[Federal Register Volume 84, Number 56 (Friday, March 22, 2019)]
[Rules and Regulations]
[Pages 10700-10719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-05362]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 455
Office of Inspector General
42 CFR Part 1007
RIN 0936-AA07
Medicaid; Revisions to State Medicaid Fraud Control Unit Rules
AGENCIES: Office of Inspector General (OIG) and Centers for Medicare &
Medicaid Services (CMS), Department of Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule amends the regulation governing State Medicaid
Fraud Control Units (MFCUs or Units). The rule incorporates statutory
changes affecting the Units as well as policy and practice changes that
have occurred since the regulation was initially issued in 1978. These
changes include a recognition of OIG's delegated authority; Unit
authority, functions, and responsibilities; disallowances; and issues
related to organization, prosecutorial authority, staffing,
recertification, and the Units' relationship with Medicaid agencies.
The rule is designed to assist the MFCUs in understanding their
authorities and responsibilities under the grant program, clarify the
flexibilities the MFCUs have to operate their programs, and reduce
administrative burden, where
[[Page 10701]]
appropriate, by eliminating duplicative and unnecessary reporting
requirements.
DATES: These regulations are effective on May 21, 2019.
FOR FURTHER INFORMATION CONTACT: Susan Burbach, (202) 708-9789, or
Richard Stern, (202) 205-0572, Office of Inspector General.
SUPPLEMENTARY INFORMATION:
Legal Authority
The legal authority for this regulatory action is found in the
Social Security Act (the Act) as follows:
Part 1007: Sections 1902(a)(61), 1903(a)(6), 1903(b)(3), 1903(q),
and 1102 of the Act.
Part 455: Section 1102 of the Act.
Executive Summary
A. Purpose of Regulatory Action
The mission of the MFCUs, as described in section 1903(q) of the
Act, is to investigate and prosecute Medicaid provider fraud and
patient abuse or neglect that occurs in health care facilities or board
and care facilities. The OIG, on behalf of HHS, has the responsibility
to administer a grant award to each of the MFCUs and to provide
oversight for MFCU operations. The purpose of this regulatory action is
to revise regulations that were initially issued after the inception of
the MFCU grant program in 1977.
We are amending this regulation for three specific reasons. First,
we are incorporating into the rule statutory changes that have occurred
since the 1977 enactment of the Medicare-Medicaid Anti-Fraud and Abuse
Amendments (Pub. L. 95-142), which amended section 1903(a) of the Act
to provide for Federal participation in the costs attributable to
establishing and operating a MFCU. Second, we are aligning the rule
with practices and policies that have developed and evolved since the
initial version of the rule was issued in 1978, 43 FR 32078 (July 24,
1978), now codified at 42 CFR part 1007. Finally, we are revising the
regulation to reduce burden on the Units, when doing so does not
undermine OIG's oversight role or the Units' mission.
For ease of reading, we have republished the entirety of part 1007
and incorporated the changes as part of that publication. However, for
some sections within part 1007, we did not make substantive changes.
B. Summary of Major Provisions
(1) Statutory Changes. We incorporate statutory changes that have
occurred since 1977, including (1) extending funding for State MFCUs by
authorizing a Federal matching rate of 90 percent for the first 3 years
of operation and a Federal matching rate of 75 percent thereafter, (2)
establishing a Medicaid State plan requirement that a State must
operate an effective Unit, (3) requiring the Secretary of Health and
Human Services to establish standards under which Units must be
operated, (4) allowing Units to seek approval from the relevant
Inspector General to investigate and prosecute violations of State law
related to fraud in any aspect of the provision of health care services
and activities of providers of such services under any Federal health
care program, including Medicare, as long as the fraud is primarily
related to Medicaid, and (5) giving Units the option to investigate and
prosecute patient abuse or neglect in board and care facilities,
regardless of whether the facilities receive Medicaid payments. With
the exception of the establishment of standards, all of these statutory
changes were self-implementing and have been operational since their
statutory effective dates. Performance standards for MFCU operations
were initially published in the Federal Register in 1994 and revised in
2012.
