  1  3  2 
Providers  24  129  0  16  226  4  50  140  3 
Provider 
0  0  0  0  0  0  0  0  0 
Associations  
Private Health 
7  0  0  2  0  0  4  0  0 
Insurer 
Long-Term Care 
1  6  0  0  7  0  0  7  0 
Ombudsman  
Adult Protective 
3  20  0  0  23  1  1  18  1 
Services  
Private Citizens  168  440  1  189  699  4  132  265  7 
MFCU Hotline  0  0  0  0  0  0  0  0  0 
Other   31  3  0  2  2  1  2  1  0 
   Total   290  1,837   2  272  2,079   16  254  966  20 
   Annual Total  2,129   2,367   1,240  
Source:  OIG analysis of  Indianas MFCU Revised Quarterly Statistical Reports, FYs 20102012. 
* The Unit is unable to provide the number of referrals that were not reported to OIG for 2012. 
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   31   
   
APPENDIX F 
Point Estimates and 95-Percent Confidence Intervals Based on  
Reviews of Case Files 
We calculated confidence intervals for key data points for our reviews of 
case files. The sample sizes, point  estimates, and 95-percent confidence 
intervals are given for the each of the following:  
Table F-1:  Confidence Intervals for Case File Review  Data  
Sample 
Data Element Description   Point Estimate   95-Percent Confidence Interval  
Size 
Case files missing supervisory approval 
97  77.3%   68.0%84.6%  
for the opening of investigations 
Closed-case files missing documented 
supervisory approval for the closing of  66  18.2%   10.6%29.3%  
investigations 
Case files missing one or more 
97  69.1%   59.3%77.4%  
documented supervisory reviews  
Source:  OIG analysis of  Indianas MFCU case files, 2014. 
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   32   
   
APPENDIX G 
UNIT COMMENTS 
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)  33   
   
 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)  34   
   
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)  35  Finding: The Unit did not timely refer 25 convictions to OIG for the purpose ofprogram 
exclusion. 
Response: The Unit concurs that some referrals were made past the 30 day limit set by 
Performance Standard 8(f). Performance Standard 8(f) does not reflect the abilities of Units such 
as Indiana's, which are reliant on county prosecutors to inform the Unit when a plea is negotiated 
and entered on a particular case.  Since the Unit itself has no independent prosecution power, this 
reliance results sometimes in pleas being negotiated without the knowledge ofthe Unit. As a 
result, the lack of prosecution power and reliance on 91 county prosecutors makes the 30-day 
requirement unreasonable. However, the Unit recognizes that the current 30-day reporting policy 
is the rule and important for program integrity, therefore, Indiana will strive to report all 
convictions as required. The 30-day rule is unreasonable and the OIG has acknowledged as 
much. It is the Unit's understanding that the OIG intends to return to this rule the language 
recently omitted by Performance Standard 8(f) which recognized that the 30-day timeframe 
could not reasonably be met by some Units. 
The Indiana Medicaid Fraud Control Unit is appreciative of your work in this audit. If 
you require additional information, please do not hesitate to contact me. I can be reached by 
calling (317) 915-5300 or matthew.whitmire@atg.in.gov. 
Sincerely, 
Matthew Whltmire 
Director, Indiana MFCU 
Cc: Greg Zoeller, Indiana Attorney General 
4 
Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)  36   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T.  Whitley, Regional 

Inspector General for Evaluation and Inspections in the Kansas City regional 

office. 

Michael J. Brown served as the project leader for this study.  Other Office of 

Evaluation and Inspections staff who conducted the study include 

Thomas Brannon and Teresa Dailey.  Office of Audit Services staff who 

conducted the study include Brian Anderson and Randall Martz.  Office of 

Investigations staff who conducted the study include Monteen Calvert.  

Office of Investigations staff who provided support include Jason Weinstock.  

Central office staff who provided support include Alexis Lynady, 

Christine Moritz, Andrew VanLandingham, and Sherri Weinstein.  

Indiana State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-07-13-00250)   37   
Office of Inspector General
http://oig.hhs.gov  
 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as  
amended, is  to protect the integrity of the Department of  Health and Human Services  
(HHS)  programs, as well as the health and welfare of beneficiaries  served by those 
programs.  This statutory mission  is  carried  out through  a nationwide network  of  audits, 
investigations, and inspections conducted by the  following operating components: 
Office of Audit Services 
The Office  of  Audit Services  (OAS) provides auditing services  for HHS, either by  conducting  
audits  with its own audit resources or by  overseeing  audit work done by others.  Audits  
examine the performance of HHS programs and/or its grantees and contractors in carrying  
out their respective responsibilities and are intended  to provide independent assessments of 
HHS programs and operations.  These assessments help reduce waste, abuse, and  
mismanagement and promote economy and efficiency  throughout  HHS. 
Office  of Evaluation and Inspections 
The Office  of  Evaluation and Inspections (OEI)  conducts national evaluations to  provide 
HHS, Congress, and the public with timely, useful, and reliable information on significant 
issues.  These evaluations focus on preventing fraud,  waste, or abuse  and promoting  
economy, efficiency, and effectiveness of departmental programs.  To promote impact, OEI 
reports also present practical recommendations for improving  program operations. 
Office of Investigations  
The Office of Investigations (OI) conducts criminal, civil, and administrative investigations  
of  fraud and misconduct  related to HHS programs, operations, and beneficiaries.  With 
investigators working in all 50 States and the District of Columbia, OI  utilizes its resources 
by actively  coordinating with the Department  of Justice  and other Federal, State, and local 
law enforcement authorities.  The investigative efforts of OI often lead to  criminal 
convictions, administrative sanctions,  and/or  civil monetary  penalties.  
Office  of Counsel to  the Inspector  General  
The Office of Counsel to the  Inspector  General (OCIG) provides general legal services to 
OIG, rendering  advice and opinions on HHS programs and operations and  providing all  
legal support for OIGs  internal operations.  OCIG represents  OIG in all civil and 
administrative fraud and abuse cases involving HHS programs,  including False Claims Act, 
program exclusion, and civil monetary penalty cases.  In  connection with these cases, OCIG 
also negotiates and monitors corporate integrity agreements.  OCIG renders advisory 
opinions, issues compliance program  guidance, publishes fraud alerts, and provides other  
guidance  to  the health care industry concerning the anti-kickback statute and other  OIG  
enforcement authorities.