Department of Health and Human Services 
OFFICE OF 
 
INSPECTOR GENERAL 
 
 
 
 
 
 
 
 
M   S M
ICHIGAN  TATE  EDICAID 
 
F C U :  
  RAUD  ONTROL  NIT  
 
2013 O R  
  NSITE  EVIEW 
 
 
 
 
 
 
 
Stuart Wright  
Deputy Inspector General for 
Evaluation and Inspections 
 
January 2014 
OEI-09-13-00070   
   
MICHIGAN STATE MEDICAID FRAUD CONTROL UNIT:  
2013 ONSITE REVIEW 
OEI-09-13-00070 
 
WHY WE DID THIS STUDY 
The Office of Inspector General (OIG) oversees all State Medicaid Fraud Control Units 
(MFCUs or Units) with respect to Federal grant compliance.  As part of this oversight, 
OIG annually reviews and certifies all Units.  In addition, OIG conducts onsite reviews of 
selected States. These reviews assess Unit performance in accordance with the 12 MFCU 
performance standards and monitor Unit compliance with Federal grant requirements,  
laws, and regulations. 
 
HOW WE DID THIS STUDY  
We analyzed data from seven sources:  (1) a review of documentation, policies, and 
procedures related to 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 and selected staff; (6) an 
onsite review of case files; and (7) an onsite review of Unit operations. 
 
WHAT WE FOUND 
From fiscal years 2010 through 2012, the Unit reported recoveries of $144 million, 
64 convictions, and 53 civil judgments and settlements.  The Unit maintained proper 
fiscal control of its resources.  Most  Unit case files contained documentation of 
supervisory approval to close cases; however, 21 percent of case files lacked 
documentation of supervisory approval to open cases, and 67 percent lacked 
documentation of periodic supervisory reviews.  In addition, the Unit did not refer 
sentenced individuals to OIG for program exclusion within an appropriate timeframe.  
The Units policies and procedures manual was not updated to reflect current Unit 
operations. Finally, the Units memorandum  of understanding (MOU) with Michigans 
State Medicaid agencythe Department of Community Health (DCH)did not reflect 
current law and practice as required. 
 
WHAT WE RECOMMEND 
We recommend that the Michigan Unit (1) ensure that supervisory approval to open cases 
and periodic supervisory reviews are documented in Unit case files, (2) ensure that it 
refers individuals for exclusion to OIG within an appropriate timeframe, (3) revise its 
policies and procedures manual, and (4) revise its MOU with DCH.  The Unit concurred 
with all four of our recommendations. 
 
 
 
 
 
 
   
TABLE OF CONTENTS 
 
Objective......................................................................................................1 

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

Methodology................................................................................................4 

Findings........................................................................................................7 

From FY 2010 through FY 2012, the Unit reported recoveries      

of $144 million, 64 convictions, and 53 civil judgments and 

settlements........................................................................................7 

The Unit maintained proper fiscal control of its resources ..............8 

Most Unit case files contained documentation of supervisory 

approval to close cases; however, 21 percent of case files       

lacked documentation of supervisory approval to open cases      

and 67 percent lacked documentation of periodic supervisory 

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

The Unit did not refer 69 percent of sentenced individuals to     

OIG for program exclusion within an appropriate timeframe  .........9 

The Units policies and procedures manual was not updated,      

and the Units MOU with DCH did not reflect current law and 

practice...........................................................................................10 

Other Observations: According to the Unit, having an OIG      

workstation within the Unit promoted cooperation between the 

Unit and OIG, and the Unit streamlined its patient abuse and 

neglect referral process ..................................................................11 
 
Conclusion and Recommendations ............................................................13 

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

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

A: Performance Standards for MFCUs (Units) ............................15 

B: Revised 2012 Performance Standards for MFCUs (Units) ......19 

C: Referrals of Provider Fraud and Patient Abuse and Neglect     

to the Michigan MFCU by Source, FYs 2010 Through 2012 .......26 

D: Investigations Opened and Closed by the Michigan MFCU,   

by Provider Category and Case Type, FYs 2010 Through 2012 ...27 

E: Case File Review Population, Sample Size Counts, and 

Confidence Interval Estimates .......................................................29 

F: Unit Comments.........................................................................31 

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

   
   
OBJECTIVE 
To conduct an onsite review of the Michigan State Medicaid Fraud 
Control Unit (MFCU or Unit). 
BACKGROUND 
The mission of State MFCUs, as established by Federal statute, is to 
investigate and prosecute Medicaid provider fraud and patient abuse and 
neglect under State law.1  Pursuant to Title XIX of the SSA, each State 
must maintain a certified Unit unless the Secretary of Health and Human 
Services (HHS) determines that operation of a Unit would not be 
cost-effective because (1) minimal Medicaid fraud exists in that State; and  
(2) the State has other, adequate safeguards to protect Medicaid 
beneficiaries from abuse and neglect.2   Currently, 49 States and the 
District of Columbia (States) have created such Units.3 In fiscal year 
(FY) 2012, combined Federal and State grant expenditures for the Units 
totaled $217.3 million, of which Federal funds represented 
$162.9 million.4, 5   That year, the 50 Units employed 1,901 individuals.6  
To carry out its duties 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.7  The staff reviews complaints referred by the 
State Medicaid agency and other sources and determines their potential for 
criminal prosecution and/or civil action.  Collectively, in FY 2012, the 
50 Units reported 1,337 convictions and 823 civil judgments and 
 
1 Social Security Act (SSA)  1903(q).  

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.  Medicaid 

Fraud Control Units, Office of Inspector General (OIG) web site.  Accessed at 

http://oig.hhs.gov/fraud/medicaid-fraud-control-units-mfcu/index.asp on May 21, 2013. 

4 All FY references in this report are based on the Federal FY (October 1  through  
September 30). 
 
5 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 
 
May 8,  2013.  

6 Ibid. 

7 SSA  1903(q)(6) and 42 CFR  1007.13. 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  1  
   
   
settlements.  That year, the Units reported recoveries of approximately 
$2.9 billion.8  
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.9  In Michigan and 43 other States, the Units are located 
within offices of State Attorneys General that have this authority.  In the  
remaining six States, the Units are located within other State agencies; 
generally, such Units must refer cases to offices with prosecutorial 
authority.10  Additionally, each Unit must be a single, identifiable entity of 
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.11   
Oversight of the MFCU Program 
The Secretary of HHS delegated to OIG the authority both to annually 
certify the Units and to administer grant awards to reimburse States for a 
percentage of their costs of operating them.12 All Units are currently funded 
by the Federal Government on a 75-percent matching basis, with the States 
contributing the remaining 25 percent.13   To receive Federal reimbursement, 
each Unit must submit an initial application to OIG.14  OIG reviews the 
application and notifies the Unit whether it is approved and the Unit is 
certified. Approval and certification are valid for a 1-year period; the Unit 
must be recertified each year thereafter.15    
Pursuant to Title XIX of the SSA, States must operate Units that effectively 
carry out their statutory functions and meet program requirements.16   OIG 
 
8 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 
 
May 8,  2013.  Pursuant to 42  CFR   1007.17, Units report the total amount of recovered 
 
funds in their annual  reports to  OIG.  Recoveries are defined as the amount  of money 
 
that defendants are required to pay as a result of a judgment or settlement in criminal and 

civil cases, and may not  reflect actual collections.  Recoveries may involve cases that 
 
include participation by other Federal and State agencies. 

