Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
I S M
LLINOIS  TATE  EDICAID 
 
 
F C U :   
RAUD  ONTROL  NIT   
 
2  012 O R
  NSITE  EVIEW 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
  Stuart Wright  
 
Deputy Inspector General for 
 
Evaluation and Inspections 
 
June 2013 
OEI-07-12-00510   
   
EXECUTIVE SUMMARY:  ILLINOIS STATE MEDICAID FRAUD CONTROL  
UNIT:  2012 ONSITE REVIEW 
OEI-07-12-00510 
 
WHY WE DID THIS STUDY 
 
The Office of Inspector General (OIG) oversees all Medicaid Fraud Control Units 
(MFCU or Unit) with respect to Federal grant compliance.  As part of this oversight, 
OIG reviews all Units. These reviews assess Unit performance in accordance with the 
12 MFCU performance standards and monitor Unit compliance with Federal grant 
requirements.   
 
HOW WE DID THIS STUDY  
 
We based our review on an analysis of data from seven sources:  (1) a review of policies 
and procedures and documentation of the Units operations, staffing, and caseload; 
(2) a review of financial documentation; (3) structured interviews with key stakeholders; 
(4) a survey of Unit staff; (5) structured interviews with the Units management; (6) an  
onsite review of case files; and (7) an onsite review of Unit operations. 
 
WHAT WE FOUND 
 
Our review of the Illinois Unit identified instances of noncompliance with Federal 
regulations and instances where the Unit could better adhere to performance standards.  
The Units organizational structure with regard to the Units attorneys conflicts with 
certification requirements and attorneys assigned to the Unit are ineligible for Federal 
reimbursement.  Opportunities for improvement in the Units adherence to the 
performance standards include, but are not limited to, reporting all convicted individuals 
for exclusion purposes, updating the Units Memorandum of Understanding with the 
State Medicaid agency, improving communication and collaboration efforts with external 
stakeholders, and establishing a minimum number of training hours required for each 
professional discipline. 
   
WHAT WE RECOMMEND 
 
We recommend that the Illinois Unit submit a corrective action plan within 30 calendar 
days from the date of the final report to resolve the Units noncompliance with the 
certification requirements and the full-time employment rule for attorneys.  The Unit 
should also work with OIGs MFCU oversight division to ensure full compliance with 
each of the 12 performance standards.  The Illinois Unit concurred with six 
recommendations and concurred in part with four recommendations. 
   
     
   
TABLE OF CONTENTS 
 
Objective......................................................................................................1 

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

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

Findings........................................................................................................8 

For FYs 2009 through 2011, the Unit reported combined civil and 

criminal recoveries of nearly $141 million and 97 convictions .......8 

The Units organizational structure for its attorneys conflicts  

with the MFCU certification standards, and attorneys  

assigned to the Unit are ineligible for FFP ......................................9 

With the exception of a lack of compliance with certification 

standards and the full-time employment rule, our review of 

financial documentation found no deficiencies in the Units 
  
fiscal control of its resources .........................................................10 

The Unit did not report to OIG the identities of 56 convicted 

providers for the purpose of program exclusion ............................10 

The Units MOU with the State Medicaid agency does  

not reflect current requirements .....................................................11 
 
Unit case files lacked supervisory approval and documentation  

of reviews of case files...................................................................11
  
The Unit investigated three cases in our sample unrelated to 

Medicaid and one case that did not follow prosecution referral 

protocol ..........................................................................................12 

The Units director and management team reported that the  

case management and tracking system is inadequate ....................12 

Key stakeholders reported a lack of communication and 

cooperation from the Units Northern command ...........................13 

Unit training plans did not identify a minimum number of  

required training hours for each professional discipline ................14 

Other observations: Effects of Unit director turnover and  

drug diversion awareness training .................................................14 

Conclusion and Recommendations ............................................................16 

   
     
   
Appendixes ................................................................................................20 

A: Social Security Act ...................................................................20 

B: Performance Standards.............................................................21 

C: Population and Sample Distribution of Case Files Open  

Any Time During Federal Fiscal Years 2009 Through 2011 .........25 

D: Investigations Opened and Closed by Provider Category  

for Federal Fiscal Years 2009 Through 2011 .................................26 

E: Medicaid Fraud Control Unit Referrals by Provider  

Category for Federal Fiscal Years 2009 Through 2011 .................28 

F: Illinois Medicaid Fraud Control Unit Organization Chart .......29 

G: Point Estimates and 95-Percent Confidence Intervals Based  

on Our Reviews of Case Files........................................................30 

H: Unit Comments ........................................................................31 

Acknowledgments......................................................................................34 

 
     
   
OBJECTIVE 
To conduct an onsite review of the Illinois State Medicaid Fraud Control Unit 
(MFCU or Unit). 
BACKGROUND 
The mission of the State MFCUs, as established by Federal statute, is to 
investigate fraud and patient abuse and neglect by Medicaid providers and to 
prosecute it under State law.1  Under the Medicaid statute, each State must 
maintain a certified Unit, unless the Secretary of Health and Human Services 
determines that operation of a Unit would not be cost-effective because 
(1) minimal Medicaid fraud exists in that State, and (2) the State has other,  
adequate safeguards to protect Medicaid beneficiaries from abuse and 
neglect.2  Currently, 49 States and the District of Columbia (States) have 
created such Units.3  In Federal fiscal year (FY) 2012, combined Federal and 
State grant expenditures for the Units totaled $217.3 million, and Units 
employed 1,901 individuals.4  
Units are required to have either Statewide authority to prosecute cases or 
formal procedures to refer suspected criminal violations to an office with 
such authority.5  Units must be located in the State Attorney Generals office 
or another State government office with statewide prosecutorial authority, or 
operate under a formal arrangement with the State Attorney Generals office.6      
   
 
1 Social Security Act (SSA)  1903(q)(3).  

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

responsibilities may include reviewing complaints of misappropriation of patients private 

funds in residential health care facilities. 

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

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

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

5  SSA  1903(q)(1). 
 
6  Ibid.  59  Fed. Reg. 49080  (Sept. 26, 1994).   Accessed at  http://oig.hhs.gov on 
 
November 22, 2011.  Note that the Office of Inspector General (OIG) published revised 

performance standards on June 1, 2012.  (See 77 Fed. Reg. 32645.)  The standards referred 
 
to in this report are those from 1994, which were in effect at the time of our review. 

Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   1   
   
In 44 States the Units are located within offices of State Attorneys General; 
in Illinois and the remaining 5 States,  the Units are located in other State 
agencies.7, 8  Generally, Units within other State agencies must refer cases to 
other offices with prosecutorial authority, such as an Attorney General or  
States Attorney.9 See Appendix A for the authorized structures for 
organizing a State MFCU. 
To carry out its duties and responsibilities in an effective and efficient 
manner, each Unit must employ an interdisciplinary staff that consists of at 
least an investigator, an auditor, and an attorney.10 Unit staff review 
complaints provided by the State Medicaid agency and other sources to 
determine their potential for criminal prosecution.  In FY 2012, the 50 Units 
collectively reported 1,337 convictions and 823 civil settlements or 
judgments.11  That year, the Units reported recoveries of approximately 
$2.9 billion.12  
Each Unit must be a single, identifiable entity of the State government, 
distinct from the State Medicaid agency, and each Unit must develop a 
formal agreementi.e., a Memorandum of Understanding (MOU)that 
describes the Units relationship with that agency.13   
Oversight of the MFCU Program 
The Secretary of Health and Human Services delegated to OIG the authority to 
annually certify the Units and to administer grant awards to reimburse States 
for a percentage of their costs of operating certified Units.14   All Units are 
currently funded by the Federal Government on a 75-percent matching basis, 
with the States contributing the remaining 25 percent.15  To receive Federal 
 
7 The Units share responsibility for protecting  the integrity of the Medicaid  program with the 
section of the  State Medicaid agency that functions as the Program Integrity Unit.  Some  
States also employ a Medicaid Inspector  General  who conducts and coordinates fraud, waste, 
and abuse activities for the State agency. 
8 In Connecticut, the Unit is located within the Chief States Attorneys office, which has 
statewide prosecutorial authority.  In  West Virginia and the District of Columbia, the Unit is 
located within the Inspector Generals office.  In Tennessee, the Unit is located in the Bureau 
of Investigation, and in Iowa, it is located in  the Department of Inspections and  Appeals.  
For each  of these five Units, the Unit attorneys are located  within the same organizational 
component as the Unit itself,  according to  the information these States gave OIG.     
9  SSA  1903(q). 
 