(2) Office of Inspector General Authority. The final rule, in
referring to OIG as the oversight agency for the MFCUs, recognizes that
the authority for certification and recertification of the Units, as
well as the administration of a Federal grant award to operate the
Units, was transferred from the predecessor agency of CMS (the Health
Care Financing Administration) to OIG on July 27, 1979.
(3) Definition of Key Terms. The final rule adds definitions of key
terms that clarify issues related to MFCU authority under the grant.
All the definitions are consistent with other regulatory definitions
and with longstanding practice.
(4) Organizational Requirements. The final rule clarifies,
consistent with OIG policy and longstanding MFCU practice, what it
means to be a ``single, identifiable entity of State government'' as
required under the statute. The regulations specify that a MFCU must
have a single director to whom all staff report, operate under a budget
that is separate from that of its parent agency, and generally have
offices in their own contiguous space.
(5) Prosecutorial Authority Requirements. The final rule,
consistent with statutory changes and longstanding practice, makes
amendments to the prosecutorial authority requirement options to
include the prosecution of patient or resident abuse and neglect and to
include formal written procedures for making referrals to the State
Attorney General or another office with statewide prosecutorial
authority.
(6) Agreement with Medicaid Agency. The final rule requires that
the agreement with the Medicaid agency establish regular communication,
procedures for coordination, and procedures by which the Unit will
receive referrals of potential fraud from managed care organizations.
This revision is consistent with the recent changes to the Medicaid
managed care regulation in 42 CFR part 438 that require managed care
organizations to refer potential fraud to the Medicaid agency or to the
MFCU.
(7) Duties and Responsibilities. The final rule, consistent with
published performance standards, requires that Units submit all
convictions to OIG for purposes of program exclusion within 30 days of
sentencing or as soon as practicable if a Unit encounters delays from
the courts. The final rule also clarifies, consistent with existing
practice, the requirement that a Unit make information available to,
and coordinate with, OIG investigators and attorneys, or with other
Federal investigators and prosecutors, on Medicaid fraud and
investigations or prosecutions involving the same suspects or
allegations.
(8) Staffing Requirements. The final rule clarifies that Units may
choose to employ professional employees as full- or part-time employees
so long as they devote their ``exclusive effort'' to Unit functions.
The final rule also establishes that a Unit will employ a director and
that all Unit employees will be under the direction and supervision of
the Unit director. The rule establishes that Unit professional
employees may also obtain outside employment with some restriction and
may perform temporary assignments that are not a required function of
the Unit, but may not receive Federal financial participation for those
assignments. The rule also clarifies that Units may employ employees or
consultants with specialized knowledge and skills, but that
investigation and prosecution functions may not be outsourced through
consultant agreements or other contracts. Finally, the rule requires
Units to provide training for professional employees on Medicaid fraud
and patient or resident abuse and neglect matters. These requirements
all codify and are consistent with current Unit operations and OIG
policy on Unit staffing.
(9) Recertification Requirements. The final rule amends the
regulation to reflect the Unit recertification process.
[[Page 10702]]
This includes describing what OIG requires annually as part of
recertification, including submission of reapplication materials and
statistical data. The final rule also eliminates the requirement to
submit an ``annual report,'' thus reducing burden. The final rule
clarifies the factors that OIG considers when recertifying a Unit. The
rule also creates a process for notifying the Unit of approval or
denial of recertification and procedures for reconsideration should OIG
deny recertification.
(10) Federal Financial Participation (FFP). The final rule reflects
that, except for Units with OIG approval to conduct data mining under
this part, Units may not receive FFP for data mining activities that
duplicate surveillance and utilization review responsibilities of State
Medicaid agencies, but may engage in activities other than data mining
to identify situations in which fraud may exist, such as efforts to
increase referrals through program outreach activities.
