U.S. Department of Health & Human Services 
Office of Inspector General 
 
 
Medicaid Fraud 
Control Units   
NOTICE  THIS DRAFT 
Fiscal Year 2017 
RESTRICTED TO OFFICIAL 
USE 
 
Annual Report 
This document is a draft report of 
the Office of Inspector General 
and is subject to revision; 
 
therefore, recipients of this draft 
should not disclose its contents for 
purposes other than for official 
review and comment under any 
circumstances.  This draft and all 
copies thereof remain the property 
of, and must be returned on 
demand to, the Office of Inspector 
General. 
 
 
OEI-09-18-00180 
 
April 2018 
Suzanne Murrin 
 
 
  Deputy Inspector General 
oig.hhs.gov 
 
 
  March 2018  U.S. Department of Health & Human Services 
OEI-09-18-00180 
Office  of Inspector General 
 
At a Glance 
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medicaid Fraud Control Units (MFCUs or Units) investigate and prosecute Medicaid provider fraud and patient abuse or neglect.   
They operate in 49 States and the District of Columbia.  The Department of Health and Human Services Office of Inspector 
General is the designated Federal agency that oversees and annually approves Federal funding for MFCUs through a 
recertification process.  For this report we analyzed the annual statistical data on case outcomessuch as convictions; civil 
settlements and judgments; and recoveriesthat the 50 MFCUs submitted for fiscal year 2017.     
TABLE OF CONTENTS 
BACKGROUND  1 
Methodology  3 
   
CASE OUTCOMES    
The number of convictions in 2017 remained similar to those in recent years  4 
Criminal recoveries nearly doubled in 2017  6 
The number of civil settlements and judgments declined slightly in 2017  8 
Civil recoveries declined in 2017  9 
   
APPENDICES   
A: OIG Priority Outcome To Maximize MFCU Effectiveness   11 
B: Beneficial Practices From OIG Onsite Reports Published in Fiscal Years 20122017  12 
C: Fiscal Year 2017 MFCU Case Outcomes and Open Investigations by Provider Type   20 
and Case Type 
   
ENDNOTES  28 
 
ACKNOWLEDGMENTS  29 
   
   
BACKGROUND 
The function of Medicaid Fraud Control Units (MFCUs or Units) is to 
investigate and prosecute Medicaid provider fraud and patient abuse or 
neglect.1  The Social Security Act (SSA) requires each State to effectively 
operate a MFCU, unless the Secretary of Health and Human Services 
determines that (1) the operation of a Unit would not be cost-effective 
because minimal Medicaid fraud exists in a particular State and (2) the State 
has other adequate safeguards to protect beneficiaries from abuse or 
neglect.2  Currently, 49 States and the District of Columbia (States) operate 
MFCUs.3   
MFCUs are funded jointly by Federal and State Governments.  Each of the 
50 MFCUs receives Federal reimbursement equivalent to 75 percent of its 
total expenditures, with State funds contributing the remaining 25 percent.4  
In fiscal year (FY) 2017, combined Federal and State expenditures for the 
Units totaled approximately $276 million, $207 million of which represented 
Federal funds.5     
Units must meet a number of requirements established by the SSA and 
Federal regulations.  For example, each Unit must:  
  be a single, identifiable entity of State Government, separate and 
distinct from the State Medicaid agency;6  
  employ an interdisciplinary staff that consists of at least an 
investigator, an auditor, and an attorney;7 
  develop a formal agreement, such as a memorandum of 
understanding, describing the Units relationship with the State 
Medicaid agency;8 and 
  have either statewide authority to prosecute cases or formal 
procedures to refer suspected criminal violations to an agency with 
such authority.9   
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report  1 
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As illustrated in Exhibit 1, MFCU cases 
typically begin as referrals from 
external sources or are generated 
internally from data mining.10  MFCU 
staff review referrals of possible fraud 
and patient abuse or neglect to 
determine their potential for criminal 
prosecution and/or civil action.  If the 
Unit accepts a referral for 
investigation, the case may result in 
various possible outcomes, such as 
convictions; civil settlements or 
judgments; and monetary recoveries.  
The Office of Inspector General (OIG) 
has the authority to exclude 
convicted individuals and entities 
from any federally funded health care 
programs on the basis of convictions 
referred from MFCUs.11  Units may 
also make program 
recommendations to their respective 
State Governments that help 
strengthen program integrity and efforts to fight patient abuse or neglect.   
OIG Oversight of the  It is a top OIG priority to continually strengthen and support the 
effectiveness of MFCUs as key partners in combating fraud and abuse.  OIG 
MFCU Program  
oversees the MFCU grant program by recertifying Units, conducting onsite 
reviews of Units, providing technical assistance to Units, and maintaining key 
statistical data about Unit caseloads and outcomes.12  Further, OIG has 
identified enhancing Medicaid program integrityincluding efforts to 
maximize the effectiveness of MFCUsas an OIG Priority Outcome.  (See 
Appendix A for details.) 
Annually, OIG approves each Units application for recertification, which is 
necessary for the Unit to receive Federal reimbursement.13  To recertify a 
Unit, OIG assesses the Units compliance with the Federal requirements for 
MFCUs contained in statute, regulations, and OIG policy transmittals.  OIG 
also examines the Units adherence to 12 performance standards, such as 
those regarding staffing, maintaining adequate referrals, and cooperating 
with Federal authorities.14  
OIG conducts periodic onsite reviews of Units.  These reviews allow OIG to 
evaluate a Units outcomes, operations, and compliance with Federal laws, 
regulations, policies and performance standards.  On the basis of these 
reviews, OIG issues public reports that contain findings and 
recommendations for improvement or corrective actions.  These reports 
may also note Unit practices that OIG identifies as particularly beneficial and 
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report  2 
OEI-09-18-00180   
that may be useful to other MFCUs.  Appendix B contains a list of beneficial 
practices that OIG cited in MFCU reports published in recent years. 
OIG also provides ongoing technical assistance and guidance to Units.  
These activities may include responding to questions from the Units, 
providing training to Units, and issuing policy transmittals to all Units. 
Annually, OIG collects and presents statistical data reported by each MFCU, 
such as the number of open cases, indictments, convictions, and amounts of 
recoveries.  These data can be accessed on the OIG website in two formats: 
a statistical chart and an interactive map.  
Methodology  We based the information in this report on the FY 2017 Annual Statistical 
Reports submitted to OIG by all 50 MFCUs, recertification materials 
submitted annually by the MFCUs, and OIG exclusions data.   
We aggregated case outcomes across all Units for FY 2017 and for each of 
the preceding 4 yearsFYs 2013 through 2016.  These outcomes include 
convictions; civil settlements and judgments; and recoveries.  For each of 
these outcomes, we also calculated an average across the 5-year period of 
FYs 2013 through 2017.  Additionally, we identified the provider types with 
the highest number of criminal and civil outcomes in FY 2017 and the 
number of FY 2017 exclusions that OIG imposed on individuals and entities 
as a result of conviction referrals from MFCUs.  We also conducted analysis 
of MFCU drug diversion cases, using data for FYs 2015 through 2017, the 
only years for which these data were available.  
OIG inspections of the MFCUs, and this annual report, differ from other OIG 
Standards 
evaluations as they support OIGs direct administration of the MFCU grant 
program, but are subject to the same internal quality controls as other OIG 
evaluations, including internal peer review.   
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of Inspectors General on 
Integrity and Efficiency.   
   