10 SSA  1903(q)(6) and 42 CFR  1007.13. 
 
11 OIG,  State Medicaid Fraud Control Units  Fiscal Year 2012 Grant Expenditures and 

Statistics. Accessed at http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/ on 
 
March 7,  2013. 

12 Ibid.  

13  SSA  1903(q)(2); 42  CFR  1007.5  and 1007.9(d).  
 
14 The portion of funds reimbursed to States by the Federal  government for  its share of 
 
expenditures for the Federal  Medicaid program, including  the MFCUs, is  called Federal 
 
Financial Participation  (FFP). 

15  SSA  1903(a)(6)(B).  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   2   
   
reimbursement, each Unit must submit an application to OIG.16 OIG reviews 
the application and notifies the Unit of its approval and certification.  Approval 
and certification are for a 1-year period; the Unit must be recertified each year 
thereafter.17    
Under the Medicaid statute, States must operate Units that effectively carry out 
their statutory functions and meet program requirements.18  OIG developed and 
issued 12 performance standards to define the criteria it applies in assessing  
whether a Unit is effectively carrying out statutory functions and meeting 
program requirements.19  Examples of criteria include maintaining an adequate 
caseload through referrals from several sources, maintaining an annual training 
plan for all professional disciplines (i.e., attorneys, investigators, and auditors), 
and establishing policy and procedure manuals for the Units operations.  See 
Appendix B for a complete list of the performance standards.  
Illinois State MFCU  
The Medicaid Fraud Control Bureau in Illinois operates as a division of the 
Illinois State Police (ISP)  and acts as the State MFCU.  At the time of our 
review, the Units 63 employees were located in two regions:  the Northern 
and Southern commands.20, 21  The Unit conforms to the ISP command 
structure. The Unit director is located in Springfield, and holds the rank of 
captain. The Northern and Southern command supervisors hold the rank of 
lieutenant.  First-line supervisors hold the rank of master sergeant and report 
to a lieutenant. Investigators, auditors, and support staff are supervised 
within this structure.  
The Unit employs investigators and auditors, but does not directly employ 
attorneys. Rather, the Unit has an MOU, dated March 14, 2005, establishing 
a formal working relationship with the Illinois Office of the Attorney 
General. Under the terms of the MOU, the attorneys are employees of the 
Attorney Generals office and are supervised by that office, although they are 
assigned to work with the Unit.  Illinois is the only MFCU organized in this 
manner.  (See Appendix F for the Units organization chart.) 
 
16 42 CFR   1007.15(a). 

17 42 CFR   1007.15(b) and  (c). 

18  SSA  1902(a)(61). 
 
19 59 Fed. Reg. 49080 (Sept. 26, 1994).  Accessed at http://www.oig.hhs.gov on 
  
November 22, 2011.  OIG published revised performance standards on  June 1, 2012.
   
(see 77 Fed. Reg. 32645.)  The standards referred to in this  report are the 1994 standards,
  
which were  in effect during  the review period  of  FYs 20092011.  

20 The Northern  command staff work  from Tinley Park, Sterling, East Moline, and 

Des Plaines, and the Southern  command staff work  from the State capital of Springfield and
  
the cities of Collinsville, DuQuoin,  Effingham, and Mattoon.  

21 OIG analysis of the 2012 Illinois Recertification Questionnaire to MFCU Director    
Review Period April 1, 2011, Through  March 31, 2012. 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   3   
   
The Unit refers a case for prosecution depending on whether the county in 
which the case is to be prosecuted is located in the Northern, Central, or 
Southern Districts of Illinois. A case within the venue of the U.S. District 
Court, Northern District of Illinois, is referred for prosecution to the Attorney 
Generals office. The Attorney Generals office may prosecute the case, or 
permit the MFCU to refer the case to another prosecuting authority.  A case 
referred for prosecution within the Central District of Illinois is referred to 
the Central Illinois Healthcare Fraud Task Force (and thereby to the Attorney 
General), to determine the appropriate prosecuting authority.  Finally, the 
Unit director, in consultation with the Chief MFCU Prosecutor, has the 
discretion to determine the appropriate prosecuting authority for a case 
within the Southern District of Illinois. 
For FY 2011, the Illinois Unit was authorized to receive $9.2 million in 
Federal funds, but actually expended just under $7.3 million in Federal funds, 
and $2.4 million in State matching funds.22  Total combined Federal and State 
Medicaid expenditures in the State of Illinois increased from $13 billion in 
FY 2009 to $13.6 billion in FY 2011.23  
For FYs 2009 through 2011, the Unit received an average of 1,628 referrals 
per year from all sources. The Illinois Department of Public Health (DPH), 
the State agency that regulates, licenses, and inspects nursing homes in 
Illinois, refers the majority of complaints that the Unit receives.  DPH 
operates the Central Complaint Registry, a 24-hour hotline that accepts 
complaints of potential abuse, neglect, or exploitation occurring in health 
care facilities, as well as reports from consumers and the public.  For 
FYs 2009 through 2011, the Unit received an average of 1,401 complaints 
per year from DPH. 
The Illinois Department of Healthcare and Family Services (HFS), the State 
Medicaid agency, reported referring only a couple of cases per month to the 
Unit. Additional referral sources include OIG, the ISP website, other State 
agencies, and concerned citizens.  
Upon receipt of a referral, a lieutenant determines whether the facts of the 
complaint merit opening a case.  Once a case is opened, the lieutenant  
assigns the case to the appropriate master sergeant, who assigns the case to 
an investigator.  The terms of the MOU with the Attorney Generals office 
requires the Unit director to ensure that the assigned attorneys have the 
opportunity to fully participate in all investigations.  Once the investigation is 
concluded, the Unit refers the case to the Attorney Generals office or 
 
22 OIG analysis of State form SF-425  for FY  2011. 

23 Medicaid Fraud Control  Units FY 2011  Statistical Chart. Accessed at http://oig.hhs.gov  

on January 9, 2013.  

Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   4   
   
another prosecutorial authority, such as a States Attorney or one of the three 
U.S. Attorneys for Illinois who will determine the potential for prosecution. 
Previous Review  
In 2010, OIG conducted an onsite review of the Illinois MFCU and found that 
the Unit: (1) expended grant resources to investigate non-Medicaid-related 
financial exploitation allegations; (2) employed investigators who lacked 
knowledge of the policies and procedures manual; (3) maintained an inadequate 
case management and tracking system; (4) failed to perform regularly 
scheduled supervisory case reviews; (5) lacked staff with extensive 
Medicaid-related investigative experience; and (6) experienced frequent 
turnover in the Unit director position. 
In the 2010 review, OIG recommended that the Unit (1) contact OIG for 
guidance when clarification is required in determining whether a case falls 
within the parameters of 42 CFR  1007.11(b); (2) provide all investigators 
with a copy of the operations manual; (3) continue to work with the 
Information Technology staff to obtain and implement an upgraded case 
management and tracking system; (4) conduct regularly scheduled supervisory 
reviews of case files every 30 days and regularly scheduled command 
reviewsi.e., reviews by the command (second-line) supervisor and the Unit 
directorof case files every 90 days;24 and (5) ensure that new investigators 
continue to receive Medicaid-specific investigative training.  OIG also 
recommended that ISP senior management strive to maintain continuity of the 
supervisory command structure. 
METHODOLOGY 
Our review covered the 3-year period of FYs 2009 through 2011.  We  
analyzed data from seven sources:  (1) a review of policies and procedures 
and documentation of the Units operations, staffing, and caseload for 
FYs 2009 through 2011; (2) a review of financial documentation for 
FYs 2009 through 2011; (3) structured interviews with key stakeholders; 
(4) a survey of Unit staff; (5) structured interviews with the Units 
management; (6) an onsite review of case files that were open in 
FYs 2009 through 2011; and (7) an onsite review of Unit operations, to 
include the Unit headquarters and offices located in the Northern and 
Southern commands.  If interview and survey respondents provided 
information that fell outside our 3-year review period, we used it to explain 
further the results of our analyses. 
 
