U.S. Department of Health and Human Services 
Office of Inspector General 
 
 
Arkansas 
Medicaid Fraud 
Control Unit:  
2019 Onsite 
Inspection
OEI-12-19-00450  Suzanne Murrin 
September 2020  Deputy Inspector General 
  for Evaluation and Inspections 
oig.hhs.gov  Report in Brief  U.S. Department of Health and Human Services 
September 2020 
Office  of Inspector General 
OEI-12-19-00450 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection 
What OIG Found 
We found that the Arkansas Medicaid Fraud Control Unit (MFCU or 
Unit) generally operated in accordance with applicable laws,  Unit Case Outcomes 
regulations, and policy transmittals during Federal fiscal years (FYs)  FYs 20162018 
20162018 but did not always comply with Federal regulations 
 73 indictments
regarding its fiscal controls.  We made two additional findings involving 
 76 convictions
the Units adherence to the performance standards: 
 86 civil settlements and
 The Unit did not regularly communicate and worked few joint judgments
cases with OIGs Office of Investigations during our review  $18.8 million in recoveries with
period. $14.1 million from global* civil
cases, $2.5 million from
 Although the Unit had procedures for reporting convictions and nonglobal civil cases, and
adverse actions to Federal partners, the Unit did not always $2.2 million from criminal cases
report them within the appropriate timeframes.
Unit Snapshot 
We also identified a beneficial practice that may be useful as a model  The Unit is part of the Arkansas Office 
to other Units.  of the Attorney General. 
 The Unit director designated Unit investigators as subject The 22-person MFCU staff
matter experts of specific provider types for efficient 10 investigators, 6 attorneys, 
assignment and improved investigation of cases. 2 auditors, and 4 support staffis 
located in Little Rock.   
What OIG Recommends and How the Unit Responded 
*Global recoveries derive from civil 
To address the three findings, we recommend that the Arkansas Unit:  settlements or judgments involving the U.S. 
(1)strengthen its fiscal controls in the four areas the report identified; Department of Justice and a group of State 
MFCUs and are facilitated by the National 
(2)take steps to improve its communication and seek more
Association of Medicaid Fraud Control Units. 
opportunities to investigate joint cases with OIGs Office of
Investigations; and (3) take steps to ensure that its staff reports all 
convictions and adverse actions to Federal partners within the appropriate timeframes.  The Unit concurred with all three 
recommendations. 
Full report can be found at oig.hhs.gov/oei/reports/oei-12-19-00450.asp   
TABLE OF CONTENTS 
BACKGROUND  1 
PERFORMANCE ASSESSMENT  5 
Case Outcomes  5 
The Unit reported 73 indictments, 76 convictions, and 86 civil settlements and judgments 
for FYs 20162018 
The Unit reported total recoveries of $18.8 million for FYs 20162018 
Performance Standard 1: Compliance with requirements  6 
Based on the information we reviewed, the Unit generally complied with applicable laws, 
regulations, and policy transmittals but did not always comply with Federal regulations 
regarding its fiscal controls 
Performance Standard 2: Staffing   6 
The Units staffing levels were reasonable in relation to the States Medicaid expenditures; 
the Unit was fully staffed at the time of our review in accordance with the Units approved 
budget 
Performance Standard 3: Policies and procedures  6 
The Unit maintained a policies and procedures manual specific to its operations; this 
manual was available to all staff on a shared network drive 
Performance Standard 4: Maintaining adequate referrals  6 
The Unit took steps to maintain an adequate volume and quality of fraud and patient 
abuse and neglect referrals 
Performance Standard 5: Maintaining a continuous case flow  7 
The Unit director designated Unit investigators as subject matter experts of specific 
provider types for efficient assignment and improved investigation of cases 
Performance Standard 6: Case mix  7 
During our review period, the Unit opened 591 cases of which 311 involved fraud and  
280 involved patient abuse or neglect; the cases covered 35 different provider types 
Performance Standard 7: Maintaining case information  7 
The Unit maintained case files in an effective manner and retained a case management 
system that allows access to case information 
Performance Standard 8: Cooperation with Federal authorities on fraud cases  8 
The Unit did not regularly communicate and worked few joint cases with OIGs Office of 
Investigations during our review period 
   
Although the Unit had procedures for reporting convictions and adverse actions to Federal 
partners, the Unit did not always report them within the appropriate timeframes 
Performance Standard 9: Program recommendations  10 
The Unit made 17 recommendations to the State Medicaid agency during our review 
period 
Performance Standard 10: Agreement with Medicaid agency  10 
The Units memorandum of understanding with the State Medicaid agency and the State 
Medicaid program integrity unit reflected current practice, policy, and legal requirements 
Performance Standard 11: Fiscal control  10 
The Unit did not always comply with Federal regulations regarding its fiscal controls 
Performance Standard 12: Training  12 
The Unit maintained a training plan for each professional discipline  
CONCLUSION AND RECOMMENDATIONS  13 
Strengthen the Units fiscal controls in the four areas the report identified   
Take steps to improve the Units communication and seek more opportunities to investigate 
joint cases with OIGs Office of Investigations 
Take steps to ensure that the Unit staff reports all convictions and adverse actions to Federal   
partners within the appropriate timeframes 
UNIT COMMENTS AND OIG RESPONSE  15 
APPENDICES   
A.  Detailed Methodology  16 
B.  Unit Comments  19 
ACKNOWLEDGMENTS  24 
   