9  SSA  1903(q)(1). 
 
10 In States with  a Unit, the Unit shares 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, including Michigan, also employ a Medicaid 

Inspector General who conducts and coordinates anti-fraud, waste, and abuse activities 

for the State agency. 

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

12 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  referred to as 

Federal Financial Participation  (FFP). 

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

15 42 CFR   1007.15(b) and  (c). 

16  SSA  1902(a)(61). 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  2  
   
   
developed and issued 12 performance standards to define the criteria that 
OIG applies in assessing whether a Unit is effectively carrying out statutory 
functions and meeting program requirements.17  Examples of standards 
include maintaining an adequate caseload through referrals from several 
sources, maintaining an annual training plan for all three of the professional 
disciplines (i.e., for auditors, investigators, and attorneys), and establishing  
policy and procedures manuals to reflect the Units operations.  See 
Appendix A for a complete list of the performance standards.18  
Michigan Unit  
The Unit is an autonomous entity within the Michigan Attorney Generals 
Criminal Justice Bureau and has the authority to prosecute cases of 
Medicaid fraud and of patient abuse and neglect.  At the time of our 
review, 30 of the Units 31 employees were located in East Lansing.19  The 
Unit Director served as the Chief Attorney and directly supervised all Unit 
attorneys, the Chief Investigator, and the Unit auditor.20 The Chief 
Investigator directly supervised three Investigative Supervisors, each of 
whom led an investigative team.21  
The Unit receives referrals of provider fraud from the State Medicaid 
agencythe Michigan Department of Community Health (DCH)and 
from Federal agencies, such as OIG.  The Unit receives referrals of patient 
abuse and neglect22 from the Michigan Long-Term Care Ombudsman and 
the Michigan Department of Licensing and Regulatory Affairs (LARA).  
In addition, the Unit receives both types of referrals from other State and 
local agencies and from the public through a Medicaid Fraud Report 
hotline and a fraud-reporting form  located on the Michigan Attorney 
Generals Web site. For additional information on Unit referrals, see 
Appendix C. 
Upon receiving a referral, a Unit investigative secretary enters the relevant  
information into the Units case file tracking system.  An Investigative 
Supervisor then screens the referral and decides whether to open it as a 
 
17 59 Fed. Reg. 49080 (Sept. 26, 1994).  Accessed at http://oig.hhs.gov  on May 8, 2013. 
  
18 Prior to the time of  our  onsite data collection  (March  2013), OIG  published a revision 
 
of the performance standards, 77 Fed. Reg. 32645  (June 1,  2012).  See Appendix B for a 

complete list of the revised performance standards.  The performance standards referred 

to in this report were published in 1994 and  were in effect during most of  our review
  
period (FYs 2010 through 2012).  When referring to the performance standards,  we refer 

to  the 1994 standards, unless otherwise noted. 
 
19 One Unit attorney was based in Detroit. 

20 Since the time of our onsite review, the Unit has hired a Chief Attorney who directly 

supervises all Unit attorneys.  The Unit Director supervises the Chief Attorney. 
21 The Units three investigative teams focus on fraud, residential care (patient abuse and  
neglect), and special projects. 
22 For the purposes of this report, misappropriation of patients  private funds in  
residential health care facilities is included  in the category of patient abuse and neglect. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  3  
   
   
case or refer it to another agency.23  For additional information on the 
Units opened and closed investigations, including a breakdown by case 
type and provider category, see Appendix D. 
After a referral is opened as a case, the Unit Director assigns the case to an  
investigator, an attorney, and, as appropriate, an auditor; the assigned Unit 
employees then meet to plan the case strategy.  The Unit may open a case 
and pursue it through a variety of actions, including criminal prosecution, 
civil action, or a combination of the two.  The Unit may close a case for a 
variety of reasons, including but not limited to resolving it through 
criminal and/or civil action or referring it to another agency.   
METHODOLOGY 
We analyzed data from seven sources:  (1) Unit documentation, including 
policies and procedures related to the Units operations, staffing, and 
caseload for FYs 2010 through 2012; (2) financial documentation for 
FYs 2010 through 2012; (3) structured interviews with key stakeholders; 
(4) a survey of Unit staff; (5) structured interviews with the Units 
management and selected staff; (6) an onsite review of case files that were  
open at any point during FYs 2010 through 2012; and (7) an onsite review 
of Unit operations. 
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 meet the performance standards or was not operating in 
accordance with laws, regulations, and/or policy transmittals.24 In 
addition, we noted practices that appeared to benefit the Unit.  We based 
these observations on statements from Unit staff and data analysis.  We  
did not independently verify the effectiveness of these practices, but 
included the information because it may be useful to other Units in their 
operations. 
We conducted the onsite review in March 2013. 
Data Collection and Analysis 
Review of Unit Documentation.  We collected and reviewed (1) Unit 
documentation, including policies and procedures related to the Units 
 
23 The Investigative Supervisor of the Fraud investigative team reviews all referrals of 
provider fraud, and the Investigative Supervisor of the Residential Care investigative 
team reviews all referrals of patient abuse and neglect.  An  Investigative Supervisor may  
also assign a Unit investigator to  gather more information on a referral before  
determining  whether to proceed  with the investigation  or refer it to another agency. 
24 All relevant  regulations, statutes, and  policy transmittals are available online at 
http://oig.hhs.gov. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  4  
   
   
operations, staffing, and cases; (2) the Units annual reports and quarterly 
statistical reports; and (3) the Units responses to recertification 
questionnaires. We reviewed this documentation to determine how the 
Unit investigates and prosecutes Medicaid cases. The documentation also  
included data such as the number of referrals received by the Unit and the  
number of investigations opened and closed.  Additionally, we confirmed 
with the Unit Director that the information we had was current at the time 
of our review and, as necessary, requested any additional data or 
clarification that was needed.  
Review of Financial Documentation. To evaluate internal controls of 
fiscal resources, OIG auditors reviewed policies and procedures related to 
the Units budgeting, accounting systems, cash management, procurement, 
property, and personnel. We obtained the Units claimed grant 
expenditures for FYs 2010 through 2012 to (1) review final Federal Status 
Reports25 and supporting documentation, (2) select and review transactions 
within direct cost categories to determine if costs were allowable, and 
(3) verify that indirect costs were accurately computed using the approved 
indirect cost rate. Finally, we reviewed records in the HHS Payment 
Management System (PMS)26 and revenue accounts to identify any 
unreported program income.27    
Interviews With Key Stakeholders.  We conducted structured interviews 
with eight individual stakeholders among five agencies who were familiar 
with Unit operations. Specifically, we interviewed the Program Integrity 
Manager for DCHs Office of Health Services Inspector General; 
Michigans Long-Term  Care Ombudsman; three Assistant U.S. Attorneys 
based in Michigan; the Michigan Attorney Generals Criminal Justice 
Bureau Chief;28 an OIG Special Agent based in East Lansing; and the OIG 
Assistant Special Agent in Charge for the State of Michigan.  These 
interviews focused on the Units interaction with external agencies, Unit 
operations, opportunities for improvement, and any practices that appeared 
to benefit the Unit and that may be useful to other Units in their 
operations. 
 