(11) Disallowance Procedures. The final rule sets forth procedures
for OIG disallowances of FFP and for Unit requests for reconsideration
and appeal of disallowances. These procedures are consistent with, and
prompted by, a 2008 amendment to the Act, adding section 1116(e), which
provided States the option to seek reconsideration of a disallowance by
an agency prior to an appeal to the Departmental Appeals Board. The
procedures are intended to mirror those that were implemented earlier
for CMS disallowances to the States, 42 CFR 430.42.
(12) CMS Companion Regulation. To ensure that both the Unit and the
Medicaid agency are required to have an agreement with each other, the
final rule includes amendments to the CMS regulation at 42 CFR 455.21
to require that the Medicaid agency has an agreement with the Unit. The
amendments to this section were developed in collaboration with CMS.
C. Costs and Benefits
There are no significant costs associated with the regulatory
revisions, and the revisions do not impose any mandates on State,
local, or Tribal governments or on the private sector that would
represent significant costs.
I. Background
A. Statutory Changes Since 1977 Implemented by This Rulemaking
(1) Omnibus Reconciliation Act of 1980 (Pub. L. 96-499). The
Medicare-Medicaid Anti-Fraud and Abuse Amendments added section
1903(a)(6) of the Social Security Act (the Act), which authorized a
Federal matching rate of 90 percent for the establishment and operation
of State Medicaid Fraud Control Units (MFCUs) for fiscal years 1978
through 1980. The Omnibus Reconciliation Act of 1980 extended funding
for State MFCUs by amending section 1903(a)(6) of the Act to authorize
a Federal matching rate of 90 percent for the first 3 years of
operation and a Federal matching rate of 75 percent thereafter.
(2) Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-66). The
Omnibus Budget Reconciliation Act of 1993 added section 1902(a)(61) to
the Act, establishing a Medicaid State plan requirement that a State
must operate an effective MFCU, unless the State demonstrates that
effective operation of a Unit would not be cost effective and that, in
the absence of a Unit, beneficiaries will be protected from abuse and
neglect. The statute further requires that the Units be operated in
accordance with standards established by the Secretary of Health and
Human Services (HHS).
(3) Ticket to Work and Work Incentives Improvement Act of 1999
(Pub. L. 106-170). In the Ticket to Work and Work Incentives
Improvement Act of 1999, Congress amended section 1903(q) of the Act to
extend the authority of MFCUs in two ways. First, the Units may seek
approval from the relevant Federal Inspector General (in most
circumstances the HHS Inspector General) to investigate and prosecute
violations of State law related to any aspect of fraud in connection
with ``the provision of health care services and activities of
providers of such services under any Federal health care program,''
including Medicare, ``if the suspected fraud or violation of State law
is primarily related to'' Medicaid. Second, the law gives Units the
option to investigate and prosecute patient abuse or neglect in ``board
and care facilities,'' regardless of whether those facilities receive
Medicaid payments.
B. Regulatory, Practice, and Policy Changes to the MFCU Program Since
1978
Prior to the publication of this final rule, the regulation was
amended on two occasions. First, the regulation was amended at Sec.
1007.9(e)-(g) (76 FR 5970 (February 2, 2011)) to implement payment
suspension provisions found in the Patient Protection and Affordable
Care Act, Public Law 111-148. Second, the regulation was modified at
Sec. 1007.20 to allow FFP for data mining under certain circumstances
(78 FR 29055 (May 17, 2013)). With the exception of these two
revisions, the regulation had not received a revision since it was
originally published in 1978. In the ensuing years, growth of the MFCU
program to 50 Units (49 States and the District of Columbia), as well
as changes in MFCU practice, health care, and the workplace, have led
to the need to revise the regulation. Further, in 1994, pursuant to
section 1902(a)(61) of the Act, the Office of Inspector General (OIG),
in consultation with the Units, developed 12 performance standards to
be used in assessing the operations of MFCUs. These performance
standards have since been revised at 77 FR 32645 (June 1, 2012). OIG
uses the performance standards to annually recertify each Unit and to
determine if a Unit is effectively and efficiently carrying out its
duties and responsibilities. On September 20, 2016, OIG published in
the Federal Register (81 FR 64383) a Notice of Proposed Rulemaking
(Proposed Rule), which we are finalizing with publication of this final
rule.