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CASE OUTCOMES 
In FY 2017, MFCU convictions totaled 1,528, similar to the number of 
The number of 
convictions for recent years.  This total included 1,157 convictions of fraud 
convictions in  
and 371 convictions of patient abuse or neglect.  Exhibit 2 shows the 
FY 2017 remained  number of convictions in each of the last 5 years.    
similar to those in 
recent years 
Significantly more convictions for fraud involved personal care 
services (PCS) attendants and agencies than any other provider type 
in FY 2017 
Of the 1,157 fraud convictions in FY 2017, 523 (45 percent) involved PCS 
 
attendants and agencies.  For additional information on the prevalence of 
fraud involving PCS, see OIGs December 2017 issue brief and October 2016 
investigative advisory.  On the next page, Exhibit 3 shows the provider types 
with the most fraud convictions in FY 2017.   
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More convictions for patient abuse or neglect involved nurse aides 
than any other provider type in FY 2017 
In FY 2017, nurse aides accounted for 112 of the total 371 patient abuse or 
neglect convictions (30 percent).  Exhibit 4 shows the provider types with 
the most convictions for patient abuse or neglect. 
Appendix C shows the number of convictions and recovery amounts for 
patient abuse or neglect cases, by provider type.   
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MFCU convictions led to the exclusion of individuals and entities 
from Federal health care programs, broadening the impact of 
convictions 
In FY 2017, OIG excluded 1,181 individuals and entities from participating in 
Federal health care programs as a result of conviction referrals from MFCUs.  
When MFCUs refer convictions for fraud and patient abuse or neglect in 
their respective States to OIG, OIG has the authority to exclude convicted 
individuals and entities from federally funded health care programs. 
Through these referrals, MFCUs help ensure that convicted individuals and 
entities are excluded from Medicaid programs in other States, as well as 
other Federal programs related to health care.  On its website, OIG 
maintains the List of Excluded Individuals/Entities.   
Criminal recoveries  Criminal recoveries of $693 million in FY 2017 were almost double those 
from FY 2016.  The majority of this amountabout $519 millioncame from 
nearly doubled in  
the Texas MFCU, which prosecuted a large case involving a doctor and 
2017 
other codefendants who defrauded Medicaid and Medicare by improperly 
recruiting individuals and falsifying medical documents.   
Exhibit 5 shows the amounts of criminal recoveries for FYs 2013 through 
2017 in relation to the 5-year average.   
Appendix C shows the number of convictions and recovery amounts for 
criminal cases, by provider type.  Appendix C also provides a variety of other 
statistics about MFCU caseloads and outcomes, by provider type.   
 
 
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Recoveries from drug diversion cases increased in FY 2017 
In FY 2017, recoveries from drug diversion cases increased considerably, 
from $15.7 million to $28.4 million.  Exhibit 6 shows the number of 
convictions and recovery amounts associated with drug diversion cases 
during FYs 2015 through 2017.     
  