BACKGROUND 
Objective 
To examine the performance and operations of the Arkansas 
Medicaid Fraud Control Unit  
Medicaid Fraud Control Units (MFCUs or Units) investigate (1) Medicaid 
Medicaid Fraud 
provider fraud and (2) patient abuse or neglect in facility settings, and 
Control Units 
prosecute those cases under State law or refer them to other prosecuting 
offices.1, 2  Under the Social Security Act (SSA), a MFCU must be a single, 
identifiable entity of State government, separate and distinct from the 
State Medicaid agency, and employ one or more investigators, attorneys, 
and auditors.3  Each State must operate a MFCU or receive a waiver.4 
Currently, 50 States, the District of Columbia, Puerto Rico, and the 
U.S. Virgin Islands operate MFCUs.5  Each Unit receives a Federal grant 
award equivalent to 90 percent of total expenditures for new Units and 
75 percent for all other Units.6  In Federal fiscal year (FY) 2019, combined 
Federal and State expenditures for the Units totaled approximately 
$302 million, with a Federal share of $227 million.7 
 
 
 
 
1 SSA  1903(q)(3).  Regulations at 42 CFR  1007.11(b)(1) clarify that a Units responsibilities 
include the review of complaints of misappropriation of patients private funds in health care 
facilities. 
2 References to State in this report refer to the States, the District of Columbia, and the 
U.S. territories. 
3 SSA  1903(q). 
4 SSA  1902(a)(61). 
5 The territories of American Samoa, Guam, and the Northern Mariana Islands have not 
established Units. 
6 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.  Thereafter, the Federal 
Government contributes 75 percent and the State contributes 25 percent. 
7 OIG analysis of MFCU annual statistical reporting data for FY 2019.  The Federal FY 2019 was 
from October 1, 2018, through September 30, 2019. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  1 
OEI-12-19-00450 
   
The Office of Inspector General (OIG) administers the grant award to each 
OIG Grant 
Unit and provides oversight of Units.8, 9  As part of its oversight, OIG reviews 
Administration 
and recertifies each Unit annually and conducts periodic reviews and 
and Oversight  inspections.  
of Medicaid  In its annual recertification review, OIG examines the Units reapplication, 
Fraud Control  case statistics and the questionnaire responses from Unit stakeholders.  
Through the recertification review, OIG assesses the Units case outcomes; 
Units 
the Units compliance with applicable laws, regulations, and OIG policy 
transmittals;10 and the Units performance as it is measured by the Units 
adherence to published performance standards.11  
OIG further assesses Unit performance by periodically conducting reviews 
and inspections that may identify findings and make recommendations for 
improvement.  During a review or inspection, OIG also makes observations 
regarding Unit operations and practices, including identifying beneficial 
practices that may be useful to share with other Units.  In addition, OIG 
provides training and technical assistance to Units, as appropriate, both 
during the review or inspection and on an ongoing basis.  
The Arkansas Unit is in Little Rock and is part of the Arkansas Office of the 
Arkansas  Attorney General (OAG).  The Arkansas OAG Operations Department 
Medicaid Fraud  administers the Units accounting and other fiscal functions.  At the time of 
our inspection, the Unit employed 22 staff  10 investigators/special agents 
Control Unit 
(including 1 senior investigator, 1 nurse investigator, and 1 nurse analyst), 
6 attorneys (including the director and the 2 senior attorneys), 1 auditor, 
1 financial analyst, and 4 support staff.  During our review period of 
FYs 20162018, the Unit spent $7,049,617, with a State share of $1,762,404. 
Management Structure.  The Unit changed its management structure 
during our review period.  Prior to 2016, the Unit had a chief investigator 
who directed and supervised the Units investigative activities.  In 2016, the 
Unit established a team approach for its investigations and prosecutions, in 
which the chief investigator and senior attorneys worked together to 
supervise and direct two specialized teams  a fraud team and an elder 
 