25 The Unit transmits financial status reports to OIGs Office of Management and Policy 
on a quarterly and annual basis.  These reports detail Unit income and expenditures. 
26 The PMS is a grant payment system operated and maintained  by the HHS Program  
Support Center, Division  of Payment Management.  The PMS provides  disbursement, 
grant monitoring, reporting, and cash management services to awarding agencies and 
grant recipients, such as Units. 
27 Program income is defined as gross income received by the grantee or subgrantee 
directly generated by a grant supported activity, or earned only as a result of the grant 
agreement during the grant period.  45 CFR   92.25(b). 
28 The Attorney Generals Criminal Justice Bureau Chief supervises the Unit Director. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  5  
   
   
Survey of Unit Staff. We conducted an online survey of Unit staff.29  We  
requested and received responses from 27 staff members, for a            
100-percent response rate. Our questions focused on Unit operations, 
opportunities for improvement, and practices that appeared to benefit the 
Unit and that may be useful to other Units in their operations.  The survey 
also sought information about the Units compliance with applicable laws, 
regulations, and policy transmittals.   
Interviews With Unit Management and Selected Staff. We conducted 
structured interviews with the Units Director, Chief Investigator, and 
auditor. We asked them to provide us with additional information 
necessary to better understand the Units operations, identify opportunities 
for improvement, identify practices that appeared to benefit the Unit and 
that may be useful to other Units in their operations, and clarify 
information obtained from other data sources.  
Onsite Review of Case Files.  We selected a simple random sample of 
100 case files from the 1,068 cases30  that were open at any point from  
FY 2010 through FY 2012. The design of this sample allowed us to 
estimate the percentage of all 1,068 cases with various characteristics at 
the 95-percent confidence level. We reviewed these 100 sampled case 
files and the Units processes for monitoring the status and outcomes of 
cases. From these 100 case files, we selected another simple random  
sample of 50 files and conducted a more comprehensive review to identify 
any other potential issues from a qualitative perspective.  For population 
and sample size counts, as well as confidence interval estimates, see 
Appendix E. 
Onsite Review of Unit Operations. While onsite, we reviewed the Units 
operations. Specifically, we observed the intake of referrals, data analysis 
operations, security of data and case files, 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.31  
 
29  We  did not survey the Unit Director, Chief Investigator, and Unit auditor because we 
interviewed these employees onsite.  In addition,  one Unit attorney was not available to  
respond to the survey. 
30 This  figure includes cases opened before FY  2010 that  remained open at some point  
during FYs 20102012. 

31 Full text  of these standards is available online at 

http://www.ignet.gov/pande/standards/oeistds11.pdf. 

Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  6  
   
   
FINDINGS 
From FY 2010 through FY 2012, the Unit reported 
recoveries of $144 million, 64 convictions, and 53 civil 
judgments and settlements 
From FY 2010 through FY 2012, the Unit reported total criminal and civil 
recoveries of $144 millionan annual average of $48 million (see 
Table 1). Of the $144 million in recoveries, the Unit attributed 
$139.8 million to civil recoveries and $4.2 million to criminal recoveries.  
Global case judgments and settlements accounted for $136.6 million of 
the total civil recoveries and global cases accounted for 190 of the Units 
1,068 cases over the 3-year period.32 The Units annual average 
expenditures for FYs 2010 through 2012 were $4.6 million.33      
Table 1: Recovered Funds Reported by the Michigan Unit, 
FYs 2010 Through 2012  
Annual  
FY 2010   FY 2011   FY 2012   3-Year Total  
  Average*  
 
Global Civil 
$51,861,436   $35,088,541   $49,682,632   $136,632,609   $45,544,203  
Recoveries 
 
Nonglobal Civil 
$2,323,024  $357,949   $412,736   $3,093,709   $1,031,236  
Recoveries 
Total Civil 
$54,184,460   $35,446,490   $50,095,368   $139,726,318   $46,575,439  
Recoveries 
Criminal 
$517,736  $443,359   $3,264,817   $4,225,912   $1,408,637  
Recoveries 
Total Civil and 
Criminal  $54,702,196   $35,889,849   $53,360,185  $143,952,230   $47,984,077  
Recoveries  
Total  
$5,030,100  $4,065,936   $4,571,020   $13,667,056   $4,555,685  
Expenditures 
Source:  OIG review of Unit self-reported Quarterly  Statistical Reports (QSRs) and other data, FYs 2010-2012. 
*Averages in  this  table are rounded. 
 
From FY 2010 through FY 2012, the Unit Reported 64 Convictions and 
53 Civil Judgments and Settlements. From FY 2010 through FY 2012, the 
Units convictions and civil judgments and settlements remained at a 
consistent level. During this period, the Unit reported 64 convictions and 
 
32 Unit-reported recoveries include funds recovered  from  multi-State, or global civil 
false claims cases, which consist of both those worked  directly by the Unit and those 
worked by staff from other Units.   
33 The figures presented in this  paragraph are rounded.  
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  7  
   
   
53 civil judgments and settlementsan annual average of 21convictions 
and 18 civil judgments and settlements (see Table 2).34   
Table 2: Unit Convictions and Civil Judgments and Settlements, 
FYs 2010 Through 201235  
3-Year  Annual  
FY 2010   FY 2011   FY 2012  
  Total   Average 
Convictions  22  21  21  64  21.3 
Civil Judgments and Settlements   19  19  15  53  17.7 
Source:  OIG review of Unit self-reported QSRs and other data, FYs 2010-2012. 
 
From FYs 2010 through 2012, the Unit opened an average of 226 cases 
annually, with an average of 158 cases of provider fraud and 68 cases of 
patient abuse and neglect. From  FYs 2010 through 2012, the Unit closed 
an average of 192 cases annually, averaging 114 cases of provider fraud 
and 78 cases of patient abuse and neglect.36  From FYs 2010 through 
2012, the Unit received an average of 5,537 referrals annually, with an 
average of 956 referrals of provider fraud and 4,581 referrals of patient 
abuse and neglect. 
The Unit maintained proper fiscal control of its 
resources  
According to Performance Standard 11, the Unit Director should exercise 
proper fiscal control over the Units resources.  On the basis of the review 
conducted by OIG auditors, the Units financial documentation indicated 
that the Units expenditures claims for FYs 2010 through 2012 represented 
allowable, allocable, and reasonable costs.  In addition, the Unit 
maintained adequate internal controls relating to accounting, budgeting, 
personnel, procurement, property, and equipment. 
Most Unit case files contained documentation of 
supervisory approval to close cases; however, 
21 percent of case files lacked documentation of 
supervisory approval to open cases and 67 percent 
lacked documentation of periodic supervisory reviews  
According to Performance Standard 6(b), Unit supervisors should approve 
the opening and closing of cases to ensure a continuous case flow and the 
timely completion of cases.  Supervisory approval to open and close cases 
 