Drug diversion cases involve investigating fraudulent billing of Medicaid for 
drugs diverted from legal and medically necessary uses.  MFCUs may 
conduct drug diversion investigations jointly with other State or Federal 
agencies, such as OIG or the U.S. Drug Enforcement Administration.   
In FY 2017, a single case in New York was responsible for $25.2 million of 
the $28.4 million in drug diversion recoveries.  This case involved a 
pharmacist who illegally purchased HIV drugs from patients and then resold 
them at the full Medicaid reimbursement amount.  Another pharmacist 
knowingly purchased these diverted drugs and dispensed them to 
thousands of patients, including many Medicaid beneficiaries.  Both 
pharmacists received prison sentences and were ordered to pay 
restitution.15 
 
 
 
 
 
 
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In FY 2017, MFCUs were responsible for 961 civil settlements and judgments, 
The number of civil 
slightly less than the number for FY 2016.  Exhibit 7 shows the numbers of 
settlements and 
civil settlements and judgments for FYs 2013 through 2017 in relation to the 
judgments declined 
5-year average.   
slightly in 2017  
Significantly more civil settlements and judgments involved 
pharmaceutical manufacturers than any other provider type in  
FY 2017 
Of the 961 civil settlements and judgements in FY 2017, 426 (44 percent) 
involved pharmaceutical manufacturers.  In one example, a pharmaceutical 
manufacturer entered into a settlement for knowingly misclassifying its drug 
as a generic drug to avoid paying rebates owed to Medicaid, in violation of 
the Federal False Claims Act.  This pharmaceutical manufacturer entered 
into a $465 million settlement and a Corporate Integrity Agreement with 
OIG that requires an annual review of the companys practices related to the 
Medicaid drug rebate program.16 
On the next page, Exhibit 8 shows the provider types with the most civil 
settlements and judgments in FY 2017. 
   
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Civil recoveries  Civil recoveries decreased to $1.1 billion in FY 2017 from $1.5 billion in  
FY 2016.  Exhibit 9 shows the amounts of civil recoveries for FYs 2013 
declined in 2017 
through 2017 in relation to the 5-year average.  The occurrence of large 
monetary settlements in certain years and the timing of these settlements 
(e.g., just before or after the end of the annual reporting period) contributes 
to this variability.  
 
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Of the $1.1 billion in civil recoveries in  
FY 2017, $765 million (69 percent) 
derive from nonglobal cases (see 
sidebar).17  The remaining  
$343 million (31 percent) derive from 
global cases.18   
The majority of nonglobal 
recoveriesmore than $513 million
came from the Georgia MFCUs 
settlement with a large health care 
corporation regarding allegations that 
the corporation had paid kickbacks to 
an obstetric clinic in return for 
referrals of patients to the corporations hospitals, which billed both 
Medicaid and Medicare.   
Appendix C shows the number of settlements and judgments and recovery 
amounts for civil cases, by provider type.   
   
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APPENDIX A: OIG Priority Outcome to 
Maximize MFCU Effectiveness 
It is a top OIG priority to strengthen the effectiveness of Medicaid Fraud Control Units (MFCUs) as key 
partners in combating fraud and abuse.  As part of its oversight, OIG constantly strives to support the 
MFCUs in ways that maximize their effectiveness.  Over the past year, the OIG has engaged in numerous 
actions to help drive MFCU effectiveness.  These include activities in five categories: (1) enhancing OIG 
oversight, (2) increasing the use of data, (3) expanding the MFCU program to better align with a growing 
and evolving Medicaid program, (4) targeting MFCU training where it can be of greatest assistance to 
MFCUs, and (5) increasing collaboration between MFCUs and OIG.   
To assess the impact of these efforts, the OIG has established two key performance indicators:  
(1) indictment rate and (2) conviction rate.  The table below shows these rates for FYs 20152017 and the 
targets that OIG aims to achieve in FYs 20182019.  
 
KEY 
PERFORMANCE  FY 2015  FY 2016  FY 2017  FY 2018  FY 2019 
INDICATORS  (ACTUAL)  (ACTUAL)  (ACTUAL)  TARGET  TARGET 
Indictment rate   17.8%  17.2%  18.4%  18.5%  19.0% 
Conviction rate  91.2%  89.7%  88.6%  91.0%  91.0% 
 
Calculations:  
Indictment rate = Total number of criminal cases with indictments or charges 
plus number of nonglobal civil cases open, filed, or referred for filing 
divided by 
total number of open cases. 
 
Conviction rate = Total number of criminal cases resulting in a defendant convicted 
divided by 
total number of cases resulting in a defendant acquitted, dismissed, or convicted.   
 
To calculate these measures, OIG aggregates data submitted by Units through Annual Statistical Reports.  
The data used in calculating the measures can be accessed on the MFCU section of the OIG website.  
   
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APPENDIX B: Beneficial Practices From OIG Onsite 
Reports Published in FYs 20122017 
This appendix summarizes MFCU practices that OIG highlighted in prior reports as beneficial to Unit 
operations.  Other Units should consider whether adopting similar practices in their States may yield 
additional benefits.   
All prior OIG reports on MFCUs are available at https://oig.hhs.gov/reports-and-
publications/oei/m.asp#mfcu.    
 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
Alaska  Successful  Unit stakeholders reported that the MFCU director 
OEI-09-16-00430  partnerships  made efforts to improve communication with 
agencies such as OIG and the State Medicaid agency.  
As a result, the number of joint OIG-MFCU cases 
tripled from FY 2012 to FY 2015. 
  Successful  Unit collaboration with Federal and State partners to 
partnerships and  investigate allegations of PCS fraud led to convictions 
program integrity  and significant monetary recoveries.  Further, the Unit 
improvements  made program integrity recommendations to 
safeguard against PCS provider fraud, and the State 
Medicaid agency implemented these 
recommendations.  
Arizona  Focus on managed  MFCU staff attended quarterly meetings with the 
OEI-07-15-00280  care   State Medicaid agency and managed care 
organizations (MCOs).  These meetings provided 
guidance to MCOs about what constitutes a quality 
referral and the types of referrals that will result in the 
MFCUs opening a case for investigation. 
Arkansas   Outreach activities  Outreach by the Unit built relationships with 
OEI-06-12-00720  stakeholders and aided the Units mission.  For 
example, Unit investigators led training for staff of the 
State Office of Long Term Care, about how to 
develop a potential referral to the MFCU.  
 