C. Summary of the 2016 Proposed Rule
The Proposed Rule set forth proposed amendments to the State
Medicaid Fraud Control Unit regulations. With respect to definitions,
we proposed to modify the current definition of ``provider,'' eliminate
the definition of ``employ or employee,'' and add definitions for
``full-time employee,'' ``part-time employee,'' ``professional
employee,'' ``exclusive effort,'' ``director,'' ``fraud,'' ``abuse of
patients,'' ``board and care facility,'' ``health care facility,''
``misappropriation of patient funds,'' ``neglect of patients,'' and
``program abuse.''
With respect to requirements for certification, we proposed to
define the phrase ``single, identifiable entity,'' specifically, that a
Unit must (1) be a single organization reporting to the single Unit
director; (2) operate under its own budget that is separate from that
of its parent division or agency; and (3) have the headquarters office
and any field offices each in their own contiguous space. We also
proposed to clarify that Units must satisfy the definition to be
certified and recertified.
With respect to prosecutorial authority requirements, we proposed
that the regulation be amended to include the establishment of formal
procedures for referring cases of patient abuse and neglect to the
appropriate prosecuting authority when there is no State agency with
statewide authority and capability for patient abuse prosecutions. We
proposed that the regulation be amended to reference the office of the
State Attorney General ``or
[[Page 10703]]
another office with statewide prosecutorial authority'' and to clarify
that the formal procedures should be written procedures.
With respect to the Unit's relationship to and its agreement with
the Medicaid agency, in the joint Proposed Rule, OIG and the Centers
for Medicare & Medicaid Services (CMS) proposed to add additional
guidance to the MFCU rule and the CMS rule to clarify that both the
Medicaid agency and the Unit must enter into a written agreement, such
as a memorandum of understanding. We also proposed to add to both rules
that the written agreement include certain required elements. Finally,
we proposed an amendment to require, consistent with changes to the law
and regulation governing the referral of credible allegations of fraud,
that the Unit provide certification to the Medicaid agency, upon
request on a quarterly basis, that any matter accepted on the basis of
a referral continues to be under investigation and thus warrants
continuation of payment suspension.
With respect to functions and responsibilities of a Unit, we
proposed to require the Unit to review complaints involving
misappropriation of funds, as we believed that making the review of
such complaints mandatory, rather than optional, is consistent with the
broad statutory responsibility for patient abuse or neglect. Consistent
with the statute, we also proposed to revise the regulation to specify
that the MFCU must obtain written permission from the relevant Federal
Inspector General to investigate cases of provider fraud in health care
programs other than Medicaid and that the Units report annually to OIG
on any approvals for extended investigative authority from any Federal
Inspector General. To be consistent with the statute, we also proposed
to permit investigations of patient abuse or neglect in board and care
facilities. We proposed that applicable State laws pertaining to
Medicaid fraud include criminal statutes as well as civil false claims
statutes or other civil authorities. We further proposed that if no
State civil fraud statute exists, Units should make appropriate
referrals of meritorious civil cases to Federal investigators or
prosecutors, such as the U.S. Department of Justice (DOJ) or the U.S.
Attorney's Office, as well as to the OIG Office of Investigations and
Office of Counsel to the Inspector General. We proposed to clarify that
when a Unit discovers that overpayments have been made to a provider or
facility, the Unit must either recover the overpayment as part of its
resolution of a fraud case or refer the matter to the proper State
agency for collection.
With respect to coordination with Federal partners, we proposed to
retain the current requirement that a Unit make available to Federal
investigators and prosecutors and OIG attorneys all information in its
possession concerning Medicaid fraud and that the Unit coordinate with
such officials any Federal and State investigations or prosecutions
involving the same suspects or allegations. However, we also proposed
to expand the requirement to further ensure effective collaboration
between the Units and OIG investigators and attorneys, or other Federal
investigators and Federal prosecutors by (1) establishing a practice of
regular meetings or communication; (2) making appropriate referrals to
OIG investigators and attorneys, other Federal investigators, and
Federal prosecutors; and (3) developing written procedures for those
coordinating actions.