24 As  noted on  page  3,  first-line supervisors hold the rank of  master sergeant and report to  
either the Northern  or Southern command supervisor, who holds the rank of lieutenant.   The 
two command supervisors report to the Unit director, who holds the rank  of captain.  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   5   
   
We analyzed data from all seven sources to describe the caseload and assess 
the performance of the Unit.  We also analyzed the data to identify any 
opportunities for improvement and any instances in which the Unit did not 
fully meet the performance standards or was not operating in accordance 
with laws, regulations, and policy transmittals.25  
Data Collection and Analysis 
Review of Unit Documentation.  We reviewed policies, procedures, and 
documentation of the Units operations, staffing, and cases, including its 
annual reports, quarterly statistical reports, and responses to recertification 
questionnaires.  We also reviewed the Units policies and procedures 
describing how it detects, investigates, and prosecutes Medicaid cases.  We 
collected data on the number of referrals received by the Unit and the number 
of investigations opened and closed.  
Review of Financial Documentation.  We reviewed Unit policies and 
procedures related to budgeting, accounting systems, cash management, 
procurement, property, and personnel to evaluate internal controls and design 
our tests for financial documentation.  We reviewed the Units claimed 
$25.5 million ($19.1 million Federal share and $6.5 million State share) in  
grant expenditures for FYs 2009 through 2011 to: (1) reconcile final 
Financial Status Reports and the supporting documentation; (2) purposively 
select and review transactions within direct cost categories to determine 
whether costs were allowable; and (3) verify that no indirect costs were 
reported during the period.  We reviewed records from the Payment 
Management System to identify, if any, unusual patterns of drawn-down 
amounts (i.e., amounts withdrawn from the grant funds).  Finally, we 
reviewed revenue accounts to identify program income amounts.  
Interviews With Key Stakeholders.  We conducted structured interviews with 
key stakeholders who were familiar with the operations of the Unit.  
Specifically, we interviewed staff from the Office of the Illinois Attorney 
General; the U.S. District Attorneys from the Northern, Central, and 
Southern districts of Illinois; the Administrator of HFSs Division of Medical 
Programs; HFSs Office of Inspector General (HFS OIG), which serves as 
the States Program Integrity Unit; and management and staff from the 
Illinois Office of the Long-Term  Care Ombudsman and Department on 
Aging. Additionally, we interviewed  Special Agents from OIGs Kansas 
City and Chicago regional offices, who work regularly with the Unit. Each 
of these interviews focused on the Units interaction with external agencies. 
 
25 All relevant  regulations, statutes, and  policy transmittals are available online at 
http://oig.hhs.gov. 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   6   
   
Survey of Unit Staff.  In August 2012, we administered an electronic survey 
of all nonmanagerial Unit staff.  We  requested and received responses from 
each of the 47 nonmanagerial staff members, a 100-percent response rate.  
Our questions focused on operations of the Unit, opportunities for 
improvement, and practices that contributed to the effectiveness and 
efficiency of Unit operations and/or performance.  The survey also sought 
information about the Units compliance with applicable laws and 
regulations. 
Interviews With Unit Management and Staff. We conducted structured 
interviews with the Unit director, the lieutenants, and the master sergeants.  
We also met with the Units chief auditor.  We asked these individuals to 
provide additional information to better illustrate the Units operations, 
identify opportunities for improvement, identify practices that contributed to 
the effectiveness and efficiency of Unit operations and/or performance, and 
clarify information obtained from other data sources. 
Onsite Review of Case Files.  We selected a simple random sample of 
100 cases from the 1,286 cases that were open at some point during 
FYs 2009 through 2011.  We reviewed all files corresponding to these 
sampled cases for documentation of supervisory approval for the opening of 
cases, documentation of closing of cases (if applicable), documented 
supervisory reviews of case files, and documented command reviews of case 
files.  From these 100 cases, we selected a further random sample of 50 cases 
for a more in-depth review of selected issues, such as the timeliness of 
investigations and case development.26  We projected the results of our 
reviews of case files to the population of Unit cases.  See Appendix C for the 
distribution of cases from the population and sample. 
Onsite Review of Unit Operations.  During our September 2012 onsite visit, 
we reviewed the Units workspace and operations.  Specifically, we visited 
the Unit headquarters in the State Capital and selected Northern and Southern 
command offices. 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. 
Standards 
This study was conducted in accordance with the Quality Standards for 
Inspection and Evaluation issued by the Council of the Inspectors General on 
Integrity and Efficiency. 
 
   
 
26  We excluded  from our analysis one case improperly coded as being related to Medicaid.  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   7   
   
FINDINGS 
For FYs 2009 through 2011, the Unit reported combined 
civil and criminal recoveries of nearly $141 million and 
97 convictions 
The Unit reported total combined criminal and civil recoveries of nearly 
$141 million for FYs 2009 through 2011.  Recoveries increased from  
$23 million in FY 2009 to $70 million in FY 2010 and declined to 
$48 million in FY 2011.  Settlements for global (i.e., multi-State) cases 
accounted for $124 million of the total recoveries but only 33 of the Units 
1,286 cases over the 3-year period. Refer to Table 1 below for details 
regarding criminal and civil recoveries.27  
During the review period, the Unit closed 967 investigations and referred 
218 cases for prosecution. Prosecution outcomes include 133 individuals 
charged, 97 criminal convictions, 11 dismissals, and 6 acquittals.28  See 
Appendix D for details on investigations opened and closed by provider 
category for FYs 2009 through 2011. 
Table 1: Illinois MFCU Criminal and Civil Recoveries, FYs 20092011  
Type of  Total  
FY 2009   FY 2010   FY 2011  
Recovery   Recoveries  
Criminal 
$5,113,957   $655,124   $3,341,296   $9,110,417  
Recoveries 
Global 
$17,727,644*  $69,464,241   $44,464,326   $124,098,774  
Recoveries  
Non-Global 
$341,620   $7,089,594   $126,240   $7,557,454 
Civil Recoveries  
 Total     
$22,841,621  $70,119,365   $47,805,622   $140,766,645  
     Recoveries  
Source:  OIG review of Unit self-reported data and Quarterly Statistical Reports, FYs 20092011. 
 
* The Unit believed that it was not required to report the Federal portion of global recoveries in 2009. The  
Federal portion of  the Units global  case recoveries was $29,098,445 in 2010 and $21,218,058 in 2011. 
 
Referrals to the Unit decreased during the period of review 
The Unit reported 2,362 referrals in FY 2009, 1,475 in FY 2010, and 1,042 in 
FY 2011. DPH accounted for 90 percent of all referrals to the Unit in 
FY 2009. The Unit director reported that many DPH referrals were 
complaints related to food quality and similar issues outside the scope of the 
 