continued on the next page 
   
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE  DESCRIPTION 
REPORT NUMBER  CATEGORY 
California  Focus on managed  The Unit provided quarterly training for MCO 
OEI-09-15-00070  care  representatives that resulted in increased fraud referrals 
from MCOs to the Unit. 
Outreach activities  The Unit hired a field representative to provide 
outreach and increase the number of fraud referrals 
sent to the Unit.  The field representative acted as a 
liaison between the Unit and other State agencies and 
also trained staff from these agencies about Medicaid 
fraud and the Units role in combating provider fraud 
and patient abuse or neglect. 
Co-location of Unit  Unit investigators have workstations at an OIG field 
and OIG staff  office, which facilitated the mutual referral of cases and 
improved communication and cooperation with OIG on 
joint cases. 
Florida  Co-location of Unit  Unit staff have workstations in an OIG field office, which 
OEI-07-15-00340  and OIG staff  improved communication and cooperation with OIG on 
joint cases, including fraud cases generated through 
the U.S. Department of Justices Medicare Strike Force. 
Idaho  Case management  The Unit implemented an investigative checklist that 
OEI-09-12-00220  tools  improved the Units case flow.  This Unit also used an 
investigative case plan for each case, which the case 
investigator discussed with Unit attorneys prior to 
monthly staff meetings. 
Kentucky  Successful  The Unit regularly met with the State Medicaid agency, 
OEI-06-17-00030  partnerships  other State agencies, and MCOs to encourage fraud 
referrals and improve communication and 
collaboration.  The results included improved quality, 
completeness, and timeliness of fraud referrals.  
  Improved staff skills  The Unit created an executive advisor position.  The 
executive advisor helped Unit attorneys develop 
litigation skills, mentored new attorneys, and served as 
a co-chair on Unit prosecutions. 
    continued on the next page 
   
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
Maryland  Improved staff skills  The Unit developed an internal boot camp training 
OEI-07-16-00140  program that helped new staff develop a full 
understanding of the Units work.  Experienced 
MFCU staff gave 1- to 2-hour lectures on topics such 
as civil and criminal investigation procedures, 
interviewing techniques, and understanding medical 
codes.   
Massachusetts  Successful partnerships  The Unit developed partnerships with other State 
OEI-07-15-00390  and Federal agencies and used clinical experts to 
  facilitate the investigation and prosecution of drug 
diversion and other pharmacy cases. 
Case management  The Unit used its Intranet system to streamline its 
tools  administrative processes, such as periodic 
supervisory case file reviews.  The Unit found that 
this helped improve case management and the 
effectiveness of investigations and prosecutions. 
Michigan   Co-location of Unit and  The Unit made workspace available to an OIG agent 
OEI-09-13-00070  OIG staff  within the Unit offices.  Co-location facilitated 
communication between the MFCU and OIG in 
assessing potential fraud referrals and working joint 
cases. 
Case management  Unit management and the Michigan Department of 
tools  Licensing and Regulatory Affairs (LARA) developed a 
streamlined process for referring cases of patient 
abuse or neglect.  This process helped to ensure 
that referrals from LARA were consistent with the 
Units statutory functions, thereby promoting Unit 
efficiency and case flow. 
Minnesota  Program integrity  The Unit helped develop legislation to protect 
OEI-06-13-02000  improvements  Medicaid beneficiaries by strengthening background 
checks for individuals who serve as guardians and 
conservators of adult Medicaid beneficiaries.   
     
    continued on the next page 
   
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
Nevada  Outreach activities  The Units outreach program consisted of educational 
OEI-09-12-00450  classes taught by Unit presenters who describe various 
  types of fraud and abuse or neglect; discuss Federal 
and State laws regarding fraud and abuse or neglect; 
and provide Unit contact information for reporting 
Medicaid-related crime.  The Units Train the Trainer 
program was instrumental in the success of the 
provider outreach program. 
New Hampshire  Outreach activities  The Unit sent a letter to nursing facilities and assisted 
OEI-02-12-00180  living facilities explaining drug diversion.  This led to an 
increase in the number of drug diversion referrals from 
these types of facilities.   
New Jersey  Case management  The Unit developed a document containing case tasks, 
OEI-02-13-00020  tools  deadlines, and descriptions of significant investigative 
and legal issues, which helped to facilitate case 
management. 
New Mexico  Focus on managed  Unit management and the State Medicaid agency 
OEI-09-14-00240  care  worked closely to develop and implement an improved 
  referral process that ensures that the Unit receives all 
appropriate fraud referrals generated by MCOs. 
Program integrity  The Unit consistently provided program integrity 
improvements  recommendations to the State Medicaid agency during 
quarterly joint protocol meetings.  One of these 
recommendations resulted in the inclusion of language 
into MCO contracts that clarified the State Medicaid 
agency role in referring all verified allegations of 
fraud, waste, or abuse in a managed care setting to the 
MFCU. 
continued on the next page 
   