We proposed to require a Unit to provide adequate safeguards to
protect sensitive information and data under the Unit's control,
updating a requirement that had largely referred to paper case files
and other case-related materials, such as evidence.
We proposed to amend the regulations to require that a Unit
transmit to OIG, for purposes of excluding convicted individuals and
entities from participation in Federal health care programs under
section 1128 of the Act, pertinent documentation on all convictions
obtained by the Unit, including those cases investigated jointly with
another law enforcement agency, as well as those prosecuted by another
agency at the local, State, or Federal level. We proposed that such
information be provided within 30 days of sentencing or, if Units are
unable to obtain pertinent information from the sentencing court within
30 days, as soon as reasonably practicable.
With respect to staffing requirements, we proposed to revise the
regulations to clarify that Unit professional employees do not need to
be ``full time'' to receive FFP, but to retain the longstanding policy
and practice that FFP is permitted only for Unit professional employees
who are devoted ``exclusively'' to the MFCU mission except for limited
circumstances that are specifically described in the regulation. We
also proposed that, to be eligible for FFP, professional employees may
not be employed by other State agencies during nonduty hours and that
professional employees may obtain employment outside of State
government, if State law allows it, but only if the outside employment
presents no conflict of interest to Unit activities. We proposed to
permit Unit professional employees to engage in temporary assignments
that are not within the functions and responsibilities of a Unit only
if such assignments are truly limited in duration. Such assignments
would not be funded by the Federal MFCU grant. We proposed to add a
requirement that the Unit must employ a director who supervises all
Unit employees, either directly or through subordinate Unit managers.
We also proposed to clarify that a Unit may not receive FFP when it
relies on individuals not employed directly by the Unit for the
investigation or prosecution of cases, including individuals retained
through consultant agreements or other contractual arrangements, but
that Units may receive FFP for the employment, or retention through
consultant agreements or other arrangements, of individuals with
particular knowledge, skills, and/or expertise that a Unit believes
will support the Unit in the investigation or prosecution of cases. We
also proposed to add a requirement that, consistent with MFCU
performance standards, a Unit must provide training for its
professional employees for the purpose of establishing and maintaining
proficiency in the investigation and prosecution of Medicaid fraud and
patient abuse and neglect. We proposed to clarify that a Unit may hire
administrative and support staff on a part-time basis. Finally, we
proposed minor clarifications to the qualifications of attorneys,
auditors, and the senior investigator.
With respect to certification, we proposed to clarify that initial
certification will be based on the information and documentation
specified in the initial application and to eliminate the requirement
that an initial application include a projection of caseload.
With respect to recertification, we proposed to revise regulations
to reflect the recertification process that has evolved since the
program began. Specifically, we proposed that the regulation would (1)
describe the information that must be provided to OIG on an annual
basis, including the recertification application and statistical data;
(2) describe other information considered for recertification; (3)
clarify the basis for recertification by OIG; (4) create a procedure in
which OIG notifies the Unit whether the reapplication is approved or
denied by the Unit's recertification date; (5) clarify that an approved
reapplication may be subject
[[Page 10704]]
to special conditions; and (6) establish basic procedures for
reconsideration of an OIG denial of recertification. We also proposed
modifications to the annual report.