8 As part of its administration of the grant award, OIG receives and examines financial 
information from Units, such as budgets and quarterly and final Federal financial reports, that 
detail MFCU expenditures. 
9 The SSA authorizes the Secretary of Health and Human Services to award grants (SSA 
 1903(a)(6)) and to certify and annually recertify the Units (SSA  1903(q)).  The Secretary 
delegated these authorities to OIG in 1979. 
10 OIG occasionally issues policy transmittals to provide guidance and instruction to MFCUs.  
Policy transmittals are located at https://oig.hhs.gov/fraud/medicaid-fraud-control-units-
mfcu/index.asp. 
11 A complete publication of the performance standards, including performance indicators, 
may be found at 77 Fed. Reg. 32645 (June 1, 2012), and also on OIGs website at 
https://oig.hhs.gov/authorities/docs/2012/PerformanceStandardsFinal060112.pdf. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  2 
OEI-12-19-00450 
   
protection team.  After the chief investigator left the Unit in April 2017, the 
Unit eliminated the chief investigator position, and the two senior attorneys 
became the team leaders of the respective teams.   
With assistance from the director, the two senior attorneys supervise and 
direct all Unit investigators and attorneys.  The senior attorneys direct each 
case and conduct the Units quarterly supervisory reviews of case files for 
the investigators and prosecutors.  The director supervises the two senior 
attorneys and the auditor. 
Referrals.  The Unit receives referrals from several sources, including the 
Arkansas Department of Human Services Office of Long-Term Care, the 
State Medicaid program integrity unit, and private citizens.  When the Unit 
receives a referral, the Unit intake/case coordinator determines if the 
referral is viable.  The team leaders of the fraud and elder protection teams 
approve the referrals to open as a case.   
Investigations and Prosecutions.  When the Unit opens a case, the 
intake/case coordinator assigns the case to an investigator for a full 
investigation.  Throughout the investigation, the team leader meets with the 
investigator on a quarterly basis to discuss the progress of the case.  
Following the investigative phase, one of the teams attorneys prosecutes 
the case, if warranted, and meets quarterly with the team leader to discuss 
the cases progress. 
The Arkansas Department of Human Services administers the State 
Arkansas 
Medicaid program and provides care for 768,057 beneficiaries enrolled in 
Medicaid  the program.12  The Arkansas Office of the Medicaid Inspector General 
Program  (OMIG) functions as the State Medicaid program integrity unit.  The OMIGs 
mission is to prevent, detect, and investigate fraud, waste, and abuse in the 
State Medicaid program. 
OIG conducted a previous onsite review of the Arkansas Unit in 2013.13  In 
Prior OIG 
that review, OIG found that the Unit: (1) did not have a policies and 
Report 
procedures manual specific to its operations; (2) lacked an updated 
memorandum of understanding (MOU) with the State Medicaid agency to 
reflect current law; (3) accepted only a small number of referrals from the 
State Medicaid agency; (4) lacked evidence of supervisory case file 
approvals and reviews; (5) incorrectly reported indirect costs; and (6) did not 
maintain an annual training plan.  During the review, OIG also reported the 
Units outreach with the States Office of Long-Term Care and other 
stakeholders as a beneficial practice. 
 
12 April 2020 Medicaid and CHIP Enrollment Data Highlights, Arkansas.  Accessed at 
https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-
data/report-highlights/index.html on August 10, 2020. 
13 OIG, Arkansas State Medicaid Fraud Control Unit: 2013 Onsite Review available at 
https://oig.hhs.gov/oei/reports/oei-06-12-00720.pdf. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  3 
OEI-12-19-00450 
   
OIG recommended that the Unit: (1) establish policies and procedures 
specific to its operations; (2) update its MOU with the State Medicaid 
agency to reflect current law; (3) work with the State Medicaid agency to 
ensure an adequate number of referrals; (4) ensure that all case files contain 
evidence of supervisory approvals and reviews; (5) ensure that indirect costs 
are correctly reported; and (6) establish an annual training plan. 
The Unit implemented all six OIG recommendations.  The Unit developed a 
policies and procedures manual specific to its operations, revised its MOU 
with the State Medicaid agency to reflect current law, and increased its 
efforts to ensure that the State Medicaid agency refer cases to the Unit.  The 
Unit also developed a new form for the supervisory reviews of case files.  
Further, the Unit received training for indirect costs and established a formal 
training plan. 
Methodology  OIG conducted the onsite inspection of the Arkansas Unit in September 
2019.  Our review covered the 3-year period of FYs 20162018.  We based 
our inspection on an analysis of data and information from 7 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 review of a random sample of 92 case 
files from the 554 nonglobal case files that were open at some point during 
our review period; (6) a review of all convictions submitted to OIG for 
program exclusion and all adverse actions submitted to the National 
Practitioner Data Bank (NPDB) during our review period; and (7) observation 
of Unit operations.  (See Appendix A for a detailed methodology.)  We 
assessed the Units operations and performance in accordance with the 
published performance standards, but we did not assess adherence to every 
performance indicator for every standard. 
Standards  We conducted this inspection 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 and external peer review. 
   