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
New York  Focus on patient  The Unit established a separate Patient Protection Unit.  
OEI-02-11-00440  abuse or neglect  This resulted in the allocation of additional resources 
and expertise to cases of patient abuse or neglect. 
  Successful  The Unit developed a list of individuals and entities 
partnerships  associated with ongoing investigations and by sharing 
it with the State Office of the Medicaid Inspector 
General, facilitated communication. 
  Use of technology  The Unit established an Electronic Investigative Support 
Group composed of staff dedicated to providing 
technical expertise as needed throughout cases.  For 
example, the group provided data analysis and tools 
for conducting undercover surveillance activities, which 
helped to improve the efficiency of investigations. 
North Carolina  Improved staff skills  The Unit partnered with another State agency to 
OEI-07-16-00070  create the North Carolina Financial Investigators 
  Academy.  The academy provided instruction to 
financial investigators on topics such as elements of 
criminal law; search and seizure procedures; 
interviewing; and testifying.  The Unit required all of 
its newly hired financial investigators to attend the 
academy, regardless of previous experience. 
Ohio  Successful  The Unit helped to establish the Ohio Program Integrity 
OEI-07-14-00290  partnerships  Group, which combines the knowledge and resources 
of all the State agencies that are responsible for 
Medicaid program integrity.  In addition, the Unit 
spearheaded the Managed Care Program Integrity 
Group which meets quarterly. 
  Use of technology  The Unit employed a special projects team to provide 
technical support to all of its investigative teams. 
Oregon  Outreach activities  The Unit created a group that provided outreach to 
OEI-09-16-00200  help increase referrals of patient abuse or neglect and 
facilitate Unit work in remote areas of the State.  This 
group provided outreach about the Units mission and 
legal authorities by establishing Unit liaisons for each 
county in Oregon and attending multidisciplinary team 
meetings at the county level. 
continued on the next page  
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
South Dakota  Outreach activities  The Unit used providers who had previously been 
OEI-07-16-00170  investigated for Medicaid fraud to educate their peers.  
These providers gave presentations alongside Unit staff 
at training conferences, which helped to highlight 
Medicaid billing issues and the implications of Medicaid 
fraud. 
Tennessee  Successful  Unit staff and stakeholders formed relationships with 
OEI-06-12-00370  partnerships  partners through participation on task forces, such as 
the Provider Fraud Task Force and the Federal Health 
Care Fraud Task Force, which was key to the Units 
productivity. 
Texas  Outreach activities  To help increase the number of referrals, the Unit 
OEI-06-13-00300  instituted outreach to heighten public awareness of the 
Unit and its mission.  The Unit required each 
investigator and investigative auditor to make  
12 outreach contacts per year.  
Utah  Improved staff skills  The Unit required all Unit auditors and investigators to 
OEI-09-13-00490    become trained as Certified Fraud Examiners.  This 
training helped the Unit improve the efficiency and 
effectiveness of its provider fraud investigations. 
  Case management  The Unit used a spreadsheet to track investigator 
tools  workloads, which helped the Unit ensure the timely 
completion of investigations.  The spreadsheet tracked 
the number of cases assigned to each investigator, 
hours spent on each case, and case complexity.  The 
information was also helpful in making decisions about 
assigning new cases to investigators.   
  Focus on managed  Unit management worked with the State Medicaid 
care  agency and MCOs to add provisions in MCO contracts 
to help ensure that MCOs send fraud referrals to the 
Unit.  
continued on the next page  
 
 
   
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OEI-09-18-00180   
Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
Vermont  Successful  The Unit director created Provider Focus Teams in 
OEI-02-13-00360  partnerships  collaboration with the State Medicaid agency.  These 
teams facilitated existing cases, developed provider 
training, and made program recommendations. 
  The Unit Director helped create the Vermont Elder 
Justice Working Group, which consisted of 
representatives from State and Federal advocacy 
groups, regulatory agencies, and law enforcement 
agencies.  The groups mission was to improve health 
care for the elderly living in long-term care facilities by 
improving communication among stakeholders and law 
enforcement agencies. 
Virginia  Successful  The Units partnerships with the Food and Drug 
OEI-07-15-00290  partnerships    Administration, the Internal Revenue Service, and the 
  Social Security Administration led to successful 
Medicaid fraud prosecutions, particularly with regard to 
pharmaceutical manufacturers, and increased Unit 
recoveries. 
Use of technology  The Unit used specialty software designed to read the 
text in a document, analyze it for keywords, and 
systematically code it according to criteria established 
by an analyst.  This improved the Units ability to 
process and track evidence collected during 
investigations and to share that evidence with Federal 
and State partners working on joint cases. 
Washington  Focus on managed  The Unit worked with the State Medicaid agency to 
OEI-09-16-00010  care  revise both the MOU between the Unit and the agency 
    and the agencys contracts with MCOs to ensure that 
  the Unit received copies of all MCO fraud referrals. 
 
The Unit used a case closure form to make numerous 
Program integrity 
program integrity recommendations to State agencies 
improvements  
and tracked the responses to these recommendations 
in a database. 
continued on the next page  
 
   
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Beneficial Practices From OIG Onsite Reports Published in FYs 20122017 (continued) 
STATE   PRACTICE 
REPORT NUMBER  CATEGORY  DESCRIPTION 
West Virginia  Improved staff skills   Unit staff learned new skills and obtained certifications 
OEI-07-13-00080  as Certified Fraud Examiners and Certified Coding 
   Professionals. 
  Focus on managed  The Unit focused on managed care by holding 
care  meetings with MCO administrators to obtain referrals. 
Wyoming  Improved staff skills  The Unit used a MFCU investigator from a neighboring 
OEI-09-16-00530  State to help train its newly hired investigator.  As part 
of the training, the investigator from the neighboring 
State observed work on active Medicaid fraud cases 
and met with the new investigator, Unit management, 
and attorneys to discuss progress.  This was a  
cost-effective training option for the Unit and furthered 
a positive working relationship with the neighboring 
MFCU. 
     
