[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Notices]
[Pages 62074-62077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-25894]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

[Docket Number: OIG-1204-N]


Proposed Revision of Performance Standards for State Medicaid 
Fraud Control Units

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice and opportunity for comment.

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SUMMARY: This notice seeks comment on an OIG proposal to revise 
standards for assessing the performance of the State Medicaid Fraud 
Control Units (MFCUs or Units). This proposal would replace and 
supersede standards published on September 26, 1994 (59 FR 49080).

DATES: To ensure consideration, public comments must be delivered to 
the address provided below by no later than 5 p.m. on December 5, 2011.

ADDRESSES: In commenting, please refer to the file code OIG-1204-N. 
Because of staff and resource limitations, OIG cannot accept comments 
by facsimile (FAX) transmission. You may submit comments in one of 
three ways (no duplicates, please):
    1. Electronically. You may submit electronic comments on specific 
recommendations and proposals through the Federal eRulemaking Portal at 
http://www.regulations.gov.
    2. By regular, express, or overnight mail. You may send written 
comments to the following address: Office of Inspector General, Office 
of Congressional and Regulatory Affairs, Department of Health & Human 
Services, Attention: OIG-118-N, Room 5541, Cohen Building, 330 
Independence Avenue, SW., Washington, DC 20201. Please allow sufficient 
time for mailed comments to be received before the close of the comment 
period.
    3. By hand or courier. If you prefer, you may deliver, by hand or 
courier, your written comments before the close of the comment period 
to Office of Inspector General, Department of Health & Human Services, 
Cohen Building, Room 5541, 330 Independence Avenue, SW., Washington, DC 
20201. Because access to the interior of the Cohen Building is not 
readily available to persons without Federal Government identification, 
commenters are encouraged to schedule their delivery with one of our 
staff members at (202) 619-1343.
    We do not accept comments by FAX transmission. All submissions 
received must include the agency name and docket number for this 
Federal Register document. All comments, including attachments and 
other supporting materials received, are subject to public disclosure.

FOR FURTHER INFORMATION CONTACT: 

Richard B. Stern, OIG Office of Evaluation and Inspections, (202) 619-
0480.
Patrice S. Drew, Office of External Affairs, (202) 619-1368.

SUPPLEMENTARY INFORMATION:

I. Background

    The mission of the MFCUs, as established in Federal statute, is to 
investigate and prosecute Medicaid provider fraud and patient abuse and 
neglect. The States are responsible for operation of the MFCUs and 
receive reimbursement for a percentage of their costs from the Federal 
Government. Under section 1903(a)(6) of the Social Security Act (Act), 
States are reimbursed for 90 percent of their costs for the first 3 
years of an MFCU's operation and 75 percent for subsequent years. All 
MFCUs are currently reimbursed at 75 percent of the costs of operating 
a certified MFCU.
    OIG is delegated authority under 1903(q) and 1903(a)(6) of the Act 
to certify and annually recertify Units as eligible for Federal 
Financial Participation (FFP), and to reimburse States for costs 
incurred in operating an MFCU. Through the certification and 
recertification process, OIG ensures that the Units meet the 
requirements for FFP set forth in section 1903(q) of the Act and in OIG 
regulations found at 42 CFR part 1007. The performance standards set 
forth in this guidance document constitute the standards that OIG will 
apply in determining the effectiveness of State Units in carrying out 
MFCU required functions. As part of the recertification process, OIG 
reviews

[[Page 62075]]

reports from the Units, obtains information from other Federal and 
State agencies, and conducts periodic onsite reviews.
    Under 1903(q), an MFCU must be a ``single, identifiable entity of 
the State government'' and be ``separate and distinct'' from the State 
Medicaid agency. The Unit must be an office of the State Attorney 
General's office, another State government office with statewide 
prosecutorial authority, or operate under a formal arrangement with the 
State Attorney General's office. The MFCU must investigate and 
prosecute Medicaid fraud cases, under State law, on a statewide basis. 
OIG regulations also require MFCUs to enter into agreements with the 
State Medicaid agency to ensure the referral of suspected provider 
fraud cases.
    Under the statute, a MFCU must also have procedures for 
investigating and prosecuting (or referring for prosecution) 
allegations of patient abuse and neglect in Medicaid-funded facilities. 
A MFCU may also investigate and prosecute abuse and neglect in ``board 
and care'' facilities, such as assisted living facilities, even if such 
facilities do not receive Medicaid payments. Finally, the statute and 
regulations require that MFCUs be composed of a team of attorneys, 
auditors, and investigators.
    Under section 1902(a)(61) of the Act, as added by Public Law 103-
66, section 13625 (1994), all States must operate MFCUs unless they 
demonstrate to the Secretary of HHS that they can operate without a 
Unit. Currently, 49 States and the District of Columbia have 
established MFCUs and 1 State, North Dakota, operates without a MFCU 
after receiving permission from HHS in 1994. Under section 1902(a)(61), 
States must operate a MFCU that effectively carries out the functions 
and requirements described in 1903(q), as determined in accordance with 
standards established by the Secretary of HHS. The guidance proposed in 
this Federal Register notice sets forth the performance standards OIG 
will consider in determining whether State MFCUs are effectively 
carrying out their statutory functions under 1903(q).
    These standards amend and update performance standards that were 
initially published in 1994. The performance standards have been used 
by OIG as part of the certification process to assess whether a MFCU is 
operating effectively. Where OIG determines there are deficiencies in 
meeting the standards, OIG will work with the Unit to improve 
performance. OIG may also make recommendations for improvement and will 
monitor the Unit's implementation of any such recommendations. 
Ultimately, a Unit that is continuously not operating effectively could 
be designated as a high-risk grantee and OIG may make a separate 
determination regarding the Unit's certification status under section 
1903(q). Based on our experience in overseeing the MFCUs since 1994, we 
are proposing in this notice to revise the standards.