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  4 
OEI-12-19-00450 
   
PERFORMANCE ASSESSMENT 
Below are the results of OIGs assessment of the performance and 
operations of the Arkansas Unit.  OIG found that the Unit generally 
complied with legal and policy requirements but did not always comply with 
Federal regulations regarding its fiscal controls.  For each of the 
performance standards, we offer either a finding or observation, including 
highlighting a beneficial practice.   
CASE OUTCOMES   
 
Observations  The Unit reported 73 indictments, 76 convictions, and 86 civil 
settlements and judgments for FYs 20162018.  From the 76 convictions, 
55 involved provider fraud and 21 involved patient abuse or neglect. 
 
 
The Unit reported total recoveries of $18.8 million for FYs 20162018.  
(See Exhibit 1 for the sources of those recoveries.)  
  Exhibit 1: The Unit reported combined civil and criminal recoveries 
of $18.8 million (FYs 201618). 
 
Source: OIG analysis of Unit statistical data FYs 2016-18. 
Note: Global civil recoveries derive from civil settlements or judgments in global cases, which are cases 
that involve the U.S. Department of Justice and a group of State MFCUs and are facilitated by the 
National Association of Medicaid Fraud Control Units. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  5 
OEI-12-19-00450 
   
STANDARD 1  A Unit conforms with all applicable statutes, regulations, and policy 
  directives. 
 
Based on the information we reviewed, the Unit generally complied 
Observation 
with applicable laws, regulations, and policy transmittals but did not 
always comply with Federal regulations regarding its fiscal controls.  We 
address this finding under Performance Standard 11 (see pages 10-12). 
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. 
 
The Units staffing levels were reasonable in relation to the States 
Observation 
Medicaid expenditures; the Unit was fully staffed at the time of our 
review in accordance with the Units approved budget.  
STANDARD 3  A Unit establishes written policies and procedures for its operations 
  and ensures staff are familiar with, and adhere to, policies and 
procedures. 
 
The Unit maintained a policies and procedures manual specific to its 
Observation 
operations; this manual was available to all staff on a shared network 
drive.  The Unit finalized its current policies and procedures manual in June 
2019. 
STANDARD 4  A Unit takes steps to maintain an adequate volume and quality of 
  referrals from the State Medicaid agency and other sources. 
 
The Unit took steps to maintain an adequate volume and quality of 
Observation 
fraud and patient abuse and neglect referrals.  The Unit met quarterly 
with OMIG to discuss potential fraud referrals, data requests, and fraud 
trends.  For patient abuse or neglect cases, the Unit received and reviewed 
incident reports submitted to the Arkansas Office of Long-Term Care by the 
States long-term care facilities.  The Unit also maintained a hotline for 
private citizens to report Medicaid fraud and patient abuse and neglect. 
 
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  6 
OEI-12-19-00450 
   
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. 
 
Observation  The Unit director designated Unit investigators as subject matter 
experts of specific provider types for efficient assignment and 
Beneficial Practice 
improved investigation of cases.  In 2016, the Unit director implemented 
a practice of designating Unit investigators as subject matter experts for 
 
  investigating the most common provider types, such as mental health 
  services, personal care services, and dental services.  According to the Unit 
director, all investigators at the time of our review specialized in at least 
one provider area; most specialized in two.  The Unit director reported that 
this practice allowed the intake/case coordinator to more efficiently assign 
cases by matching them with the appropriate subject matter experts.  Unit 
investigators expressed that the Unit director placed them in subject 
matter areas where they could excel, thus improving the quality of 
investigations. 
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. 
 
During our review period, the Unit opened 591 cases of which 
Observation 
311 involved fraud and 280 involved patient abuse or neglect; the cases 
covered 35 different provider types.  The Units cases involved facility-
based providers such as nursing facilities, mental health facilities, and adult 
day care centers as well as individual providers such as personal care 
services attendants, nurses, and nurses aides. 
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. 
 
The Unit maintained case files in an effective manner and retained a 
Observation 
case management system that allows access to case information.  The 
Unit used a proprietary electronic case management system, which was 
available for all Unit staff to record and track case information.  The Unit 
also maintained paper case files.  OIG examined the Units electronic case 
management system and paper case files in reviewing the random sample 
of 92 case files open during our review period.  We determined whether the 
case files contained the appropriate documentation, such as opening and 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  7 
OEI-12-19-00450 
   
closing documents, interview summaries, investigative activity summaries, 
and quarterly supervisory reviews.  We also consulted Unit staff to allow 
them to explain any occasional missing supervisory reviews and activity 
summaries.  In OIGs professional judgment, the Units case files were 
maintained in an effective manner and the case management system 
allowed efficient access to case information.  
STANDARD 8  A Unit cooperates with OIG and other Federal agencies in the 
  investigation and prosecution of Medicaid and other health care fraud. 
 