   
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OEI-09-18-00180   
APPENDIX C: FY 2017 MFCU Case Outcomes and 
Open Investigations by Provider Type and Case 
Type 
Exhibit C1: Number of convictions; settlements and judgments; and recoveries by 
provider type and case type 
CRIMINAL  CIVIL 
Settlements 
Amount of  and  Amount of 
PROVIDER TYPE  Convictions  Recoveries  Judgments  Recoveries 
Patient Abuse or Neglect 
Assisted Living Facility  13  $157,249  1  $8,450 
Developmental Disability Facility  3  $2,903  0  $0 
Hospice  0  $0  0  $0 
Nondirect Care Staff  32  $369,413  0  $0 
Nurse Aide (CNA or Other)  112  $72,077  3  $6,190 
Nursing Facilities  8  $7,453  10  $368,203 
Nurse (LPN, RN, NP) or Physician  76  $47,623  0  $0 
Assistant  
Personal Care Aide or Other Home Care  59  $128,878  1  $2,000 
Aide 
Other  68  $12,437,547  1  $7,355 
FraudFacility-Based Medicaid Providers and ProgramsInpatient and/or 
Residential 
Assisted Living Facility  9  $123,880  14  $962,541 
Developmental Disability Facility  0  $0  2  $73,095 
(Residential) 
Hospice   2  $7,361,559  1  $30,229 
Hospital   4  $4,727,897  15  $570,937,362 
Inpatient Psychiatric Services for  0  $0  0  $0 
Individuals Under Age 21 
Nursing Facility  10  $179,507  11  $1,244,577 
Other Inpatient Mental Health Facility  0  $0  3  $749,986 
Other Long-Term Care Facility  1  $85,879  0  $0 
continued on the next page 
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OEI-09-18-00180   
Number of convictions; settlements and judgments; and recoveries by provider type and case 
type (continued) 
CRIMINAL  CIVIL 
Settlements 
Amount of  and  Amount of 
PROVIDER TYPE  Convictions  Recoveries  Judgments  Recoveries 
FraudFacility-Based Medicaid Providers and ProgramsOutpatient and/or 
Day Services 
Adult Day Center  2  $13,754  6  $8,823 
Ambulatory Surgical Center  0  $0  1  $25,836 
Developmental Disability Facility   1  $500  4  $270,222 
(Nonresidential) 
Dialysis Center  0  $0  0  $0 
Mental Health Facility (Nonresidential)  25  $11,376,668  7  $7,286,193 
Substance Abuse Treatment Center  24  $1,187,813  4  $1,785,759 
Other Facility (Nonresidential)  8  $109,752  7  $6,824,645 
FraudLicensed Practitioners 
Audiologist  1  $800  1  $30,000 
Chiropractor  1  $3,113  2  $250,533 
Clinical Social Worker  10  $2,402,458  4  $175,648 
Dental Hygienist  1  $0  0  $0 
Dentist  10  $1,960,914  25  $16,195,746 
Nurse (LPN, RN, or Other Licensed)  87  $8,073,391  5  $16,994 
Nurse Practitioner  0  $0  1  $230,000 
Optometrist  0  $0  0  $0 
Pharmacist  10  $5,330,942  6  $12,242,387 
Physician Assistant  1  $0  0  $0 
Podiatrist  5  $5,117,606  0  $0 
Psychologist  13  $2,745,128  3  $166,817 
Therapist (Non-Mental Health, PT, ST,  5  $88,705  3  $453,656 
OT, RT) 
Other Practitioner  48  $8,976,725  9  $1,472,028 
FraudMedical Services 
Ambulance  13  $5,521,817  4  $2,693,171 
Billing Services  4  $3,073,411  7  $6,227,021 
continued on the next page 
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OEI-09-18-00180   
Number of convictions; settlements and judgments; and recoveries by provider type and case 
type (continued) 
CRIMINAL  CIVIL 
Settlements 
Amount of  and  Amount of 
PROVIDER TYPE  Convictions  Recoveries  Judgments  Recoveries 
FraudMedical Services (continued) 
Home Health Agency  54  $62,468,019  12  $7,391,059 
Lab (Clinical)  8  $3,396,067  8  $6,268,310 
Lab (Radiology and Physiology)  4  $2,046,870  2  $6,750,480 
Lab (Other)  0  $0  3  $84,576 
Medical Device Manufacturer  0  $0  28  $6,134,391 
Pain Management Clinic  2  $1,494,699  4  $21,106,889 
Personal Care Services Agency  49  $2,772,302  14  $3,564,307 
Pharmaceutical Manufacturer  0  $0  426  $289,740,635 
Pharmacy (Hospital)  0  $0  0  $0 
Pharmacy (Institutional Wholesale)  1  $567  67  $27,809,268 
Pharmacy (Retail)  12  $34,712,565  70  $31,737,553 
Suppliers of Durable Medical Equipment,  21  $28,333,624  37  $2,284,941 
Prosthetics, Orthotics and Supplies 
(DMEPOS) 
Transportation (Nonemergency)  18  $4,814,9199  6  $850,747 
Other   17  $1,142,751  21  $6,537,870 
FraudOther Individual Providers 
Emergency Medical Technician or  0  $0  0  $0 
Paramedic 
Nurses Aide (CNA or Other)  24  $42,175  0  $0 
Optician  1  $0  1  $25,000 
Personal Care Services Attendant  474  $5,797,716  20  $219,082 
Pharmacy Technician  5  $609,301  0  $0 
Unlicensed Counselor (Mental Health)  22  $3,937,398  1  $3,525 
Unlicensed Therapist (Non-Mental  5  $124,380  0  $0 
Health) 
Other  58  $5,982,816  5  $99,613 
FraudPhysicians (MD/DO) by Medical Specialty 
Allergist/Immunologist  0  $0  3  $931,554 
Cardiologist  4  $108,003,909  2  $131,370 
continued on the next page 
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OEI-09-18-00180   
Number of convictions; settlements and judgments; and recoveries by provider type and case 
type (continued) 
CRIMINAL  CIVIL 
Settlements 
Amount of  and  Amount of 
PROVIDER TYPE  Convictions  Recoveries  Judgments  Recoveries 
FraudPhysicians (MD/DO) by Medical Specialty (continued) 
Emergency Medicine  0  $0  0  $0 
Family Practice  36  $333,734,767  7  $1,546,877 
Geriatrician  0  $0  1  $31,435 
Internal Medicine  7  $466,045  9  $5,397,157 
Neurologist  1  $0  1  $16,989 
Obstetrician/Gynecologist  1  $0  2  $1,152,623 
Ophthalmologist  1  $2,519,945  1  $49,255 
Pediatrician  3  $238,968  4  $403,554 
Physical Medicine and Rehabilitation  4  $148,716  0  $0 
Psychiatrist  2  $50,079  4  $704,061 
Radiologist  0  $0  3  $3,056,677 
Surgeon  0  $0  0  $0 
Urologist  0  $0  0  $0 
Other MD/DO  14  $8,006,716  17  $4,485,956 
FraudProgram Related 
Managed Care Organization (MCO)  0  $0  2  $31,777,258 
Medicaid Program Administration  6  $760,957  5  $8,174,986 
Other  8  $80,689  14  $8,740,722 
Total  1,528  $693,372,320  961  $1,107,954,185 
         