II. Standards for Assessing MFCU Performance

Performance Standard 1--Compliance With Requirements

    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. OIG regulations for operation of a MFCU contained in 42 CFR part 
1007;
    C. Other Federal regulations and policies applicable to the 
Medicaid program, including 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. Other applicable conditions of the State's award.

Performance Standard 2--Staffing

    A Unit maintains reasonable staff levels and office locations in 
relation to the State's Medicaid program expenditures and in accordance 
with staffing allocations approved in its budget. In meeting this 
standard, the following performance indicators will be considered:
    A. The Unit employs the number of staff that is included in the 
Unit's budget estimate as approved by OIG.
    B. The Unit employs a total number of professional staff, including 
attorneys, auditors, and investigators, that is commensurate with the 
State's total Medicaid program expenditures and that enables the Unit 
to effectively investigate and prosecute (or refer for prosecution) the 
volume of case referrals and workload for both Medicaid fraud and 
patient abuse and neglect.
    C. The Unit employs a mix and number of attorneys, auditors, 
investigators, and other professional staff, that is both commensurate 
with the State's total Medicaid program expenditures and that allows 
the Unit to effectively investigate and prosecute (or refer for 
prosecution) the 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. Office locations are distributed throughout the State, and are 
adequately staffed, commensurate with the volume of case referrals and 
workload for each location.

Performance Standard 3--Policies and Procedures

    A Unit establishes written policies and procedures for its 
operations and ensures that staff are familiar with, and adhere to, 
policies and procedures. In meeting this standard, the following 
performance indicators will be considered:
    A. The Unit has written guidelines or manuals that contain current 
policies and procedures, consistent with these performance standards, 
for the investigation and 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.
    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.

Performance Standard 4--Maintaining Adequate Referrals

    A Unit takes steps to maintain an adequate volume and quality of 
referrals from the single State Medicaid agency and other sources. In 
meeting this standard, the following performance indicators will be 
considered:
    A. The Unit takes steps, such as the development of operational 
protocols, to ensure that the State Medicaid agency and other agencies 
refer to the Unit all suspected provider fraud cases.
    B. 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.
    C. 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.
    D. The Unit provides timely information to the State Medicaid 
agency when the Medicaid agency

[[Page 62076]]

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).
    E. The Unit takes steps to ensure that the State Long Term Care 
Ombudsman and other officials and agencies refer to the Unit suspected 
patient abuse and neglect cases.
    F. The Unit takes steps, through public outreach or other means, to 
encourage the public to refer cases to the Unit.

Performance Standard 5--Maintaining a Continuous Case Flow

    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. In meeting this standard, the following performance 
indicators will be considered:
    A. Supervisors approve the opening and closing of all 
investigations.
    B. Supervisors review the progress of cases as part of a 
performance management system 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 supported and 
justified based on resource constraints or other exigencies.

Performance Standard 6--Case Mix

    A Unit's case mix, as practicable, covers all significant provider 
types and includes a mix of fraud and patient abuse and neglect cases. 
In meeting this standard, the following performance indicators will be 
considered:
    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 at all times maintains a 
substantial number of patient abuse and neglect cases.

Performance Standard 7--Maintaining Case Information

    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. In meeting this standard, the following 
performance indicators will be considered:
    A. Supervisory reviews 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 in a timely manner, as defined 
by MFCU 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 reporting of aggregate case information.