27 Global cases are civil false-claims actions  involving the U.S. Department of Justice and  
other State MFCUs.  The National Association of Medicaid Fraud Control Units facilitates 
the settlement of global cases. 
28  One individual was convicted in two different cases.  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   8   
   
grant. The Unit director also reported that educating DPH about what 
constitutes criminal abuse and neglect had decreased that agencys 
proportion of the Units referrals from 90 percent in 2010 to 76 percent in 
2011. 
The Unit also reported a significant decline in referrals from HFS, which are 
routed to the Unit through HFS OIG.  HFS OIG provided 129 referrals in 
FY 2009, 62 referrals in FY 2010, and 22 referrals in FY 2011. Unit and 
HFS management, and the HFS Inspector General, who was newly appointed 
in 2012, attributed the decline in referrals to issues internal to OIG that 
existed prior to his appointment.  Reportedly, as a result, many of the 
referrals from HFS to HFS OIG were not forwarded to the Unit.  The HFS 
Inspector General is a former Unit attorney and has made positive efforts to 
reestablish communication and referral processes between the two agencies.  
See Appendix E for details on referrals received by provider category for 
FYs 2009 through 2011. 
The Units organizational structure for its attorneys 
conflicts with the MFCU certification standards, and 
attorneys assigned to the Unit are ineligible for FFP 
Our review found that all of the attorneys assigned to the Unit are employees 
of the Attorney Generals office and are neither supervised by, nor report to, 
the Unit director.  This arrangement conflicts with the certification 
requirements in section 1903(q)(6) of the Social Security Act and 
implemented by OIG in 42 CFR  1007.13.  These certification standards 
require Units to employ sufficient staff to effectively and efficiently carry out 
its duties, including employing [o]ne or more attorneys experienced in the 
investigation or prosecution of civil fraud or criminal cases.29  The current 
arrangement, in which all the attorneys assigned to the MFCU are employed 
by the Attorney Generals office, does not satisfy this requirement, nor does 
it appear to satisfy the statutory definition of a MFCU as a single identifiable 
entity of the State government under 1903(q).   
Further, under 42 CFR  1007.19(e)(4), FFP is not available for the 
performance of a person other than a full-time employee of the Unit; Units 
may only claim FFP for the costs of full-time professional employees.  OIG 
State Fraud Policy Transmittal 89-130 defines a full-time employee as an 
employee who (1) works exclusively on MFCU matters and (2) works under 
the supervision and direction of the Unit.  The policy further states that if an 
employee performs duties under the direction of another State office, such 
 
29  42  CFR  1007.13(a)(1). 
 
30 OIG State Fraud Policy Transmittal 89-1, Clarification of  the Hiring of  Full-time and  

Part-time Employees, Jan. 13, 1989.  Accessed at http://oig.hhs.gov  on November 7, 2012. 

Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   9   
   
an employee would not be considered a full-time employee under the 
program regulations.  The MOU between the Unit and the Attorney 
Generals office supports the finding that Unit attorneys are employees of the 
Attorney Generals office, and instructs that The Attorney General will 
assign eleven MFCU prosecutors who will be supervised by the Attorney 
General with input from the Unit Director. 
In support of recertification by OIG in 2010, 2011, and 2012, the Unit 
submitted organization charts that use a solid line to indicate a direct 
reporting relationship between the Chief Attorney and the Unit director.  See 
Appendix F for the organization chart submitted by the Unit for the 
2012 review.  During our onsite review, we noted that attorneys report 
directly to the Attorney Generals office and learned that the Unit director  
does not provide input on the supervision or performance of the attorneys.  
Further, the director does not directly manage the attorneys and may be 
unable to ensure that they work full-time on MFCU cases.  Our review, 
however, found no evidence to suggest that the attorneys work on activities 
not eligible for FFP. 
With the exception of a lack of compliance with 
certification standards and the full-time employment 
rule, our review of financial documentation found no 
deficiencies in the Units fiscal control of its resources 
According to Performance Standard 11, the Unit should exercise proper 
fiscal control over the Units resources.  Although the Unit was not in 
compliance with certification standards or the full-time employment rule (as 
addressed in the previous finding), the Units expenditures claims for 
FYs 2009 through 2011 represented allowable, allocable, and reasonable 
costs in accordance with applicable Federal regulations.  In addition, the Unit 
maintained adequate internal controls relating to accounting, budgeting, 
personnel, procurement, property, and equipment.   
The Unit did not report to OIG the identities of 
56 convicted providers for the purpose of program 
exclusion 
According to Performance Standard 8(d), when a convicted provider is 
sentenced, the Unit should send a referral letter to OIG within 30 days or 
other reasonable time period for the purpose of excluding that provider from  
Federal health care programs.  The Illinois Unit failed to report 56 of 
97 (58 percent) individuals convicted of fraud, abuse, or neglect.  Sentencing 
for these 56 individuals occurred from 12 months to 47 months prior to our 
onsite review. Failure to report convicted providers in a timely manner to 
OIG for program exclusion enables those providers to continue billing 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   10   
   
Medicaid and Medicare and/or to receive other Federal grants and contracts.  
Providers convicted of health care fraud and patient abuse remain a threat to 
potential victims.   
Subsequent to the completion of our onsite review, the Unit director notified 
the review team that documentation of the convictions previously unreported 
for exclusion purposes had been submitted to OIG as of December 2012.  
The Unit director stated that future exclusion reports will be forwarded to 
OIG. 
Failure to report provider convictions to OIG for the purpose of 
program exclusion resulted in a loss of more than $20,000 to the 
Medicaid program 
Medicaid claims data shows that a single convicted provider, who had not 
been reported to OIG for the purpose of program exclusion, received nearly 
$20,630 from the Medicaid program during the period of our review.  The 
provider was sentenced on May 5, 2009, but received payments for claims 
for attendant care services between August 5, 2009, and December 12, 2012 
(the most recent data available at the time of our review). 
The Units MOU with the State Medicaid agency does not 
reflect current requirements 
According to Performance Standard 10, the Unit should periodically review 
its MOU with the State Medicaid agency and seek amendments, as 
necessary, to ensure it reflects current law and practice.  The current  
operating MOUwhich has an effective date of November 5, 2007lacks 
reference to the State False Claims Acts31, 32 and does not include payment 
suspension provisions for providers who are subject to an ongoing 
investigation related to credible allegations of fraud.33  
Unit case files lacked supervisory approval and 
documentation of reviews of case files 
Performance Standard 6 states that the Unit should have a continuous case 
flow and cases should be completed in a reasonable time.  As a part of this 
effort, managers should approve the opening and closing of cases and 
document any supervisory reviews in the case file.  Ten percent of opening 
investigations and 4 percent of closed cases lacked evidence of documented 
 
31 305 Illinois Compiled Statutes (ILCS) 5 Illinois Public  Aid Code   8A-3 and 8A-7.  
Accessed at http://www.ilga.gov on December 10, 2012. 

32 740 ILCS  175 Illinois False Claims Act  4(a) Civil actions for false claims.  Accessed at 

http://www.ilga.gov on December 10, 2012. 

33 42 CFR    455.23 and 1007.9(e)(1).  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   11   
   
supervisory approval. Our 2010 onsite review also noted that the Unit lacked 
appropriate documentation of reviews of case files. 
Performance Standard 6 also states that supervisory reviews should be 
conducted periodically and noted in the case file.  The Unit conducts two 
types of supervisory reviews: supervisory review (by a first-line 
supervisor, i.e., a master sergeant) and command review (by a second-line 
supervisori.e., the command supervisor, who is a lieutenantand the 
Unit director, who is a captain). The Units policy is to conduct a 
supervisory review of case files every 30 days on all open cases, and to 
conduct a command review of case files every 90 days on all open cases.  
Sixty percent of case files lacked documentation of supervisory review and 
34 percent lacked documentation of command review.34   We assessed 
whether supervisory and command reviews of case files occurred during the 
tenure of the new director (i.e., 2012)although this timeframe was outside 
of our review periodand found that all required reviews were conducted 
for the sampled cases.  See Appendix G for sample sizes and 95-percent 
confidence intervals associated with point estimates.  
The Unit investigated three cases in our sample 
unrelated to Medicaid and one case did not follow 
prosecution referral protocol  
We identified investigations that involved a missing iPod, and a physician 
alleging that she had not been paid by a group practice that employed her.  
These do not appear to be Medicaid cases.  Another case in our selected 
sample involved a pair of stolen motorcycles; however, the Unit director 
stated that the case had been mistakenly archived as a MFCU case in an 
administrative error and had not been investigated by the Unit.  Finally, we 
noted one investigation in which the Unit referred a case within the Central 
District to a States Attorney for prosecution that, after the referral was 
declined, was forwarded to the Attorney Generals office. The MOU 
between the agencies requires that cases in the Central District are to be  
referred to the Healthcare Fraud Task Force first. 
The Units director and management team reported the 
case management and tracking system is inadequate 
According to Performance Standard 3, the Unit should establish an adequate, 
computerized case management and tracking system.  During our surveys of 
Unit staff and interviews with management, the Unit director reported a lack 
 