   
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Exhibit C2: Number of open investigations at the end of FY 2017 by provider type and 
case type 
  OPEN INVESTIGATIONS 
PROVIDER TYPE  Criminal  Civil  Total  
Patient Abuse or Neglect 
Assisted Living Facility  167  2  169 
Developmental Disability Facility  120  1  121 
Hospice  7  5  12 
Nondirect Care Staff  171  1  172 
Nurse Aide (CNA or Other)  521  0  521 
Nursing Facilities  867  75  942 
Nurse (RN, LPN, NP) or Physician Assistant  548  0  548 
Personal Care Aide or Other Home Care Aide  294  0  294 
Other  623  2  625 
FraudFacility-Based Medicaid Providers and ProgramsInpatient and/or 
Residential 
Assisted Living Facility  38  11  49 
Developmental Disability Facility (Residential)  36  5  41 
Hospice   69  54  123 
Hospital  117  215  332 
Inpatient Psychiatric Services for Individuals Under   17  6  23 
Age 21 
Nursing Facility  119  236  355 
Other Inpatient Mental Health Facility  23  38  61 
Other Long-Term Care Facility  16  8  24 
FraudFacility-Based Medicaid Providers and ProgramsOutpatient and/or 
Day Services 
Adult Day Center  77  8  85 
Ambulatory Surgical Center  0  11  11 
Developmental Disability Facility (Nonresidential)  21  9  30 
Dialysis Center  1  49  50 
Mental Health Facility (Nonresidential)  218  46  264 
Substance Abuse Treatment Center  96  33  129 
Other Facility (Nonresidential)  105  52  157 
continued on the next page 
   
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OEI-09-18-00180   
Number of open investigations at the end of FY 2017 by provider type and case type (continued) 
  OPEN INVESTIGATIONS 
PROVIDER TYPE  Criminal  Civil  Total  
FraudLicensed Practitioners 
Audiologist  6  3  9 
Chiropractor  23  7  30 
Clinical Social Worker  95  4  99 
Dental Hygienist  4  2  6 
Dentist  357  80  437 
Nurse (LPN, RN, or Other Licensed)  406  9  415 
Nurse Practitioner  63  1  64 
Optometrist  25  6  31 
Pharmacist  51  36  87 
Physician Assistant  31  0  31 
Podiatrist  21  5  26 
Psychologist  83  6  89 
Therapist (Non-Mental Health, PT, ST, OT, RT)  93  30  123 
Other Practitioner  152  19  171 
FraudMedical Services 
Ambulance  106  19  125 
Billing Services  36  24  60 
Home Health Agency  635  78  713 
Lab (Clinical)  59  411  470 
Lab (Radiology and Physiology)  10  30  40 
Lab (Other)  18  120  138 
Medical Device Manufacturer  2  563  565 
Pain Management Clinic  58  13  71 
Personal Care Services Agency  266  17  283 
Pharmaceutical Manufacturer  148  3,226  3,374 
Pharmacy (Hospital)  0  4  4 
Pharmacy (Institutional Wholesale)  15  238  253 
Pharmacy (Retail)  179  577  756 
Transportation (Nonemergency)  196  13  209 
Suppliers of Durable Medical Equipment, Prosthetics,  191  499  690 
Orthotics, and Supplies (DMEPOS) 
continued on the next page 
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OEI-09-18-00180   
Number of open investigations at the end of FY 2017 by provider type and case type (continued) 
  OPEN INVESTIGATIONS 
PROVIDER TYPE  Criminal  Civil  Total  
FraudMedical Services 
Other   115  176  291 
FraudOther Individual Providers 
Emergency Medical Technician or Paramedic  2  0  2 
Nurse Aide (CNA or Other)  59  1  60 
Optician  2  5  7 
Personal Care Services Attendant  1,855  13  1,868 
Pharmacy Technician  10  0  10 
Unlicensed Counselor (Mental Health)  109  6  115 
Unlicensed Therapist (Non-Mental Health)  8  0  8 
Other  257  38  295 
FraudPhysicians (MD/DO) by Medical Specialty 
Allergist/Immunologist  8  3  11 
Cardiologist  22  18  40 
Emergency Medicine  11  8  19 
Family Practice  279  16  295 
Geriatrician  5  0  5 
Internal Medicine  172  16  188 
Neurologist  32  2  34 
Obstetrician/Gynecologist  29  6  35 
Ophthalmologist  12  8  20 
Pediatrician  29  4  33 
Physical Medicine and Rehabilitation  26  8  34 
Psychiatrist  87  8  95 
Radiologist  8  6  14 
Surgeon  37  6  43 
Urologist  4  1  5 
Other MD/DO  283  75  358 
continued on the next page 
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Number of open investigations at the end of FY 2017 by provider type and case type (continued) 
  OPEN INVESTIGATIONS 
PROVIDER TYPE  Criminal  Civil  Total  
FraudProgram Related 
Managed Care Organization (MCO)  14  86  100 
Medicaid Program Administration  15  14  29 
Other  67  125  192 
TOTAL  11,157  7,556  18,713 
 