34 These averages are rounded. 

35 Civil Judgments and/or Settlements include those received from global cases.   

36 Closures include multiple cases opened before FY 2010. 

Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  8  
   
   
suggests that Unit supervisors are monitoring the intake and resolutions of 
cases, thereby facilitating progress in the cases.  The Unit documented 
supervisory approval to close cases in 98 percent of closed case files.  
Although Unit supervisors reported that they approved the opening of all 
case files, 21 percent of the case files lacked documentation of supervisory 
approval to open cases. 
According to Performance Standard 6(c), supervisory reviews should be 
conducted periodically and noted in the case file to ensure timely case 
completion.37  Although Unit supervisors reported that they consistently 
conducted periodic supervisory reviews, 67 percent of the files lacked 
documentation of periodic supervisory reviews.  During our onsite review, 
Unit management provided a case status form that was introduced 
toward the end of FY 2011 to ensure that periodic supervisory reviews are 
documented in Unit case files.  After the introduction of the case status 
form, the percentage of closed case files that lacked documentation of 
periodic supervisory reviews decreased in FY 2012, from 84 percent of 
case files closed in FYs 20102011 to 39 percent of case files closed in 
FY 2012. Similarly, the percentage of case files that lacked 
documentation of periodic supervisory reviews decreased in FY 2012, 
from 71 percent of case files opened in FYs 20102011 to 43 percent of 
case files opened in FY 2012. The case status form is now included with 
each case file and contains columns for the supervisory review date, the 
case status, and the reviewing supervisors initials. 
The Unit did not refer 69 percent of sentenced 
individuals to OIG for program exclusion within an 
appropriate timeframe 
According to Performance Standard 8(d), when a convicted individual is  
sentenced, the Unit should send a referral letter to OIG within 30 days or 
other reasonable time period for the purpose of program exclusion.38, 39   
The Unit reported 64 total convictions  within the review period, but had not  
 
37 For the purposes of this report, supervisory approval to  open and close a case does not  
constitute a periodic supervisory review.  Periodic supervisory reviews indicate that a 
supervisor reviewed a case more than  once  between the cases opening and closing and 
documented those reviews in  the case file.  
38 Pursuant to section 1128(a) of the SSA, OIG excludes from participation in Federal  
health care programs any person or entity convicted of a criminal offense related to the 
delivery  of an item or service under the Medicaid program or to the neglect or abuse of  
patients in connection with the delivery of a health care item or service.  No payment 
may be made by Medicaid, Medicare, or  other Federal  health care programs for an item  
or service provided, ordered,  or prescribed by an excluded individual or entity.  
42  CFR  1001.1901.  
39 According to  Standard  8(f) of the 2012 Performance Standards, all referrals for 
exclusion should be transmitted to OIG within  30  days. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  9  
   
   
referred 44 (69 percent)40 of those sentenced individuals to OIG for program 
exclusion as of our onsite review.   Of these 44 individuals, 7 had not been 
referred to OIG as of 6 months from  the sentencing date, 12 had not been 
referred as of a year from the sentencing date, 19 had not been referred as of 
2 years from the sentencing date, and 6 had not been referred as of 3 years  
from the sentencing date.   
During our onsite review, Unit management reported that it was unaware 
that the Unit was required to refer 30 of these 44 individuals, who were 
sentenced for financial exploitation of residential health care facility 
patients. Unit management also reported that it was unaware that it should 
have referred an additional 8 of the 44 sentenced individuals who were 
jointly investigated by the Unit and external agencies, as the Unit was not  
the lead investigative agency in these cases.41  Finally, Unit management 
reported that it was unaware that it should have referred 4 of the 
44 sentenced individuals because they were beneficiaries who were 
sentenced for conspiring with providers to commit Medicaid fraud.42   The 
Unit has provided documentation to OIG demonstrating that 27 of these  
44 sentenced individuals have been referred to OIG for program exclusion 
since the time of our onsite review.  According to the Unit, the remaining 
17 sentenced individuals will be referred to OIG for program exclusion. 
The Units policies and procedures manual was not 
updated, and the Units MOU with DCH did not reflect 
current law and practice 
According to Unit management, the Units policies and procedures manual 
had not been updated since the 1990s.43 As a result, it did not reflect any 
subsequent changes to Unit policies or procedures.  In addition, the Units 
October 2010 MOU with DCH had not been updated to include the 
payment suspension referral process. 
 
 
   
 
40 This  percentage is  rounded. 
   
41 The Unit reported that it did  not  have a tracking mechanism  to ensure that these 

sentenced providers were referred to OIG for program exclusion by the external 

investigating agency.   In seven of the eight cases, the providers were not referred to  OIG 

for program  exclusion by  the external investigating agency. 

42 The Unit had no explanation for why the remaining 2 of the 44 sentenced individuals 
 
were not referred to OIG for program exclusion. 
 
43 Unit management did not  know  precisely when the Units policies and procedures 

manual had last been updated. 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  10  
   
   
The Units policies and procedures manual was not updated to 
reflect current Unit operations 
According to Performance Standard 3, the Unit should establish policies 
and procedures for its operations, which should be included in a manual.  
However, the Units manual had not been updated to include changes to 
the Units policies and procedures, such as the case file review policy that  
was introduced in FY 2011. This policy includes the use of the case status 
form to ensure that periodic supervisory reviews are documented in Unit 
case files. 
The Units MOU with DCH did not reflect current law and 
practice 
According to Performance Standard 10, a Unit should periodically review  
its MOU with the State Medicaid agency to ensure that the MOU reflects 
current law and practice.   As required by Federal regulations, the Unit had 
an MOU with DCH.44  However, the Units MOU with DCH had not been 
updated to include a provision describing the referral process between the 
Unit and DCH for providers who are subject to a payment suspension on the 
basis of a credible allegation of fraud.45  Unit management reported that it 
is working with DCH to issue a revised MOU that incorporates the 
payment-suspension provision. 
Other Observations 
During our onsite review, we noted two practices that may have been 
beneficial to Unit operations: (1) an OIG workstation within the Unit that 
promoted cooperation between the Unit and OIG, and (2) the Units 
streamlined patient abuse and neglect referral process.  
According to the Unit, having an OIG workstation within the 
Unit promoted cooperation between the Unit and OIG 
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.  
Performance Standard 8(a-c) specifies that cooperation includes 
 
44  42 CFR  1007.9(d).  
45 The Affordable Care  Act,   6402(h)(2), requires State Medicaid programs, as a 
condition of receiving FFP, to suspend payments to providers for whom there is a 
credible allegation  of fraud, unless good cause exists to  not suspend payments.  One way  
to establish good cause is for the MFCU to inform the Medicaid agency that the 
suspension would compromise or  jeopardize its investigation of the provider.  CMS and  
OIG implemented this provision in  revisions to 42 CFR   455.23 and 1007.9(e) 
effective March 25, 2011 (76 Fed.  Reg. 5862, February 2,  2011).  
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  11  
   
   
communicating effectively with the OIG and other Federal agencies, 
providing timely information about Unit case actions to those agencies, 
and having effective case referral procedures.  To facilitate 
communication about joint Unit-OIG investigations and to increase the 
number of case referrals between the Unit and OIG, the Unit makes 
workspace available to an OIG Special Agent within the Unit offices; the  
OIG agent uses this workspace once or twice a week.46, 47 Unit 
management, staff, and stakeholders reported that the OIG workspace 
within the Unit benefitted the Units performance by encouraging fraud 
referrals, facilitating communication between the agencies, and promoting 
efficiency through an informal, reciprocal assessment of potential 
referrals.  
The Unit streamlined its patient abuse and neglect referral 
process 
According to Performance Standard 6, a Unit should have a continuous 
case flow and cases should be completed within a reasonable time period.  
According to Unit management and staff, before FY 2011, a large 
proportion of patient abuse and neglect referrals from LARA were related 
to matters inconsistent with the Units statutory functions.48 Those 
referrals reportedly reduced Unit efficiency by diverting Unit time and 
resources from ongoing cases.  In response, Unit management and LARA 
developed a streamlined process for referring cases of patient abuse and 
neglect during FY 2011. This process sets certain minimum criteria for a 
referral to be sent to the Unit.  Unit management and staff reported that 
this process reduced the total number of referrals from LARA without 
limiting those referrals that were consistent with the Units statutory 
functions, thereby promoting Unit efficiency and case flow.  As a result of 
the streamlined referral process, the total number of referrals from LARA 
of patient abuse and neglect was reduced from 5,446 in FY 2011 to 
2,482 in FY 2012. 
 