34 For the purposes of this report, supervisory approval to  open and close a case does not  
constitute a review of the case file.  Periodic supervisory review indicates that a supervisor  
reviewed a case more than once between the opening and closing of the case. 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   12   
   
of confidence in the case management and tracking system.  Other Unit 
managers reported that the system is inadequate and loses information, 
requiring staff to reenter the data from archived sources.  Results from our 
staff survey similarly revealed responses that indicated the system is old or 
outdated, loses information, and is not user friendly.    
During our onsite review, we assessed the system and found that the variable 
field for tracking case reviews was little more than an open text field.  Issues 
with the case management and tracking system remain an unresolved finding 
from our 2010 onsite review. 
Key stakeholders reported a lack of communication and 
cooperation from the Units Northern command 
According to Performance Standard 8, the Unit will cooperate with the OIG 
and other Federal agencies, whenever appropriate and consistent with its 
mission, in the investigation and prosecution of health care fraud.  Our 
interviews with key stakeholders revealed that the Unit has developed an 
effective relationship with the Office of the Long-Term Ombudsman.  
However, room exists for improved communication and cooperation with 
other external stakeholders. 
Stakeholders who primarily interacted with the Northern command offices 
reported that improved communication and more interagency cooperation 
would benefit all parties. The U.S. Attorney for the Northern District of 
Illinois expressed concern that the Northern command disregarded input on 
cases, which impeded interagency cooperation.  We also learned that 
although the Unit management has a cordial relationship with OIGs Office 
of Investigations staff, high Unit staff turnover and a lack of regular dialogue 
between the agencies impeded productivity.  The Special Agent in Charge for 
OIGs Chicago region and the U.S. Attorney for the Northern District of 
Illinois expressed an interest in improving their working relationships with 
the Unit.  
In contrast, stakeholders working with the Southern command offices were 
complimentary of the Unit and reported effective working relationships with 
staff.  The Assistant Special Agent in  Charge of OIGs St. Louis field office 
works regularly with Unit staff, and reported that his office maintains great 
communication and enjoys a close working relationship with the Southern 
command. He also noted that the Unit routinely participates in search 
warrants and assists with cases as needed.  Further, the U.S. Attorneys  
Office for the Southern District of Illinois described its relationship with the 
Unit as excellent and productive. 
   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   13   
   
Unit training plans did not identify a minimum number 
of required training hours for each professional 
discipline 
According to Performance Standard 12, the Unit should maintain an annual 
training plan for all professional disciplines that includes a minimum number 
of hours of training required for each professional discipline.  The Unit had 
training plans and made funds available to staff for training.  However, the 
training plan did not include a minimum number of training hours for each 
professional discipline. All staff reported that the Unit provided them with 
training opportunities and that the training they received aided the mission of 
the Unit.35    
Other observations:  Effects of Unit director turnover 
and drug diversion awareness training  
In addition to assessing the Units compliance with relevant statutes and 
regulations and its performance consistent with each of the performance 
standards, we made two observations involving a potential deficiency and a 
noteworthy practice that might be of interest to other Units.   
Unit director turnover 
Between October 2008 and September 2011, the Illinois Unit employed six 
acting and/or permanent directors.  The current director was appointed in 
December 2011.  Twenty percent of the respondents to the Unit staff survey 
mentioned that the frequency of Unit director turnover is problematic.  
Although the length of tenure of Unit directors is not specified in the 
performance standards, a high turnover rate with directors may have a 
detrimental effect on the effectiveness, efficiency, and morale of a Unit.   
Drug diversion awareness training 
The Unit has an initiative to provide nursing home staff with drug diversion 
awareness training to reduce instances of caregivers diverting residents 
prescription drugs for personal use or sale.  Unit management reported that 
investigators regularly visit nursing homes to inspect logbooks and train staff 
to identify dispensing irregularities.  Investigators encourage placement of a 
three-digit numeral behind the names of staff that dispenses drugs, to identify 
the person.  The practice has reportedly resulted in a drop in diversion cases 
 
35 Although  we reviewed training records,  we did not evaluate the staffs professional  
qualifications.  Rather, we applied the performance standards to evaluate whether the Unit 
maintained a formal training  plan for each professional discipline and assessed training 
opportunities specific to Unit operations.  We recognize that attorneys, investigators, and 
auditors receive professional and law enforcement training, and that the lack of an annual 
training plan does not suggest that professional staff are unqualified.  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   14   
   
within nursing homes because [w]hen you start to educate the 
administrators, theyre able to pick up problems.   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   15   
   
CONCLUSION AND RECOMMENDATIONS 
For FYs 2009 through 2011, the Unit reported combined civil and criminal 
recoveries of nearly $141 million, of which $124 million represented global 
case recoveries. The Unit referred 218 cases for prosecution, which resulted 
in 97 convictions, 11 dismissals, and 6 acquittals. 
The Unit director reported that educating DPH has improved the quality of its 
referrals and decreased markedly the number of referrals unrelated to the 
agencys mission.  Additionally, numerous HFS referrals routed through HFS 
OIG were not forwarded to the Unit. 
The organizational charts submitted in support of the Units 2010 and 
2012 onsite review indicated that attorneys assigned to the Unit were 
supervised by the Unit director.  However, our review found that the Unit 
director neither supervises the attorneys nor contributes to their performance 
appraisals. Thus, the Unit does not meet the certification staffing 
requirements, nor do the attorneys meet the definition of the full-time 
employee rule.  FFP is not available for the compensation of persons other 
than full-time employees of the Unit.  
Because the Units attorney structure for its attorneys is not compliant with  
the certification staffing requirements and the full-time employment rule for 
attorneys, the Unit must submit a corrective action plan due within 
30 calendar days from the date of the final report issuance to resolve 
noncompliance, and work with OIGs MFCU oversight division to ensure 
certification requirements are met and that that FFP is available in the future 
for attorneys.  
For FYs 2009 through 2011, the Unit did not report the identities of all 
convicted providers to OIG for the purpose of program exclusion, which 
resulted in a loss of approximately $20,000 to the Medicaid program.  The 
Units cases lacked documentation of supervisory reviews and detailed 
investigatory interview notes.  The Units current MOU with the State 
Medicaid agency failed to comply with all Federal requirements.  We also 
noted during our review of case files that the Unit opened cases that were 
unrelated to Medicaid.  In addition, Unit management and staff reported that 
the computerized case management and tracking system remains inadequate, 
an issue we also noted during our 2010 Unit review.  We also found that the 
Northern commands communication and cooperation with key stakeholders 
requires improvement, and that the Units staff training plan did not identify 
the number of training hours to be required for each professional discipline.  
External stakeholders and Unit staff mentioned the turnover rate within the 
directors office impeding productivity.  Although the length of tenure of 
Unit directors is not specified in the performance standards, OIG has 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   16   
   
concerns that this issue affects the effectiveness and efficiency of Unit 
operations. 
Finally, Unit supervisors reported that providing nursing home staff with 
drug diversion awareness and logbook inspection trainings has been 
beneficial to Unit operations, and reduced the number of drug diversion 
crimes committed.   
We recommend that the Illinois Unit: 
Submit a Corrective Action Plan to Address Noncompliance With 
Certification Requirements 
Section 1903(q)(6) of the Act, 42 CFR  1007.13, and OIG State Fraud 
Policy Transmittal 89-1 require the Unit to employ and supervise full-time 
professional staff, including at least one Unit attorney.  Because the Units 
attorney structure is not compliant with the certification staffing requirements 
OIG may be unable to recertify the Unit in the absence of a reorganization of 
the Unit or other acceptable remedy.   
Submit a Corrective Action Plan to Address Noncompliance With 
the Full-Time Employment Rule for Attorneys  
Section 1903(q)(6) of the Act, 42 CFR  1007.13, and OIG State Fraud 
Policy Transmittal 89-1 require the Unit to employ and supervise full-time 
professional staff. Because the Units attorney structure is not compliant 
with the full-time employment rule, FFP is not available for attorneys who 
are employed and supervised by the Attorney Generals office.   
Note: OIGs expectation is that the Unit submit a single Corrective Action 
Plan that addresses the issues identified above.  This Corrective Action Plan 
is due within 30 calendar days from the date the final report is issued. 
We also recommend that the Illinois Unit: 
Refer Individuals for the Purpose of Program Exclusion to OIG 
Within the Appropriate Timeframe  
The Unit should make certain that individuals convicted of fraud, abuse, and 
neglect are reported within 30 days of their sentencing, in accordance with 
Performance Standard 8(d) of the revised performance standards. 
Update the Units MOU With the State Medicaid Agency to 
Comply With Federal Grant Requirements 
The Unit should update the MOU with HFS to include language regarding 
the Illinois False Claims  Acts and provider payment suspension provisions.  
Ensure That All Case Files Contain Opening and Closing 
Investigative Memoranda, Documented Supervisory Approvals, 
and Documented Periodic Supervisory Reviews  
Ensure Referrals for Prosecution Follow Established Protocol 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   17   
   