 
 
 
 
 
 
 
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OEI-09-18-00180   
ENDNOTES 
1 SSA  1903(q)(3)-(4).  Regulations at 42 CFR  1007.11(b)(1) add that a Units responsibilities may include reviewing 
complaints of misappropriation of patients private funds in residential health care facilities.  Unit investigations of 
patient abuse and neglect are limited to incidents occurring in: (1) health care facilities that receive Medicaid 
payments, or (2) board and care facilities, which are residential settings that receive payment on behalf of two or 
more unrelated adults who reside in the facility and for whom nursing care services or a substantial amount of 
personal care services are provided.  SSA  1903(q)(4). 
2 SSA  1902(a)(61). 
3 North Dakota and the territories of American Samoa, Guam, the Northern Marianas Islands, Puerto Rico, and the 
U.S. Virgin Islands have not established Units. 
4 SSA  1903(a)(6).  Units receive 90 percent Federal reimbursement for their first 3 years of operation.   
5 OIG analysis of FY 2017 MFCU Annual Statistical Reports. 
6 SSA  1903(q)(2); 42 CFR  1007.9(a). 
7 SSA  1903(q)(6); 42 CFR  1007.13. 
8 42 CFR  1007.9(d). 
9 SSA  1903(q)(1). 
10 42 CFR  1007.20.  To conduct data mining, MFCUs must receive preapproval from OIG.   
11 SSA  1128(a), 42 USC  1320a-7.  See also OIG Exclusions Background Information.  Accessed at 
http://oig.hhs.gov/exclusions/background.asp on March 13, 2018. 
12 SSA  1903(a)(6), (q).  The SSA authorizes the Secretary of HHS to award grants to the Units; the Secretary 
delegated this authority to the OIG. 
13 42 CFR  1007.15. 
14 MFCU performance standards are published at 77 Fed. Reg. 32645 (June 1, 2012).   
15 New York Attorney Generals Press Office, A.G. Schneiderman Announces Sentencing of Long Island Pharmacist of up 
to 24 Years in Prison For Selling Black-Market HIV Medications.  Accessed at https://ag.ny.gov/press-release/ag-
schneiderman-announces-sentencing-long-island-pharmacist-24-years-prison-selling on February 26, 2018.   
16 District of Massachusetts U.S. Attorneys Office, Mylan Agrees to Pay $465 Million to Resolve False Claims Act 
Liability.  Accessed at https://www.justice.gov/usao-ma/pr/mylan-agrees-pay-465-million-resolve-false-claims-act-
liability on March 12, 2018. 
17 To calculate the return on investment (ROI) for MFCUs, we first calculated the total recoveries by adding the  
$693 million in criminal case recoveries to $1.1 billion in civil case recoveries.  We then divided the $1.8 billion in total 
recoveries by the total MFCU grant expenditures of $276 million, resulting in the overall ROI of $6.52. 
18 To calculate the percentages for civil global and nonglobal recoveries, we used the total civil recoveries of  
$1,108 million.  
   
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report  28 
OEI-09-18-00180   
ACKNOWLEDGMENTS 
Linda Min served as the team leader for this study, and China Tantameng 
served as the lead analyst.  Office of Evaluation and Inspections staff who 
provided support include Susan Burbach, Jordan Clementi, Matt DeFraga, 
and Kevin Farber.  
We would also like to acknowledge the contributions of other Office of 
Inspector General staff, including, Alexis Crowley, Lonie Kim,  
Christine Moritz, and Jessica Swanstrom.   
This report was prepared under the direction of Blaine Collins, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Abby Amoroso and Michael Henry, Deputy Regional 
Inspectors General; and in consultation with 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.
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report  29 
OEI-09-18-00180   
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. 
Medicaid Fraud Control Units Fiscal Year 2017 Annual Report   
OEI-09-18-00180