 
46 The Unit does not pay for the equipment or  wireless internet connection  used  by the 
OIG agent; these are funded directly by  the OIG Office of Investigations. 

47 The OIG staff to whom the Unit transmits information  for the purpose of excluding 
 
providers are located in a headquarters office distinct from  the office that employs OIG 

field agents. 

48 For example, many of the referrals received from  LARA before FY 2011 included 

complaints from family members of long-term care facility residents about incidents that 

did not rise to the level  of criminal abuse or  neglect.
  
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  12  
   
   
CONCLUSION AND RECOMMENDATIONS 
From FY 2010 through FY 2012, the Unit reported recoveries of 
$144 million, 64 convictions, and 53 civil judgments and settlements.  
Most Unit case files consistently contained documentation indicating 
supervisory approval to close cases.  The Unit maintained proper fiscal  
control of its resources. According to the Unit, having an OIG 
workstation within the Unit promoted cooperation between the Unit and 
OIG. Finally, the Unit improved its case flow by streamlining its patient 
abuse and neglect referral process. 
Opportunities for Unit improvement exist.  Specifically, Unit case files did 
not consistently contain documentation of supervisory approval to open 
cases or periodic supervisory reviews. In addition, the Unit did not refer 
69 percent of sentenced individuals to OIG for program exclusion within 
an appropriate timeframe.   The Units policies and procedures manual also 
had not been updated to reflect the Units periodic case file review policy.   
Finally, the Units MOU with DCH did not reflect current law and 
practice. We found no evidence of noncompliance with applicable laws, 
regulations, or policy transmittals.  
We recommend that the Michigan Unit: 
Ensure that supervisory approval to open cases and periodic 
supervisory reviews are documented in Unit case files 
The Unit should ensure that supervisors are consistently reviewing case 
files and documenting these reviews on case status forms. 
Ensure that letters referring providers for exclusion are 
submitted to OIG within an appropriate timeframe 
The Unit should ensure that letters referring individuals and entities for 
exclusion are sent within 30 days of defendant sentencing, consistent with 
Standard 8(f) of the 2012 Performance Standards.  The Unit should also 
ensure that it refers all sentenced individuals for exclusion, regardless of 
the type of crime or the Units specific role in the investigation and/or 
prosecution of a provider. 
Revise its policies and procedures manual to reflect current 
Unit operations 
The Unit should revise its policies and procedures manual to include its 
periodic case file review policy.   
Revise its MOU with DCH to reflect current law and practice 
The Unit should revise its MOU with DCH to include a provision 
describing the referral process between the Unit and DCH for providers 
who are subject to payment suspension on the basis of a credible 
allegation of fraud. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  13  
   
   
UNIT COMMENTS AND OFFICE OF INSPECTOR GENERAL  
RESPONSE 
The Unit concurred with the four report recommendations. 
Regarding our first recommendation, the Unit reported that it created and 
now uses an assignment memo, to be signed by the Unit Director, which is 
included in the file for each full-scale investigation.  The Unit also created 
a case status form to be kept in each cases file to document periodic 
supervisory review of the file. 
Regarding our second recommendation, the Unit explained that, for a 
majority of those cases not reported to OIG for exclusion, either (1) the 
underlying case was not connected to the delivery of a health care item or 
service under the terms of the Federal exclusion law, or (2) the case 
involved a joint investigation and the Unit was not the primary 
investigative agency.  The Unit also understands and accepts OIGs 
interpretation that all convictions should be reported to OIG for program  
exclusion, regardless of the Units role in each case or the type of 
individual convicted. 
Regarding our third recommendation, the Unit created a revised draft of its 
policies and procedures manual, which the Unit expects to formalize and 
distribute to Unit staff during the first quarter of 2014. 
Regarding our fourth recommendation, the Unit created a revised draft of 
its MOU with DCH that should be in place by the end of January 2014.   
The full text of the Units comments is provided in Appendix F.   We did 
not make any changes to the report as a result of the Units comments. 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  14  
   
   
APPENDIX A 
Performance Standards for MFCUs (Units)49   
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 Office of Inspector General 
(OIG)? 
b. 	  Does the Unit employ the number of attorneys, auditors, and 
investigators that were approved in the Unit's budget? 
c. 	  Does the Unit employ a reasonable size of professional staff in 
relation to the State's total Medicaid program expenditures?   
d. 	  Are the Unit office locations established on a rational basis and are 
such locations appropriately staffed? 
3. 	A Unit should establish policies and procedures for its operations, 
and maintain appropriate systems for case management and case 
tracking.  In meeting this standard, the following performance 
indicators will be considered: 
 
49 59 Fed. Reg. 49080  (Sept. 26, 1994).  These performance standards were in effect 
during most of our review  period and precede the performance standards published in 
June 2012.  
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  15  
   
   
a. 	  Does the Unit have policy and procedure manuals? 
b. 	  Is an adequate, computerized case management and tracking 
system in place? 
4. A Unit should take steps to ensure that it maintains an adequate 
workload through referrals from the single State agency and other 
sources.  In meeting this standard, the following performance 
indicators will be considered:  
a. 	  Does the Unit work with the single State Medicaid agency to 
ensure adequate fraud referrals? 
b. 	  Does the Unit work with other agencies to encourage fraud 

referrals? 

c. 	  Does the Unit generate any of its own fraud cases? 
d. 	  Does the Unit ensure that adequate referrals of patient abuse 
complaints are received from all sources? 
5. 	A Units case mix, when possibl e, 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? 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  16  
   
   
7. A Unit should have a process for monitoring the outcome of cases.  
In meeting this standard, the following performance indicators will be 
considered:  
a. 	  The number, age, and type of cases in inventory. 
b. 	  The number of referrals to other agencies for prosecution. 
c. 	  The number of arrests and indictments. 
d. 	  The number of convictions. 
e. 	  The amount of overpayments identified. 
f. 	  The amount of fines and restitution ordered. 
g. 	  The amount of civil recoveries. 
h. 	  The numbers of administrative sanctions imposed. 
8. 	 A Unit will cooperate with the OIG and other federal agencies, 
whenever appropriate and consistent with its mission, in the 
investigation and prosecution of health care fraud.  In meeting this 
standard, the following performance indicators will be considered: 
a. 	  Does the Unit communicate effectively with the OIG and other 
Federal agencies in investigating or prosecuting health care fraud 
in their State? 
b. 	  Does the Unit provide OIG regional management, and other 
Federal agencies, where appropriate, with timely information 
concerning significant actions in all cases being pursued by the 
Unit? 
c. 	  Does the Unit have an effective procedure for referring cases,  
when appropriate, to Federal agencies for investigation and other 
action?  
d. 	  Does the Unit transmit to the OIG, for purposes of program  
exclusions under section 1128 of the Social Security Act, reports 
of convictions, and copies of Judgment and Sentence or other 
acceptable documentation within 30 days or other reasonable time 
period? 
9. 	A Unit should make statutor y or programmatic recommendations, 
when necessary, to the State government. In meeting this standard, 
the following performance indicators will be considered:  
a. 	  Does the Unit recommend amendments to the enforcement 
provisions of the State's statutes when necessary and appropriate to 
do so? 
b. 	  Does the Unit provide program recommendations to single State 
agency when appropriate? 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  17  
   
   
c. 	  Does the Unit monitor actions taken by State legislature or State 
Medicaid agency in response to recommendations? 
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? 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  18  
   