Performance Standard 8--Performance Outcome and Measurement

    A Unit has a process for monitoring and measuring the outcome of 
cases. In meeting this standard, the following performance indicators 
will be considered when determining how effectively the Unit detects, 
investigates and prosecutes (or refers for prosecution) Medicaid fraud 
and patient abuse and neglect:
    A. The Unit maintains a performance management system or relies 
upon the State's performance management system as it applies to the 
Unit.
    B. If establishing its own performance system, the Unit develops 
performance outcomes, such as 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 Unit's inventory/
docket.
    4. The number of referrals received by the Unit and the number of 
referrals to other agencies made by the Unit.
    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 restrictions ordered 
in a criminal case; the dollar amount of recoveries and the types of 
relief obtained through civil judgments or prefiling settlements.
    9. Non-case specific work of the Unit which enhances the Unit's 
mission, such as training activities for provider groups and other 
public integrity or law enforcement offices; outreach and training for 
State and county social service agencies; liaison meetings with managed 
care organizations; and publication of fraud alerts or other 
information for areas within the Unit's jurisdiction.
    C. The Unit establishes annual performance goals for each 
identified outcome.
    D. The Unit annually evaluates whether it has achieved its goals.
    E. If the Unit maintains a strategic plan, the Unit aligns 
performance outcomes and goals with the plan.

Performance Standard 9--Cooperation With Federal Authorities on Fraud 
Cases

    A Unit cooperates with OIG and other Federal agencies in the 
investigation and prosecution of Medicaid and other health care fraud. 
In meeting this standard, the following performance indicators will be 
considered:
    A. The Unit communicates on a regular basis with the OIG Office of 
Investigations (OI) and other Federal agencies investigating or 
prosecuting health care fraud in the State.
    B. The Unit cooperates and, as appropriate, coordinates with OI 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 OI or another Federal agency.
    C. The Unit makes available, 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 OI or other relevant agencies under procedures as 
set by those agencies.
    E. For cases that have significant 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 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 or successor data bases.

[[Page 62077]]

Performance Standard 10--Program Recommendations

    A Unit makes statutory or programmatic recommendations, when 
warranted, to the State government. In meeting this standard, the 
following performance indicators will be considered:
    A. The Unit, when warranted and appropriate, makes statutory 
recommendations to the State legislature to improve the operation of 
the Unit, including amendments to the enforcement provisions of the 
State code.
    B. The Unit, when warranted and appropriate, makes other regulatory 
or administrative recommendations regarding program integrity issues to 
the State Medicaid agency and to other agencies responsible for 
Medicaid operations or funding.
    C. The Unit monitors actions taken by the State legislature and the 
State Medicaid or other agencies in response to recommendations.
    D. The Unit reports program recommendations to OIG.

Performance Standard 11--Agreement With Medicaid Agency

    A Unit periodically reviews its Memorandum of Understanding (MOU) 
with the single State Medicaid agency to ensure that it reflects 
current practice, policy, and legal requirements. In meeting this 
standard, the following performance indicators will be considered:
    A. The MOU reflects current policy and practice by both the Unit 
and the State Medicaid agency.
    B. The MOU meets current Federal legal requirements as contained in 
law or regulation, including 42 CFR Sec.  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 Single State Agency to a 
Medicaid Fraud Control Unit.

Performance Standard 12--Fiscal Control

    A Unit exercises proper fiscal control over Unit resources. In 
meeting this standard, the following performance indicators will be 
considered:
    A. The Unit director, or the director's designee, approves and 
signs the Unit's budget and estimated expenditures.
    B. The Unit director, or the director's designee, approves and 
signs all fiscal and administrative reports concerning Unit 
expenditures.
    C. The Unit maintains an equipment inventory that is updated on a 
regular basis to reflect all property under the Unit's control.
    D. The Unit maintains an effective time and attendance system.
    E. The Unit applies generally accepted accounting principles in its 
control of Unit funding.
    F. The Unit employs a financial system in which all funds are 
assigned to individual accounts according to their source and all 
expenditure items can be traced to the original funding stream and 
account.

Performance Standard 13--Training

    A Unit maintains an annual training plan for all professional 
disciplines. In meeting this standard, the following performance 
indicators will be considered:
    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 complies with its 
training plans and maintains records of the staff's compliance.
    C. Professional certifications are maintained for all staff, 
including continuing education requirements.
    D. The Unit participates in training offered by OIG, CMS, and other 
MFCUs, as funding permits.
    E. Through cross-training or by other means, Unit staff receive 
training on the role and responsibilities of the State Medicaid agency 
and other law enforcement partners.

Daniel R. Levinson,
Inspector General.
[FR Doc. 2011-25894 Filed 10-5-11; 8:45 am]
BILLING CODE 4152-01-P