With respect to FFP rates and eligible costs, we proposed to modify
the regulation to reflect that, under law, FFP is available at the rate
of 90 percent during the first 12 quarters of a Unit's operation and at
75 percent thereafter, beginning with the 13th quarter of a Unit's
operation. We also proposed to clarify that each quarter of
reimbursement at the 90 percent matching rate is counted in determining
when the 13th quarter begins and that quarters of Unit operation do not
have to be consecutive to accumulate for purposes of determining when
the 90 percent matching period has ended. Additionally, we proposed to
clarify in regulation that a Unit may receive FFP for its efforts to
increase referrals through program outreach activities. We also
proposed to clarify the prohibition on the ability of Units to receive
FFP to ``identify situations in which a question of fraud may exist''
by clarifying the ability of Units to engage in activities, other than
data mining, to identify potential civil or criminal fraud in the
Medicaid program.
In addition, we proposed to clarify that the longstanding FFP
prohibition for beneficiary fraud (unless the suspected fraud involves
conspiracy with a provider) is narrowly focused on cases involving the
establishment of eligibility for Medicaid, such as the suspected
fraudulent statement of assets and income. On the other hand,
consistent with OIG policy, the proposed revision would permit FFP for
the investigation or prosecution of cases in which a beneficiary is
alleged to have submitted, or caused the submission of, a fraudulent
claim to the program for particular items or services that are
unrelated to the beneficiary's status as a beneficiary. One scenario in
which such cases may arise involves Medicaid personal care services
``self-directed'' programs, where the beneficiary may submit claims and
receive payment from Medicaid, may be responsible for hiring his or her
own caregivers, and may be required to monitor the activities of
caregivers.
With respect to disallowance procedures, we proposed to amend the
regulation to establish procedures for taking formal disallowances of
FFP, for Units to request reconsideration of disallowances, and to
appeal to the HHS Departmental Appeals Board.
Finally, we proposed to update the listing of other applicable HHS
regulations that were amended after the MFCU regulations were initially
promulgated.
II. Summary of Public Comments and OIG Responses
A. General
We received responsive comments from 10 distinct commenters,
including trade associations (such as the national association that
represents the MFCUs), individual Units, a health plan, and a State
medical society. Some of the commenters provided comments on multiple
topics. Commenters generally supported our proposals, but many of them
recommended certain changes and requested certain clarifications. We
have divided the public comment summaries and our responses into
sections pertaining to the part of the regulation to which they apply.
B. Definition of Fraud and Other Criminal Conduct
Comment: One commenter expressed concern that OIG, in its Proposed
Rule, both adopted State law definitions for types of criminal conduct,
including ``abuse of patients,'' ``fraud,'' ``misappropriation of
patient funds,'' and ``neglect of patients,'' and provided examples of
the essential elements of the crime. The commenter stated that the
definitions are ``overly expansive and inappropriate'' and that
``[e]ach MFCU must be able to defer to its state law definitions and
not be expected to comply with overarching federal definitions.'' The
commenter recommended that OIG delete all of the proposed language in
each of the definitions following the reference to State law.
Response: We proposed to define ``fraud'' as any act that
constitutes criminal fraud under applicable State law including the
deception, concealment of material fact, or misrepresentation made by a
person intentionally, in deliberate ignorance of the truth or in
reckless disregard of the truth.
It was not our intent to require States to comply with an
overarching definition, and this is the reason we defer to the
definitions contained in State law. The purpose in describing the
elements of the crime was to provide guidance on those elements that
are typically contained in State law.
Therefore, as specified in Sec. 1007.1 of our regulations, we are
finalizing the definition of fraud by retaining the first sentence of
the proposed definition of fraud as contained in the Proposed Rule but
have revised the language in the second sentence to clarify that the
crime ``may'' include the noted elements. We have also made a technical
change in eliminating the phrase ``by a person'' since the crime could
be committed by an organization as well. We have made similar revisions
to the other definitions that rely on State law definitions: ``abuse of
patients or residents'' and ``neglect of patients or residents.''
C. Definition of Abuse of Patients
Comment: Concerning the proposed definition of ``abuse of
patients,'' one commenter raised three concerns regarding the
definition. First, the commenter observed that the reference to abuse
of a ``patient'' is too narrow, since Unit authority may extend to
residents of facilities who are not considered ``patients'' under State
law. The commenter recommended that the definition be expanded to
include ``patient and/or resident of a care facility'' and that,
whenever the term ``patient'' is used throughout the regulation, the
word ``resident'' be added as well. Secondly, the commenter believed
that the term ``willful'' is problematic for States that define
``abuse'' as conduct that is not willful, such as reckless conduct.