   
APPENDIX B 
Revised 2012 Performance Standards for MFCUs (Units)50   
1. 	A Unit conforms with all applicable statutes, regulations, and 
policy directives, including:  
a. 	  Section 1903(q) of the Social Security Act, containing the basic 
requirements for operation of a MFCU; 
b. 	  Regulations for operation of a MFCU contained in 42 CFR 

part 1007; 

c. 	  Grant administration requirements at 45 CFR part 92 and Federal 
cost principles at 2 CFR part 225; 
d. 	  OIG policy transmittals as maintained on the OIG Web site; and  
e. 	  Terms and conditions of the notice of the grant award. 
2. 	A Unit maintains reasonable staff levels and office locations in 
relation to the States Medicaid program expenditures and in 
accordance with staffing allocations approved in its budget.  
a. 	  The Unit employs the number of staff that is included in the Units 
budget estimate as approved by OIG. 
b. 	  The Unit employs a total number of professional staff that is 
commensurate with the States total Medicaid program  
expenditures and that enables the Unit to effectively investigate  
and prosecute (or refer for prosecution) an appropriate volume of 
case referrals and workload for both Medicaid fraud and patient 
abuse and neglect. 
c. 	  The Unit employs an appropriate mix and number of attorneys, 
auditors, investigators, and other professional staff that is both 
commensurate with the States total Medicaid program  
expenditures and that allows the Unit to effectively investigate and 
prosecute (or refer for prosecution) an appropriate volume of case 
referrals and workload for both Medicaid fraud and patient abuse 
and neglect. 
d. 	  The Unit employs a number of support staff in relation to its 
overall size that allows the Unit to operate effectively.  
e. 	  To the extent that a Unit maintains multiple office locations, such 
locations are distributed throughout the State, and are adequately 
 
50  77  Fed.  Reg. 32645 (June 1, 2012). 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  19  
   
   
staffed, commensurate with the volume of case referrals and 
workload for each location. 
3. 	A Unit establishes written policies and procedures for its 
operations and ensures that staff are familiar with, and adhere to, 
policies and procedures.  
a. 	  The Unit has written guidelines or manuals that contain current 
policies and procedures, consistent with these performance 
standards, for the investigation and (for those Units with 
prosecutorial authority) prosecution of Medicaid fraud and patient 
abuse and neglect. 
b. 	  The Unit adheres to current policies and procedures in its 

operations. 

c. 	  Procedures include a process for referring cases, when appropriate, 
to Federal and State agencies. Referrals to State agencies, 
including the State Medicaid agency, should identify whether 
further investigation or other administrative action is warranted, 
such as the collection of overpayments or suspension of payments. 
d. 	  Written guidelines and manuals are readily available to all Unit 
staff, either online or in hard copy. 
e. 	  Policies and procedures address training standards for Unit 

employees. 

4. 	A Unit takes steps to maintain an adequate volume and quality of 
referrals from the State Medicaid agency and other sources. 
a. 	  The Unit takes steps, such as the development of operational 
protocols, to ensure that the State Medicaid agency, managed care 
organizations, and other agencies refer to the Unit all suspected 
provider fraud cases. Consistent with 42 CFR 1007.9(g), the Unit 
provides timely written notice to the State Medicaid agency when 
referred cases are accepted or declined for investigation.  
b. 	  The Unit provides periodic feedback to the State Medicaid agency 
and other referral sources on the adequacy of both the volume and 
quality of its referrals.  
c. 	  The Unit provides timely information to the State Medicaid or 
other agency when the Medicaid or other agency requests 
information on the status of MFCU investigations, including when 
the Medicaid agency requests quarterly certification pursuant to  
42 CFR 455.23(d)(3)(ii). 
d. 	  For those States in which the Unit has original jurisdiction to 
investigate or prosecute patient abuse and neglect cases, the Unit 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  20  
   
   
takes steps, such as the development of operational protocols, to 
ensure that pertinent agencies refer such cases to the Unit, 
consistent with patient confidentiality and consent.  Pertinent 
agencies vary by State but may include licensing and certification 
agencies, the State Long Term Care Ombudsman, and adult 
protective services offices. 
e. 	  The Unit provides timely information, when requested, to those 
agencies identified in (D) above regarding the status of referrals. 
f. 	  The Unit takes steps, through public outreach or other means, to 
encourage the public to refer cases to the Unit.  
5. 	A Unit takes steps to maintain a continuous case flow and to 
complete cases in an appropriate timeframe based on the 
complexity of the cases.  
a. 	  Each stage of an investigation and prosecution is completed in an 
appropriate timeframe. 
b. 	  Supervisors approve the opening and closing of all investigations 
and review the progress of cases and take action as necessary to 
ensure that each stage of an investigation and prosecution is 
completed in an appropriate timeframe. 
c. 	  Delays to investigations and prosecutions are limited to situations 
imposed by resource constraints or other exigencies. 
6. 	A Units case mix, as practicabl e, covers all significant provider 
types and includes a balance of fraud and, where appropriate, 
patient abuse and neglect cases.  
a. 	  The Unit seeks to have a mix of cases from all significant provider 
types in the State.  
b. 	  For those States that rely substantially on managed care entities for 
the provision of Medicaid services, the Unit includes a 
commensurate number of managed care cases in its mix of cases. 
c. 	  The Unit seeks to allocate resources among provider types based 
on levels of Medicaid expenditures or other risk factors.  Special 
Unit initiatives may focus on specific provider types. 
d. 	  As part of its case mix, the Unit maintains a balance of fraud and 
patient abuse and neglect cases for those States in which the Unit 
has original jurisdiction to investigate or prosecute patient abuse 
and neglect cases.  
e. 	  As part of its case mix, the Unit seeks to maintain, consistent with 
its legal authorities, a balance of criminal and civil fraud cases. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  21  
   
   
7. 	A Unit maintains case files in an effective manner and develops a 
case management system that allows efficient access to case 
information and other performance data. 
a. 	  Reviews by supervisors are conducted periodically, consistent with 
MFCU policies and procedures, and are noted in the case file.  
b. 	  Case files include all relevant facts and information and justify the 
opening and closing of the cases. 
c. 	  Significant documents, such as charging documents and settlement 
agreements, are included in the file.  
d. 	  Interview summaries are written promptly, as defined by the Units 
policies and procedures. 
e. 	  The Unit has an information management system that manages and 
tracks case information from initiation to resolution. 
f. 	  The Unit has an information management system that allows for 
the monitoring and reporting of case information, including the 
following: 
1. 	  The number of cases opened and closed and the reason that  
cases are closed. 
2. 	  The length of time taken to determine whether to open a 
case referred by the State Medicaid agency or other 
referring source. 
3. 	  The number, age, and types of cases in the Units 
inventory/docket. 
4. 	  The number of referrals received by the Unit and the 
number of referrals by the Unit to other agencies. 
5. 	  The dollar amount of overpayments identified. 
6. 	  The number of cases criminally prosecuted by the Unit or 
referred to others for prosecution, the number of 
individuals or entities charged, and the number of pending 
prosecutions. 
7. 	  The number of criminal convictions and the number of civil 
judgments. 
8. 	  The dollar amount of fines, penalties, and restitution 
ordered in a criminal case and the dollar amount of 
recoveries and the types of relief obtained through civil 
judgments or prefiling settlements. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  22  
   