The Unit did not regularly communicate and worked few joint cases 
Findings 
with OIGs Office of Investigations (OI) during our review period.  We 
found that the Unit director did not regularly communicate with OI 
management during our review period.  Performance Standards 8(a) and 
8(b) state that the Unit should regularly communicate and cooperate with 
OI.14  Other than attending joint biannual health care task force meetings, 
the Unit director and OI management did not meet or communicate on a 
regular basis.  However, the Unit director reported that one of the Unit 
investigators communicated regularly with an OI agent about the Unit 
investigators cases.  The Unit reported that it only communicated, or 
deconflicted, with OI if a case involved both Medicare and Medicaid.   
 
Additionally, we found that the Unit and OI worked few joint cases.  
Specifically, OI officials reported working only seven joint cases with the Unit 
during FYs 20162018.  To improve communication and increase the 
number of joint cases, OI officials suggested that it would be beneficial for 
the Unit and OI to conduct joint trainings.  After our onsite visit, both the 
Unit director and OI management reported that their working relationship 
was improving through better communication. 
 
Although the Unit had procedures for reporting convictions and 
adverse actions to Federal partners, the Unit did not always report them 
within the appropriate timeframes.  Performance Standard 8(f) states that 
the Unit should report to OIG all convictions for the purpose of exclusion 
from Federal health care programs within 30 days of sentencing.15  We 
 
14 Current Federal regulations, which were effective after our review period, also state that the 
Unit should establish a practice of regular meetings or communication with OI (42 CFR 
 1007.11(e)(3) (effective May 21, 2019)). 
15 Effective May 21, 2019, 42 CFR  1007.11(g) requires the Unit to transmit information on 
convictions within 30 days of sentencing, or as soon as practicable if the Unit encounters 
delays in receiving the necessary information from the court. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  8 
OEI-12-19-00450 
   
found that the Unit did not report 39 of its 76 convictions to OIG within the 
appropriate timeframes.16   
According to the Unit, it reported 25 convictions late because the conviction 
information was not forwarded within the Unit in a timely manner.  It 
reported eight convictions late because of delays in receiving the necessary 
information from the sentencing court.  At the time of our onsite visit, Unit 
officials believed that if the Unit investigated but did not prosecute cases, 
the Unit did not need to report any resulting convictions to OIG.  
Consequently, the Unit had not reported six convictions to OIG.17  However, 
the Unit should be reporting all convictions to OIG, regardless of who 
prosecutes the cases.18   
Federal regulations require that the Unit report all adverse actions resulting 
from investigations or prosecution of health care providers to the NPDB 
within 30 days of the final adverse actions date.19  Performance Standard 
8(g) also states that the Unit should report qualifying cases to the NPDB.20  
We found that the Unit did not report 30 of its 76 adverse actions to the 
NPDB within the appropriate timeframes.21   
According to the Unit, it reported 19 adverse actions late because the 
adverse action information was not forwarded within the Unit in a timely 
manner.  At the time of our onsite visit, Unit officials believed that if the Unit 
investigated but did not prosecute cases, the Unit did not need to report 
any resulting adverse actions to the NPDB.  Consequently, the Unit did not 
report four adverse actions to the NPDB.22  The Unit reported most of the 
remaining adverse actions late because of court delays in receiving the 
necessary information from the sentencing court.  
 
 
 
 
 
16 The Unit reported 9 of the 39 convictions to OIG within 35 days of sentencing. 
17 Since our onsite visit, the Unit has reported these six convictions to OIG. 
18 Policy Transmittal 2014-2 provides guidance for Units to report all convictions to OIG. 
19 45 CFR  60.5.  Examples of final adverse actions include, but are not limited to, convictions, 
civil judgments (but not civil settlements), and program exclusions (SSA  1128E(g)(1)). 
20 The NPDB is intended to restrict the ability of physicians, dentists, and other health care 
practitioners to move from State to State without disclosure or discovery of previous medical 
malpractice and adverse actions. 
21 The Unit reported 9 of the 30 adverse actions to the NPDB within 35 days of the adverse 
action. 
22 Since our onsite visit, the Unit has reported these four adverse actions to the NPDB. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  9 
OEI-12-19-00450 
   
STANDARD 9  A Unit makes statutory or programmatic recommendations, when 
  warranted, to the State government. 
 
The Unit made 17 recommendations to the State Medicaid agency 
Observation 
during our review period.  The Medicaid agency implemented 10 of the 
Units recommendations, which covered a range of service areas including 
mental health and home health care.  For example, the Medicaid agency 
implemented the Units recommendations to require (1) specific dates on 
mental health services claims to denote when the services were rendered 
and (2) each home health care provider to have a provider number and 
include the provider number on Medicaid claims.  This additional 
information could allow the State Medicaid agency to more easily identify 
questionable services and identify providers for further review or 
investigation. 
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. 
 
The Units MOU with the State Medicaid agency and the State 
Observation 
Medicaid program integrity unit reflected current practice, policy, and 
legal requirements. The Unit finalized its MOU with the Medicaid agency 
 
and OMIG (the program integrity unit) in September 2017.  
STANDARD 11  A Unit exercises proper fiscal control over its resources. 
 