Ensure Investigations Are Related to Medicaid and Repay Grant 
Funds for Ineligible Cases 
The Unit should not investigate cases outside the scope of the Federal grant 
and should work with OIG to identify the staff hours and expenditures 
associated with the ineligible cases to repay the Federal grant funds.   
Upgrade the Units Case Management and Tracking System  
The Unit should implement a case management and tracking system that is 
not vulnerable to the loss of data and is user friendly. 
Improve Communication and Cooperation With Key Stakeholders 
The Unit should strive to improve outreach efforts and communication 
among key stakeholders such as HFS, HFS OIG, OIGs Chicago region, and 
the U.S. Attorneys Office for the Northern District of Illinois. 
Establish Training Hour Requirements for Professional 
Disciplines 
The Unit should include a minimum number of training hours for each 
professional discipline in its training plan. 
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
The Illinois Unit concurred with six recommendations and concurred in part 
with four recommendations. Regarding our first and second 
recommendations involving organizational structure, the Unit concurred in 
part. The Unit agreed that there appears to be an issue with the attorneys  
reporting structure but that attorneys assigned to the Unit have been 
dedicated full-time to Medicaid fraud prosecution.  We do not dispute that the 
attorneys appear to be dedicated full-time to Medicaid fraud and other cases 
within the Units authority.  However,  the Unit director does not supervise or 
manage the case work of the attorneys and the Unit thus does not comply 
with the rule that employees be full-time employees that report to and are 
supervised by the Unit. The Illinois State Police and Illinois Attorney 
Generals Office are working to revise their Memorandum of Understanding 
to resolve the compliance issue.  A corrective action plan will be provided to 
OIG in response to the final report.  
Regarding our third recommendation involving reporting of conviction 
information, the Unit concurred.  The Unit submitted all documentation of 
convictions for the period of review for the purposes of program exclusion by 
December 2012.  A procedure has now been put in place to ensure the 
documentation is submitted within 30 days of the sentencing date.  
Regarding our fourth recommendation about the MOU, the Unit concurred.  
The Unit is currently rewriting the MOU with the State Medicaid agency to 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   18   
   
address the issues of provider payment suspension and make mention of the 
Illinois False Claims  Act.  The Unit anticipates that this will be completed by 
October 1, 2013. 
Regarding our fifth recommendation about case file documentation, the Unit 
concurred in part. The Unit director asserts that all cases were opened and 
closed as required but states that not all of these reports made it to the file in 
the Records Bureau. The Unit director will make efforts to correct these 
issues and ensure that supervisory and command case reviews are properly  
documented.  The Unit will develop a checklist for case closures to ensure a 
file is complete before it is forwarded to the Records Bureau.  
Regarding our sixth recommendation about following established protocol, 
the Unit concurred.  The Unit is reviewing prosecution protocols to 
standardize the process of referring cases for prosecution.  This will be 
addressed in the revised MOU with the Attorney Generals Office. 
Regarding our seventh recommendation about ensuring investigations are 
related to Medicaid, the Unit concurred.  The Unit director asserts that all 
cases were opened believing there was a Medicaid nexus; once it was clear 
there was not, all investigations were promptly closed.  
Regarding our eighth recommendation about the case management system, 
the Unit concurred. Subsequent to our review, the Unit has conducted 
research with various other Units to identify a viable system with 
demonstrated capabilities.  The Unit anticipates it will begin implementing a 
new system by December 2013. 
Regarding our ninth recommendation about communicating and cooperating 
with key stakeholders, the Unit concurred in part.  The Unit identified a 
sometimes-stressed relationship with the U.S. Attorneys Office in the  
Northern District. The Unit will continue to reach out to Federal partners.    
Regarding our tenth recommendation about establishing training hour 
requirements, the Unit concurred.  The Unit is revising its training policy to 
include a minimum number of training hours for each professional discipline.  
The Unit anticipates the policy will be  completed within the next 30 days. 
The full text of the Units comments is provided in Appendix H.   
   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   19   
   
APPENDIX A 
Social Security Act 
[SSA  1903(q)(1)] 
(q) For the purposes of this section, the term State Medicaid fraud control 
unit means a single identifiable entity of the State government which the 
Secretary certifies (and annually recertifies) as meeting the following 
requirements: 
(1) The entity: 
(A) is a unit of the office of the State Attorney General or of another 
department of State government which possesses statewide authority to 
prosecute individuals for criminal violations,  
(B) is in a State the constitution of which does not provide for the criminal 
prosecution of individuals by a statewide authority and has formal 
procedures, approved by the Secretary, that (i) assure its referral of suspected 
criminal violations relating to the program under this title to the appropriate 
authority or authorities in the State for prosecution and (ii) assure its 
assistance of, and coordination with, such authority or authorities in such 
prosecutions, or 
(C) has a formal working relationship with the office of the State Attorney  
General and has formal procedures (including procedures for its referral of  
suspected criminal violations to such office) which are approved by the 
Secretary and which provide effective coordination of activities between the 
entity and such office with respect to the detection, investigation, and 
prosecution of suspected criminal violations relating to the program under 
this title.    
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   20   
   
APPENDIX B 
Performance Standards for Medicaid Fraud Control Units36  
[59 Fed. Reg. 49080, Sept. 26, 1994] 
1. 	A Unit will be in conformance with all applicable statutes, regulations 
and policy transmittals.   In meeting this standard, the Unit must meet, 
but is not limited to, the following requirements:  
a. 	  The Unit professional staff must consist of permanent employees 
working full-time on Medicaid fraud and patient abuse matters. 
b. 	  The Unit must be separate and distinct from the single State Medicaid 
agency.  
c. 	  The Unit must have prosecutorial authority or an approved formal 
procedure for referring cases to a prosecutor. 
d. 	  The Unit must submit annual reports, with appropriate certifications, 
on a timely basis. 
e. 	  The Unit must submit quarterly reports on a timely basis. 
f. 	  The Unit must comply with the Americans with Disabilities Act, the 
Equal Employment opportunity requirements, the Drug Free 
workplace requirements, Federal lobbying restrictions, and other such 
rules that are made conditions of the grant. 
2. 	A Unit should maintain staff levels in accordance with staffing 
allocations approved in its budget. In meeting this standard, the 
following performance indicators will be considered: 
a. 	  Does the Unit employ the number of staff that was included in the 
Unit's budget as approved by the OIG [Office of Inspector General]? 
b. 	  Does the Unit employ the number of attorneys, auditors, and 

investigators that were approved in the Unit's budget? 

c. 	  Does the Unit employ a reasonable size of professional staff in 
relation to the State's total Medicaid program expenditures?   
d. 	  Are the Unit office locations established on a rational basis and are 
such locations appropriately staffed? 
3. 	A Unit should establish policies  and procedures for its operations, and 
maintain appropriate systems for case management and case 
tracking.  In meeting this standard, the following performance indicators 
will be considered: 
 
36 These performance standards were the ones in  effect at the time of our review and precede 
the performance standards published in June 2012.    
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   21   
   
a. 	  Does the Unit have policy and procedure manuals? 
b.	   Is an adequate, computerized case management and tracking system  
in place? 
4. 	A Unit should take steps to ensure that it maintains an adequate 
workload through referrals from the single State agency and other 
sources.  In meeting this standard, the following performance indicators 
will be considered:  
a. 	  Does the Unit work with the single State Medicaid agency to ensure 
adequate fraud referrals? 
b.	   Does the Unit work with other agencies to encourage fraud referrals? 
c. 	  Does the Unit generate any of its own fraud cases? 
d.	   Does the Unit ensure that adequate referrals of patient abuse 

complaints are received from all sources? 