   
8. 	A Unit cooperates with OIG and other Federal agencies in the 
investigation and prosecution of Medicaid and other health care 
fraud.  
a. 	  The Unit communicates on a regular basis with OIG and other 
Federal agencies investigating or prosecuting health care fraud in 
the State.  
b.	   The Unit cooperates and, as appropriate, coordinates with OIGs 
Office of Investigations and other Federal agencies on cases being 
pursued jointly, cases involving the same suspects or allegations, 
and cases that have been referred to the Unit by OIG or another 
Federal agency. 
c. 	  The Unit makes available, to the extent authorized by law and 
upon request by Federal investigators and prosecutors, all 
information in its possession concerning provider fraud or fraud in 
the administration of the Medicaid program. 
d.	   For cases that require the granting of extended jurisdiction to 
investigate Medicare or other Federal health care fraud, the Unit 
seeks permission from OIG or other relevant agencies under 
procedures as set by those agencies.  
e. 	  For cases that have civil fraud potential, the Unit investigates and 
prosecutes such cases under State authority or refers such cases to 
OIG or the U.S. Department of Justice. 
f. 	  The Unit transmits to OIG, for purposes of program exclusions 
under section 1128 of the Social Security Act, all pertinent 
information on MFCU convictions within 30 days of sentencing, 
including charging documents, plea agreements, and sentencing 
orders. 
g. 	  The Unit reports qualifying cases to the Healthcare Integrity & 
Protection Databank, the National Practitioner Data Bank, or 
successor data bases.  
9. 	 A Unit makes statutory or programmatic recommendations, when 
warranted, to the State government. 
a. 	  The Unit, when warranted and appropriate, makes statutory 
recommendations to the State legislature to improve the operation 
of the Unit, including amendments to the enforcement provisions 
of the State code. 
b.	   The Unit, when warranted and appropriate, makes other regulatory 
or administrative recommendations regarding program integrity 
issues to the State Medicaid agency and to other agencies 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  23  
   
   
responsible for Medicaid operations or funding.  The Unit monitors 
actions taken by the State legislature and the State Medicaid or 
other agencies in response to recommendations. 
10. 	A Unit periodically reviews  its Memorandum of Understanding 
(MOU) with the State Medicaid agency to ensure that it reflects 
current practice, policy, and legal requirements. 
a. 	  The MFCU documents that it has reviewed the MOU at least every 
5 years, and has renegotiated the MOU as necessary, to ensure that 
it reflects current practice, policy, and legal requirements. 
b. 	  The MOU meets current Federal legal requirements as contained in 
law or regulation, including 42 CFR 455.21, Cooperation with 
State Medicaid fraud control units, and 42 CFR 455.23, 
Suspension of payments in cases of fraud. 
c. 	  The MOU is consistent with current Federal and State policy, 
including any policies issued by OIG or the Centers for Medicare 
& Medicaid Services (CMS). 
d.	   Consistent with Performance Standard 4, the MOU establishes a 
process to ensure the receipt of an adequate volume and quality of  
referrals to the Unit from the State Medicaid agency. 
e. 	  The MOU incorporates by reference the CMS Performance 
Standard for Referrals of Suspected Fraud from a State Agency to 
a Medicaid Fraud Control Unit. 
11. 	A Unit exercises proper fiscal  control over Unit resources.  
a. 	  The Unit promptly submits to OIG its preliminary budget 
estimates, proposed budget, and Federal financial expenditure 
reports. 
b.	   The Unit maintains an equipment inventory that is updated 

regularly to reflect all property under the Units control. 

c. 	  The Unit maintains an effective time and attendance system and 
personnel activity records. 
d.	   The Unit applies generally accepted accounting principles in its 
control of Unit funding. 
e. 	  The Unit employs a financial system in compliance with the 
standards for financial management systems contained in 
45 CFR 92.20. 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  24  
   
   
12. 	A Unit conducts training that  aids in the mission of the Unit. 
a. 	  The Unit maintains a training plan for each professional discipline 
that includes an annual minimum number of training hours and that 
is at least as stringent as required for professional certification. 
b. 	  The Unit ensures that professional staff comply with their training 
plans and maintain records of their staffs compliance.  
c. 	  Professional certifications are maintained for all staff, including  
those that fulfill continuing education requirements.  
d. 	  The Unit participates in MFCU related training, including training 
offered by OIG and other MFCUs, as such training is available and 
as funding permits. 
e. 	  The Unit participates in cross training with the fraud detection staff  
of the State Medicaid agency. As part of such training, Unit staff 
provide training on the elements of successful fraud referrals and 
receive training on the role and responsibilities of the State 
Medicaid agency. 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  25  
   
   
APPENDIX C 
Referrals of Provider Fraud and Patient Abuse and Neglect to  
the Michigan MFCU by Source, FYs 2010 Through 2012 
Table C-1: Total MFCU Referrals of Fraud and Abuse and Annual Average 
Annual  
  Case Type   FY 2010   FY 2011   FY 2012   3-Year Total  
Average*  
Patient Abuse and Neglect  5,514   5,581   2,647   13,742   4,581  
 
Provider Fraud   1,016  997  855  2,868  956 
 
  Total   6,530   6,578   3,502   16,610   5,537  
 
Source:  Unit response to OIG data request. 
 
  *Averages in  this  column are rounded. 
Table C-2: Unit Referrals, by Referral Source 
 
 
FY 2010   FY 2011   FY 2012  
   
Abuse  Abuse  Abuse  Percentage 
Referral 
Fraud   and  Fraud   and  Fraud   and  Total   of All 
Source  
Neglect   Neglect   Neglect   Referrals  
State Survey  
and 
63  5,248   50  5,446   32  2,482   13,321   80.2%  
Certification 
Agency 
MFCU Hotline  633  31  624  19  532  28  1,867   11.2%  
Private 
212  74  216  97  208  128  935  5.6%  
Citizens 
Other  34  154  34  13  10  1  246  1.5%  
State Medicaid 
49  0  40  0  34  0  123  0.7%  
Agency 
Other State 
8  2  14  2  10  3  39  0.2%  
Agencies 
Law  
7  1  8  0  1  0  17  0.1%  
Enforcement  
OIG  9  1  3  0  4  0  17  0.1%  
Licensing 
0  1  1  1  7  4  14  <0.1% 
Board  
Private Health 
0  0  4  0  9  0  13  <0.1% 
Insurers  
Adult 
Protective  0  2  1  3  3  1  10  <0.1% 
Services  
Prosecutors  1  0  2  0  5  0  8  <0.1% 
Total   1,016   5,514   997  5,581   855  2,647   16,610   100%  
Annual    
6,530  6,578  3,502  
Total    
Annual    
5,537  
Average*    
Source:  OIG analysis of Unit  Quarterly Statistical Reports, FYs 2010  through 2012. 
*This average is rounded. 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  26  
   
   
APPENDIX D 
Investigations Opened and Closed by the Michigan MFCU, by  
Provider Category and Case Type, FYs 2010 Through 2012 
 
Table D-1: Total Annual Opened and Closed Investigations  
 
  Annual   
 Case Type   FY 2010   FY 2011   FY 2012   3-Year Total   Average*  
 Opened   268  209  200  677  226 
Patient Abuse and 
  119  35  49  203  68 
Neglect 
  Provider Fraud   149  174  151  474  158 
Closed  247  162  166  575  192 
 
Patient Abuse and 
140  57  36  233  78 
  Neglect 
Provider Fraud   107  105  130  342  114 
 
S ource:  Unit response to OIG data request. 
*Averages in  this  table are rounded. 
   