 
The Unit did not always comply with Federal regulations regarding its 
Finding 
fiscal controls.  We identified four areas in which the Unit lacked proper 
fiscal controls during our review period.  Specifically, we found that the Unit 
(1) claimed both unallowable and unsupported costs on its Federal grant; 
(2) submitted required financial reports late; (3) did not encrypt employee 
laptops; and (4) incorrectly calculated its indirect costs. 
 
The Unit claimed both unallowable and unsupported costs on its Federal 
grant.  We found that the Unit claimed $5,274 in unallowable costs and 
$1,500 in unsupported costs on its Federal grant.23  The unallowable costs 
 
23 45 CFR  75.405(a) states that a cost is allocable to a Federal award or other cost objective 
if the goods or services involved are chargeable or assignable to that Federal award or cost 
objective in accordance with relative benefits received.  This standard is met if the cost is 
incurred specifically for the Federal award.  45 CFR  75.403(g) states that costs must be 
adequately documented to be allowable under Federal awards. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  10 
OEI-12-19-00450 
   
related to $2,499 for vehicle repairs to a non-Unit vehicle and $2,775 in 
travel charges for non-Unit staff.  For the unsupported costs, the Unit could 
not locate supporting documentation for $1,500 in FY 2018 costs.  According 
to the Unit, the unallowable costs occurred because of coding errors in the 
processing of invoices and the unsupported costs occurred because the 
Arkansas OAG financial manager at the time did not maintain sufficient 
records.  To avoid future issues, Unit officials stated that they have discussed 
with the Arkansas OAG financial staff the importance of ensuring that the 
Units costs are coded correctly, and the Unit has created a new financial 
analyst position to review the Units costs on a monthly basis. 
 
The Unit submitted 8 of its 15 required financial reports late.  Of the eight late 
reports, the Unit submitted one report more than 6 months late, one report 
more than 3 months late, and two reports more than a month late.  The 
Unit submitted the remaining four reports less than a month late.  Unit 
officials attributed the late reports to the Arkansas OAG financial managers 
failure to comply with Federal grants reporting requirements.24  The 
Arkansas OAG terminated the financial managers employment shortly 
before the OIG onsite inspection, and the Unit hired a financial analyst to 
complete all of the Units Federal reporting requirements. 
 
The Unit did not encrypt employee laptops storing sensitive data.  Federal 
regulations require Units to safeguard protective personally identifiable 
information and other sensitive data to prevent misuse.25  According to Unit 
officials, the Unit had encrypted laptops until 2018, at which point the 
encryption was turned off because of technical issues.  In January 2020, the 
Unit director reported to OIG that all of the Units computers had been 
encrypted. 
 
The Unit incorrectly calculated its indirect costs.  The Unit should apply its 
approved indirect cost rate to its base, which is salaries and fringe 
benefits.26, 27  This calculation produces the dollar amount of indirect costs 
to which the Unit is entitled.  However, the Unit did not use the 
 
24 45 CFR  75.342(b)(1) states that annual reports must be due 90 calendar days after the 
reporting period, while quarterly or semiannual reports must be due 30 calendar days after 
the reporting period. 
25 45 CFR  75.303(e) and 42 CFR  1007.11(f). 
26 45 CFR  75, Appendix VII(B)(7) defines an indirect cost rate as a device for determining in 
a reasonable manner the proportion of indirect costs each program should bear.  The 
indirect cost rate is the ratio (expressed as a percentage) of the indirect costs to a direct cost 
base. 
27 The U.S. Department of Health and Human Services (HHS) Cost Allocation Services 
approves the Units indirect cost rate agreements.  In the Units indirect cost rate agreement, 
its base is defined as direct salaries and wages including all fringe benefits. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  11 
OEI-12-19-00450 
   
HHS-approved indirect cost rate or base to determine its indirect costs.  
Instead, the Unit calculated its indirect costs by adding together monthly 
direct costs, including rent and lease expenses, and allocating them as 
indirect costs.  As a result, the Unit underclaimed its indirect costs by 
$362,889 ($272,167 Federal share) for FYs 20162018.  The Units financial 
analyst attributed the incorrect calculation of indirect costs to the Arkansas 
OAGs inability to apply the HHS-approved indirect cost rate in its 
accounting system. 
STANDARD 12  A Unit conducts training that aids in the mission of the Unit. 
 
 
The Unit maintained a training plan for each professional discipline.  
Observation 
The training plan included the minimum number of training hours 
required for professional certification. 
 