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

providers in the State? 

b.	   Does the Unit seek to have a mix of Medicaid fraud and Medicaid 
patient abuse cases? 
c. 	  Does the Unit seek to have a mix of cases that reflect the proportion 
of Medicaid expenditures for particular provider groups? 
d.	   Are there any special Unit initiatives targeting specific provider types 
that affect case mix? 
e. 	  Does the Unit consider civil and administrative remedies when  
appropriate? 
6. 	A Unit should have a continuous case flow, and cases should be 
completed in a reasonable time. In meeting this standard, the following 
performance indicators will be considered:  
a. 	  Is each stage of an investigation and prosecution completed in an 
appropriate time frame?  
b.	   Are supervisors approving the opening and closing of investigations?  
c. 	  Are supervisory reviews conducted periodically and noted in the case 
file? 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   22   
   
7. 	A Unit should have a process for monitoring the outcome of cases.  In 
meeting this standard, the following performance indicators will be 
considered:  
a. 	  The number, age, and type of cases in inventory. 
b. 	  The number of referrals to other agencies for prosecution. 
c. 	  The number of arrests and indictments. 
d. 	  The number of convictions. 
e. 	  The amount of overpayments identified. 
f. 	  The amount of fines and restitution ordered. 
g. 	  The amount of civil recoveries. 
h. 	  The numbers of administrative sanctions imposed. 
8. 	A Unit will cooperate with the OIG and other Federal agencies, 
whenever appropriate and consistent with its mission, in the 
investigation and prosecution of health care fraud.  In meeting this 
standard, the following performance indicators will be considered: 
a. 	  Does the Unit communicate effectively with the OIG and other 
Federal agencies in investigating or prosecuting health care fraud in 
their State? 
b. 	  Does the Unit provide OIG regional management, and other Federal 
agencies, where appropriate, with timely information concerning 
significant actions in all cases being pursued by the Unit? 
c. 	  Does the Unit have an effective procedure for referring cases, when 
appropriate, to Federal agencies for investigation and other action? 
d. 	  Does the Unit transmit to the OIG, for purposes of program  
exclusions under section 1128 of the Social Security Act, reports of 
convictions, and copies of Judgment and Sentence or other acceptable 
documentation within 30 days or other reasonable time period? 
9. 	A Unit should make statutor y or programmatic recommendations, 
when necessary, to the State government. In meeting this standard, the 
following performance indicators will be considered:  
a. 	  Does the Unit recommend amendments to the enforcement provisions 
of the State's statutes when necessary and appropriate to do so? 
b. 	  Does the Unit provide program recommendations to single State 
agency when appropriate? 
c. 	  Does the Unit monitor actions taken by State legislature or State 
Medicaid agency in response to recommendations? 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   23   
   
10. 	A Unit should periodica lly review its memorandum of 

understanding (MOU) with the single State Medicaid agency and 

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

indicators will be considered: 
 
a. 	  Is the MOU more than 5 years old? 
b.	   Does the MOU meet Federal legal requirements? 
c. 	  Does the MOU address cross-training with the fraud detection staff of 
the State Medicaid agency? 
d.	   Does the MOU address the Units responsibility to make program  
recommendations to the Medicaid agency and monitor actions taken 
by the Medicaid agency concerning those recommendations? 
11. 	The Unit director should exercise proper fiscal control over the Unit 
resources. In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit director receive on a timely basis copies of all fiscal 
and administrative reports concerning Unit expenditures from the 
State parent agency? 
b.	   Does the Unit maintain an equipment inventory?  
c. 	  Does the Unit apply generally accepted accounting principles in its 
control of Unit funding? 
12. 	A Unit should maintain an annual  training plan for all professional 
disciplines.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit have a training plan in place and funds available to 
fully implement the plan? 
b.	   Does the Unit have a minimum number of hours training requirement 
for each professional discipline, and does the staff comply with the 
requirement? 
c. 	  Are continuing education standards met for professional staff? 
d. 	  Does the training undertaken by staff aid to the mission of the Unit?   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   24   
   
APPENDIX C 
Population and Sample Distribution of Case Files Open Any Time 
During Fiscal Years 2009 Through 2011 
Population  Population of Case  Sample Case  Sample Case Files 
Data Element Description  
of Case Files   Files (Percentage)   Files   (Percentage)  
FraudCivil (Open)   3  0.2  0  0 
FraudCivil (Closed)   55  4.3  6  6 
FraudCriminal (Open)   115  8.9  8  8 
FraudCriminal (Closed)   306  23.8  24  24 
AbuseCivil (Open)   0  0  0  0 
AbuseCivil (Closed)   5  0.4  0  0 
AbuseCriminal (Open)   23  1.8  1  1 
AbuseCriminal (Closed)   666  51.8  53  53 
Patient Funds-Civil (Open)   0  0  0  0 
Patient FundsCivil (Closed)  1  0  0  0 
Patient Funds-Criminal (Open)   11  0.9  0  0 
Patient FundsCriminal (Closed)  101  7.9  8  8 
Total   1,286  100  100  100 
Source:  Office of  Inspector General analysis of  Illinois Medicaid Fraud Control Unit Quarterly Statistical Reports, FYs 20092011. 
   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   25   
   
APPENDIX D 
Investigations Opened and Closed By Provider Category for 
Fiscal Years 2009 Through 2011 
Table D-1: Fraud Investigations  
Provider Category   Fiscal Year (FY) 2009   FY 2010   FY 2011  
Facilities   Opened  Closed  Opened  Closed  Opened   Closed 
 Hospitals  1  2  0  2  0  1 
     Nursing Facilities   1  1  2  3  2  0 
     Other Long-Term Care   
0  0  0  0  0  0 
     Facilities  
     Substance Abuse Treatment     
0  0  0  0  1  0 
Centers  
     Other   3  5  9  5  3  9 
   Subtotal   5  8  11  10  6  10 
Practitioners   Opened  Closed  Opened  Closed  Opened   Closed 
     Doctors of Medicine or  
15  15  9  14  12  21 
     Osteopathy  
Dentists  8  5  5  5  2  4 
Podiatrists  0  1  1  0  0  1 
     Optometrists/Opticians  2  0  1  1  3  3 
     Counselors/Psychologists  0  1  0  0  2  1 
Chiropractors  0  1  1  0  1  1 
     Other   0  0  1  1  0  0 
   Subtotal   25  23  18  21  20  31 
Medical Support  Opened   Closed   Opened   Closed   Opened   Closed 
 Pharmacies  1  7  10  5  2  4 
Pharmaceutical 
0  2  9  10  16  16 
     Manufacturers  
     Durable Medical Equipment  
1  2  2  0  3  3 
     and/or Supplies 
     Laboratories  1  2  1  1  1  2 
     Transportation Services  4  7  12  3  9  5 
     Home Health Care Agencies   0  3  1  2  1  2 
     Home Health Care Aides   15  23  33  28  63  31 
     Nurses, Physician Assistants,  
Nurse Practitioners, Certified   1  1  0  0  3  0 
Nurse Aides 
Radiologists  1  0  0  0  1  2 
     Medical SupportOther   1  0  0  0  2  1 
   Subtotal   25  47  68  49  101  66 
 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   26   
   