 
Table D-2: Patient Abuse and Neglect Investigations  
 
Provider Category   FY 2010   FY 2011   FY 2012  
        
Opened  Closed  Opened  Closed  Opened  Closed 
Nondirect Care   3  1  1  1  0  0 
Nurses/Doctors Assistants  7  7  6  2  11  7 
Nursing Facilities   5  8  6  6  9  2 
Other Long-Term  Care 
0  0  0  2  0  1 
Facilities  
Other   104  124  22  46  29  26 
Total   119  140  35  57  49  36 
Source:  Unit response to OIG data request. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  27  
   
   
 
 
Table D-3: Provider Fraud Investigations  
 
Provider Category   FY 2010   FY 2011   FY 2012  
Facilities   Opened  Closed   Opened  Closed   Opened  Closed  
Hospitals  1  0  5  3  4  2 
Nursing Facilities   4  17  2  0  3  4 
Other Long-Term  Care 
0  1  1  1  1  0 
Facilities  
Substance Abuse 
0  2  0  0  1  0 
Treatment Centers 
Other Facilities   5  3  7  3  2  3 
  Subtotal   10  23  15  7  11  9 
Practitioners   Opened  Closed  Opened  Closed  Opened  Closed 
Chiropractors  0  1  1  0  0  0 
Counselors/ 
4  1  2  4  6  2 
Psychologists 
Dentists  5  9  11  1  3  5 
Optometrists/Opticians  0  0  1  1  0  0 
Physicians   20  12  15  9  24  17 
Podiatrists  0  0  0  1  1  0 
Other Practitioners  0  0  0  0  1  0 
  Subtotal   29  23  30  16  35  24 
Medical Support  Opened  Closed   Opened  Closed   Opened  Closed  
Durable Medical 
13  2  13  7  3  12 
Equipment Suppliers 
Home Health Care 
3  2  5  1  3  3 
Agencies 
Home Health Care Aides  5  4  5  5  6  4 
Laboratories  6  0  3  4  6  3 
Nurses/Doctors 
1  3  1  1  2  0 
Assistants  
Pharmaceutical 
55  25  66  39  40  51 
Manufacturers 
Pharmacies  21  16  21  17  23  15 
Radiologists  0  1  0  0  0  0 
Transportation Services  0  0  2  1  10  2 
Other Medical Support   6  7  11  6  10  7 
  Subtotal   110  60  127  81  103  97 
Program  Related   Opened  Closed  Opened  Closed  Opened  Closed 
Billing Company  0  0  1  0  2  0 
Managed Care   0  1  1  1  0  0 
  Subtotal   0  1  2  1  2  0 
  Total   149  107  174  105  151  130 
 
Source:  Unit response to OIG data request. 
 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  28  
   
   
APPENDIX E 
Case File Review Population, Sample Size Counts, and 
Confidence Interval Estimates 
Table E-1 shows population and sample counts and percentages by case 
type. Note that both samples have percentages of case types similar to the 
general population, though sample counts for some case types are very 
small.  Because of these small sample sizes, we cannot reliably generalize 
what we found in our sample review to each case type in the population, 
and only our overall estimates project to the population of all case files.  
We estimated the 4 population values for all 1,068 case files from the 
results of our review of the case files selected in our simple random  
samples.  Table E-2 includes the estimate descriptions, sample sizes, point 
estimates, and 95-percent confidence intervals for these four estimates.  
 
Table E-1:  Population and Sample Size Counts for Case Types 
Population Count  Sample Count*    Sample Count* 
Case Type  
and (%)  n=1,068   and (%)  n=100   and (%)  n=50  
Closed  621 (58%)   62 (62%)   27 (54%)  
Open   447 (42%)   38 (38%)   23 (46%)  
Civil  440 (41%)   39 (39%)   19 (38%)  
Criminal  628 (59%)   61 (61%)   31 (62%)  
Patient Abuse/Neglect  304 (28%)   29 (29%)   12 (24%)  
Total Fraud   764 (72%)   71 (71%)   38 (76%) 
     Global Fraud   190 (18%**)   22 (22%**)   13 (26%**) 
 Non-Global Fraud     
(Provider Fraud)   574 (54%**)   49 (49%**)   25 (50%**)  
Source: The Michigan MFCU provided a list of all  case  files open during FYs 2010 through 2012. 

*OIG generated this random sample. 

**These  percentages refer to the total/sampled number of all  cases, not to the total/sampled number of fraud  cases. 

 
 
 
 
 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  29  
   
   
Table E-2:  Confidence Intervals for Key Case File Review  Data  
Point  95-Percent Confidence 
Estimate Description  Sample Size 
Estimate  Interval  
Case Files With 
Documented Supervisory   62   98.4%   91.699.8%  
Approval for Closing  
Case Files With No 
Documented Supervisory   100  21.0%   13.830.0%  
Approval for Opening  
Case Files With No 
Documentation of at 
100   60.0%   50.269.3%  
Least One Supervisory 
Review  
Case Files With No 
Documentation of 
100  67.0%   57.375.8%  
Periodic Supervisory  
Review  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  30  
   
   
APPENDIX F 
Unit Comments 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  31  
   
   
 
 
 
 
 
 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  32  
  Stuart vVright 
Page 3 
December 19, 2013 
Recommendation #4:  Revise the MOU with the Department of 
Community Health. 
Unit Comment:  The lVIFCU concurs with this recommendation. The last 
operational MOU with the Department of Community Health (DCH) was executed 
in October of 2010 and is now stale in a number of respects.  The MFCU created a 
new draft MOU and has provided that draft: to DCH for review and comment on 
October 25, 2013.  Since then, the two agencies have made adjustments to the 
language and an updated MOU should be in place by the end of January of 2014. 
Once again, I thank yon ibr the opportunity to comment on your report and 
appreciate how this process has had a positive impact on the Unit. 
Sincerely, 
David E. Tanay 
Division Chief 
Health Care Fraud Division 
fil7-241-G500 
DET/jk 
cc:  Susan Burbach 
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review (OEI-09-13-00070)  33   
   
ACKNOWLEDGMENTS 
This report was prepared under the direction of Timothy S. Brady, Regional 
Inspector General for Evaluation and Inspections in the San Francisco 
regional office, and Michael Henry,  Deputy Regional Inspector General.  
Matthew DeFraga served as the lead analyst for this study.  Other Office 
of Evaluation and Inspections staff from the San Francisco Regional 
Office who provided support include Rosemary Rawlins.  Central office 
staff who provided support include Susan Burbach, Kevin Farber, 
Christine Moritz, Andrew VanLandingham, and Sherri Weinstein.  Office 
of Audit Services staff who provided support include Brian Anderson and 
Timothy Heslop.  Office of Investigations staff who provided support 
include David Vail.   
Michigan State Medicaid Fraud Control Unit:  2013 Onsite Review  (OEI-09-13-00070)  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.