 
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  12 
OEI-12-19-00450 
   
CONCLUSION AND RECOMMENDATIONS 
From the information we reviewed, we found that the Arkansas Unit 
generally complied with applicable legal requirements, except that the Unit 
did not always comply with Federal regulations regarding its fiscal controls.  
We also identified other opportunities for improvement.  Specifically, during 
our review period, we found that the Unit did not regularly communicate 
and worked few joint cases with OIGs Office of Investigations (OI).  
Additionally, we found that the Unit staff did not report all convictions and 
adverse actions to Federal partners within the appropriate timeframes. 
To address these findings, we recommend that the Arkansas Unit: 
Strengthen the Units fiscal controls in the four areas the report 
identified. 
The Unit should strengthen its fiscal controls in the reports four identified 
areas and take the following actions: 
(1)  Refund the Federal grant $6,774 in the unallowable and unsupported 
costs, ensure that future costs are coded accurately, and maintain 
supporting documentation for future costs on the Federal grant; 
(2) Take steps to ensure that the Unit submits all required financial reports 
on time; 
(3) Ensure that all Unit laptops continue to be encrypted to protect the 
electronic information under the Units control; and 
(4) Establish policies and procedures to properly apply its approved indirect 
cost rate in calculating its indirect costs for Federal reimbursement. 
 
Take steps to improve the Units communication and seek more 
opportunities to investigate joint cases with OI. 
The Unit should establish a practice of regular meetings or communication 
with OI, which should include deconfliction of cases.  Additionally, the Unit 
should seek more opportunities to conduct joint cases.  To improve 
communication and increase joint cases, the Unit could conduct joint 
training with OI to help both groups understand each others roles and 
responsibilities.  
 
Take steps to ensure that the Unit staff reports all convictions 
and adverse actions to Federal partners within the appropriate 
timeframes. 
The Unit should take steps to ensure that it reports all convictions to OIG 
within 30 days of sentencing and adverse actions to the NPDB within  
30 days of the action.  The Unit could provide conviction and adverse action 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  13 
OEI-12-19-00450 
   
training to necessary staff or implement automated reminders to alert Unit 
staff when to report the convictions or adverse actions. 
   
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  14 
OEI-12-19-00450 
   
UNIT COMMENTS AND OIG RESPONSE 
The Arkansas Unit concurred with all three of our recommendations.  
The Unit concurred with our first recommendation to strengthen its fiscal 
controls and stated that it has either implemented or will implement the 
four actions that we recommended in the report.  First, the Unit stated that 
it will refund the Federal grant $6,774 in unallowable and unsupported 
costs, will monitor and review Unit costs to ensure that they are coded 
accurately, and will maintain supporting documentation for Unit costs.  
Second, the Unit reported that its newly hired internal financial analyst has 
been submitting required financial reports timely and will continue to do so.  
Third, the Unit stated that it has encrypted all Unit laptops and is amending 
its policies and procedures manual to require encryption for any new Unit 
laptops.  Fourth, the Unit stated that its financial analyst is reviewing 
expenses on a monthly basis and that the Unit will develop policies and 
procedures to apply the correct indirect cost rate in the future. 
The Unit also concurred with our second recommendation to take steps to 
improve its communication and seek more opportunities to investigate joint 
cases with OI.  The Unit reported that it has created an action plan with OI 
to establish regular meetings and communication about cases.  The Unit 
stated that since our onsite visit, it has opened five joint cases with OI.  The 
Unit stated that it also plans to conduct joint training with OI as well. 
Finally, the Unit concurred with our third recommendation to take steps to 
ensure that its staff reports all convictions and adverse actions to Federal 
partners within the appropriate timeframes.  The Unit stated that it has 
provided training to all employees and improved its automated reminders 
to alert its staff as to when to report convictions and adverse actions. 
For the full text of the Units comments, see Appendix B. 
   
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  15 
OEI-12-19-00450 
   
APPENDIX A: Detailed Methodology 
Data Collection and Analysis 
We collected and analyzed data from the seven sources below to identify 
any opportunities for improvement and instances when the Unit did not 
adhere to the performance standards or was not operating in accordance 
with laws, regulations, or policy transmittals.28  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 20162018.  The review involved 
examining the Units recertification materials, including (1) the annual 
reports, (2) the Unit Directors recertification questionnaires, (3) the Units 
memorandum of understanding with the State Medicaid agency and OMIG 
(the Medicaid program integrity unit), (4) the OMIG program integrity 
directors questionnaires, and (5) the OIG Special Agent in Charges 
questionnaires.  We also reviewed the Units policies and procedures 
manual and the Units self-reported case outcomes and referrals included in 
its annual statistical reports for FYs 20162018.  We examined the 
recommendations from the 2013 OIG onsite review report and the Units 
implementation of those recommendations. 
Review of Unit Financial Documentation.  OIG auditors reviewed the Units 
internal fiscal controls and use of fiscal resources to identify any internal 
control issues or other issues involving the use of resources.  We reviewed 
and discussed with Unit staff their responses to an internal controls 
questionnaire over accounting, budgeting, personnel, procurement, 
property, equipment, and the Units financial policies and procedures. 
Additionally, we examined the Units claimed grant expenditures for 
FYs 20162018.  For these expenditures, we (1) reviewed the Units payment 
records to identify unusual patterns of withdrawal amounts; (2) reconciled 
the Units Federal financial status reports (SF-425 forms) that the Unit 
submitted to OIG with the Units transaction detail reports for our review 
period; (3) compared the Units transactions detail reports to its approved 
budgets; and (4) reviewed the Units indirect costs to determine if the costs 
were adequately allocated to the Unit in accordance with the 
HHS-approved indirect cost rates. 
 