 Table D-1 (Continued):  Fraud Investigations  
Program  Related   Opened  Closed  Opened  Closed  Opened   Closed 
     Managed Care    0  0  1  0  0  1 
Medicaid Program  
4  2  3  3  3  3 
Administration 
Billing Company   0  0  0  0  0  0 
     Other  0  2  3  0  3  0 
   Subtotal   4  4  7  3  6  4 
   Total Provider Categories   59  82  104  83  133  111 
Source:  Office of  Inspector General (OIG) analysis of Unit Annual Reports, FYs 20092011.  
Table D-2: Patient Abuse, Neglect, and Funds Investigations  
Provider Category   FY 2009   FY 2010   FY 2011  
  Opened  Closed  Opened  Closed  Opened   Closed 
     Nursing Facility   94  87  227  198  217  214 
     Other Long-Term Care   0  0  1  7  0  3 
     Nurses/Physicians  
Assistant/Nurse 
17  25  43  37  34  39 
Practitioner/  
     Certified Nurse Aides 
     Home Health Aides  2  1  0  0  1  1 
     Other  21  10  26  40  36  29 
Total   134  123  297  282  288  286 
Source:  OIG analysis of Unit  Annual  Reports, FYs 20092011.  
   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   27   
   
APPENDIX E 
Medicaid Fraud Control Unit Referrals by Provider Category for 
Fiscal Years 2009 Through 2011 
Fiscal Year (FY) 2009   FY 2010   FY 2011  
Abuse  Abuse  Abuse 
Patient  Patient  Patient 
Referral Source   Fraud   and  Fraud   and  Fraud   and 
Funds   Funds   Funds  
Neglect   Neglect   Neglect  
Medicaid Agency  
PI/SURS* 
(Department of 
Healthcare and  119  6  0  58  4  0  18  3  1 
Family Services, 
Office of Inspector 
General)  
Medicaid Agency  
Other (Department  6  2,129   3  2  1,256   12  3  780  13 
of Public Health) 
State Survey  and  
0  0  0  0  0  0  0  0  0 
Certification 
Other State 
15  2  2  34  2  1  64  4  0 
Agencies 
Licensing Board  0  1  0  1  5  0  1  1  0 
Law Enforcement  3  1  6  9  4  6  2  7  1 
Office of Inspector 
7  1  0  15  1  0  9  0  1 
General 
Prosecutors  6  3  1  1  2  1  3  2  3 
Providers  1  13  6  2  17  7  6  26  11 
Provider 
1  0  0  0  0  0  0  1  0 
Associations  
Private Health 
0  0  0  0  0  0  3  0  0 
Insurer 
Long-Term Care 
0  0  1  1  0  3  0  0  5 
Ombudsman  
Adult Protective 
0  0  0  1  0  0  0  0  0 
Services  
Private Citizens  11  3  3  15  6  2  25  7  7 
MFCU** Hotline   3  1  1  1  0  0  20  6  3 
Other   6  1  0  4  1  1  4  1  1 
   Total   178  2,161   23  144  1,298   33  158  838  46 
   Annual Total  2,362   1,475   1,042  
 
* Program Integrity/Surveillance and Utilization Review Subsystem. 

** Medicaid Fraud Control Unit. 

Source:  Office of  Inspector General analysis of  Illinois Medicaid Fraud Control Unit Quarterly Statistical Reports, FYs 20092011. 

   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   28   
   
APPENDIX F 
Illinois Medicaid Fraud Control Unit Organization Chart 
 
 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)  29   
   
APPENDIX G 
Point Estimates and 95-Percent Confidence Intervals Based on  
Our Reviews of Case Files 
We calculated confidence intervals for key data points for our reviews of 
case files. The sample sizes, point  estimates, and 95-percent confidence 
intervals are given for the each of the following:  
Table F-1:  Confidence Intervals for Case File Review  Data  
Sample 
Data Element Description   Point Estimate   95-Percent Confidence Interval  
Size 
Case files missing supervisory approval 
99  10.1%   5.6%17.6%  
for the opening of investigations 
Case files missing documented 
supervisory approval for the closing of  87  3.5%   1.1%10.0%  
investigations 
Case files missing documented periodic 
supervisory reviews (30-day supervisory   82  59.8%   49.1%69.6%  
review of case file) 
Case files missing documented periodic 
supervisory reviews (90-day command  99  34.3%   25.9%44.0%  
review of case file) 
Source:  Office of  Inspector General Analysis of  Illinois Medicaid Fraud Control Unit case files, 2012. 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   30   
   
APPENDIX H 
Unit Comments 
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)  31   
   
 
   
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)  32  Mr. Stuart Wright  Page 3 
May 28, 2013 
reach out to our federal pm1ners. 
I 
Unit training plans did not identify a minimum number of required training hours for each professional  I 
discipline. 
  Establis h Training Hour Req uirements for Professional Disciplines. 
We concur. Our Unit is already revis ing its training policy to include a minimum number of training hours for each 
professional discipline. We anticipate that the policy will be completed within the next 30 days. 
Thank you for taking the time to audit the lllinois MFCU and bringing these conce rns to my attention. Please 
feel tree to contact Captain Willi am Sheridan, MFC U Director, at 2171785-3321, with any further questions regard ing 
this review. 
Sincere ly, 
Hiram Grau 
Director 
Illi nois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)  33   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Brian T.  Whitley, Acting 
Regional Inspector General for Evaluation and Inspections in the Kansas City 
regional office.   
Other Office of Evaluation and Inspections staff who conducted the study 
include Thomas Brannon, Michael J. Brown, Teresa Dailey, Matt DeFraga, 
Julie Dusold Culbertson, and Brian T. Pattison.  Office of  Audit Services staff  
who conducted the study include Tate Clark, Amy Erickson, and Angela 
Wiser.  Office of Investigations staff who conducted the study include Jason 
Weinstock.  Central office staff who provided support include Sarah 
Ambrose, Christine Moritz, and Andrew VanLandingham.  
Illinois State Medicaid Fraud Control Unit:  2012 Onsite Review (OEI-07-12-00510)   34   
Office of  Inspector  General 
 
http://oig.hhs.gov  
 
The mission  of  the Office of Inspector General  (OIG), as mandated by  Public Law  95-452,  as  
amended, is  to protect the integrity of the Department of  Health and  Human Services  
(HHS) programs,  as  well as  the health  and  welfare of beneficiaries served by those  
programs.  This  statutory mission is carried out through a nationwide  network of  audits, 
investigations, and inspections conducted  by the  following  operating components:  
Office of  Audit  Services  
The Office of  Audit Services (OAS) provides auditing services  for  HHS, either by conducting  
audits with its own audit  resources or  by overseeing audit work done by  others.  Audits  
examine the performance of  HHS programs  and/or  its grantees and contractors in carrying  
out their respective responsibilities and are intended to provide independent assessments of  
HHS programs  and operations.  These assessments help reduce waste,  abuse, and  
mismanagement and promote economy  and efficiency throughout  HHS.  
Office  of  Evaluation  and  Inspections  
The  Office  of Evaluation and  Inspections (OEI)  conducts national evaluations to  provide  
HHS,  Congress,  and the public  with  timely,  useful, and reliable information on  significant  
issues.  These evaluations focus  on preventing fraud, waste, or abuse and promoting  
economy,  efficiency, and effectiveness of departmental programs.  To promote impact,  OEI  
reports  also  present  practical recommendations for  improving program operations.   
Office of  Investigations  
The Office of  Investigations  (OI) conducts criminal, civil, and administrative investigations  
of fraud  and  misconduct related  to HHS programs,  operations, and beneficiaries.  With  
investigators working in  all 50  States and  the District of Columbia, OI utilizes its resources  
by actively coordinating  with  the Department of  Justice and other Federal,  State,  and local  
law enforcement authorities.  The investigative efforts  of  OI often lead  to criminal 
convictions, administrative sanctions, and/or civil  monetary penalties.  
Office of  Counsel  to  the Inspector  General  
The Office of  Counsel  to the Inspector  General  (OCIG) provides general legal services  to 
OIG, rendering advice  and  opinions on  HHS programs and operations  and providing all  
legal support  for  OIGs internal operations.  OCIG  represents OIG in  all civil and  
administrative  fraud and  abuse cases involving  HHS programs, including False Claims Act,  
program exclusion, and civil monetary penalty cases.  In connection  with  these cases,  OCIG  
also negotiates and monitors corporate integrity agreements.  OCIG renders  advisory  
opinions, issues compliance program guidance, publishes fraud  alerts,  and provides other  
guidance to  the  health care industry concerning  the anti-kickback  statute and other OIG  
enforcement authorities.