 
28 All relevant regulations, statutes, and policy transmittals are available online at 
https://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  16 
OEI-12-19-00450 
   
While onsite, we reviewed three purposive samples to assess the Units 
internal control of fiscal resources: 
1.  We selected and reviewed 71 transactions, totaling $204,337.  We 
included transactions from different Federal cost categories.  We then 
requested and reviewed documentation supporting the selected 
transactions. 
2.  We reconciled the Units payroll registers with payroll costs.  We 
selected 29 Unit employees salaries and reviewed their supporting 
documentation. 
3.  We reviewed the Units fixed asset inventory by selecting 19 of the Units 
562 fixed assets and verifying the samples existence.  
 
Interviews with Key Stakeholders.  In August 2019, we interviewed key 
stakeholders, including officials in the OMIG, the States Office of Long-
Term Care, and the U.S. Attorneys Office.  We also interviewed the 
managers from OIGs Office of Investigations who work with the Unit.  We 
focused these interviews on the Units relationship and interaction with the 
stakeholders as well as opportunities for improvement.  We used the 
information collected from these interviews to develop subsequent 
interview questions for Unit management and staff. 
Onsite Interviews with Unit Management and Selected Staff.  We 
conducted structured onsite interviews with the Units management and 
selected staff in September 2019.  We interviewed the Unit director, the two 
senior attorneys, one auditor, and five investigators, including the senior 
investigator.  We also interviewed the Chief Deputy Attorney General, who is 
the supervisor of the Unit director.  We asked these individuals questions 
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; 
(4) clarification regarding information obtained from other data sources; 
and (5) the Units training and technical assistance needs.   
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 20162018 and include the status of the case; whether the case was 
criminal, civil, or global; and the dates on which the case was opened and 
closed, if applicable.  The total number of cases was 591.   
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 Units.  We 
excluded 37 global cases, leaving 554 case files.   
We then selected a simple random sample of 92 cases from the population 
of 554.  This sample allowed us to make estimates of the overall percentage 
of case files with various characteristics with an absolute precision of  
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  17 
OEI-12-19-00450 
   
+/- 10 percent at the 95-percent confidence level.  We reviewed the 92 case 
files for adherence to the relevant performance standards and compliance 
with statute, regulation, and policy transmittals.  During the onsite review of 
the sampled cases, we consulted Unit staff to address any apparent issues 
with individual case files, such as missing documentation.  
Review of Unit Submissions to OIG and NPDB.  We also reviewed 
all 76 convictions submitted to OIG for program exclusion during our review 
period, and all 76 adverse actions submitted to the NPDB during our review 
period.  We reviewed whether the Unit submitted information on all 
sentenced individuals and entities to OIG for program exclusion and all 
adverse actions to the NPDB for FYs 20162018.  We also assessed the 
timeliness of the submissions to OIG and the NPDB. 
Onsite Review of Unit Operations.  During the onsite inspection, we 
observed the Units workspace and operations of the Units office in Little 
Rock.  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. 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  18 
OEI-12-19-00450 
   
APPENDIX B: Unit Comments 
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  19 
OEI-12-19-00450 
   
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  20 
OEI-12-19-00450 
   
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  21 
OEI-12-19-00450 
   
 
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  22 
OEI-12-19-00450 
   
   
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  23 
OEI-12-19-00450 
   
 
ACKNOWLEDGMENTS 
Keith Peters of the Medicaid Fraud Policy and Oversight Division served as 
the team leader for this inspection.  Susan Burbach of the Medicaid Fraud 
Policy and Oversight Division also participated in the inspection.  Two 
agents from the Office of Investigations also participated in the inspection.  
Office of Evaluation and Inspections staff who provided support include 
Kevin Farber, Christine Moritz, and Colleen White.   
 
We would also like to acknowledge the contributions of the Office of Audit 
Services staff, including Matthew Odom, Laura Cummings, 
Meagan Summers, and Kelsey Minchew. 
 
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
Arkansas Medicaid Fraud Control Unit: 2019 Onsite Inspection  24 
OEI-12-19-00450 
   
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 
to provide HHS, Congress, and the public with timely, useful, and reliable 
and Inspections 
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 
legal services to OIG, rendering advice and opinions on HHS programs and 
the Inspector 
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.