Finally, the commenter observed the wide variation in what constitutes
abuse under State law and recommended that we eliminate the examples
entirely in the definition.
Response: We agree with the comments regarding the definition of
abuse. Under section 1903(q)(4) of the Act--as implemented by Sec.
1007.11(b)(2) of this rulemaking--the Units may receive FFP for abuse
or neglect cases arising in ``board and care facilities.'' Expanding
the definition to include abuse of ``residents,'' in addition to
``patients,'' is consistent with the statutory definition of ``board
and care facility'' in section 1903(q)(4)(B) of the Act. Adding the
reference to ``residents'' is also consistent with the Units'
longstanding lack of statutory authority to receive FFP for the
investigation and prosecution of cases of patient abuse or neglect that
occur in the home or other nonfacility settings.
We have also revised the definition to eliminate reference to
``willful'' conduct and to provide examples of what constitutes abuse.
We have made a similar revision to include both patients and
residents in the definition of ``neglect of patients'' to Sec.
1007.11(b) as well, which describes a Unit's responsibilities regarding
abuse or neglect.
D. Definition of Data Mining
Comment: One commenter expressed a concern that the proposed
definition at Sec. 1007.1 of ``data mining'' did not
[[Page 10705]]
consider the analysis of data that might occur during the course of an
investigation, rather than as part of activities designed to identify
new potential cases. For example, the commenter stated that in the
course of investigations, it is often necessary to conduct a ``peer
comparison'' between or among providers and present that information to
a jury or other fact finder for the purpose of demonstrating what is
usual and customary. The commenter stated that the activities related
to such analysis should be considered as eligible for FFP without
receiving a waiver from OIG to conduct data mining.
Response: We agree with the commenter that the use of data analysis
in an ongoing case should not be subject to the prohibition on FFP for
data mining and that Units need not receive a data mining waiver to
conduct such activities.
We believe, however, that the existing regulatory definition
permits such case-related activities by describing those activities
that require a data mining waiver from OIG to be limited to:
. . . the practice of electronically sorting Medicaid or other
relevant data, including, but not limited to, the use of statistical
models and intelligent technologies, to uncover patterns and
relationships within that data to identify aberrant utilization,
billing, or other practices that are potentially fraudulent.
By limiting the activities needing a waiver to those which involve
the ``sorting [of] Medicaid or other relevant data,'' we believe that
the existing definition excludes the type of case-related activities
referred to by the commenter. This position is consistent with the 2013
preamble to the rulemaking establishing the data mining waiver
authority. In a response to a comment, we stated:
We agree that the intent of the regulation is not to limit other
types of Medicaid data analysis being conducted in the normal course
of an investigation. Units may analyze relevant Medicaid data as
part of the evidence-gathering process while investigating a
particular possible fraud. In some instances, this data analysis
conducted as part of a particular investigation might allow the Unit
to identify other potential targets, which would result in opening
new fraud cases. Such data analysis is an accepted part of a MFCU's
investigative function and does not implicate the prohibition
contained in Sec. 1007.19(e)(2).
78 FR 29055, 29057 (May 17, 2013).
E. Definition of Director
Comment: One commenter agreed that the proposed definition of
``director'' is beneficial but suggested that the role of the director
would be clarified, and the working relationship between the Unit and
OIG improved, by amending the definition to also state that the
director ``serves as the chief liaison with OIG for all Unit-related
activities.''
Response: We agree with the commenter about the importance of
maintaining effective working relationships between the Units and OIG.
However, while the director plays the role of liaison with OIG in most
Units, we decline to modify the definition to require this, as other
Units may choose to designate another individual or individuals to play
that role. Also, even if the director plays the role of primary
liaison, some Units may choose to designate another individual to be
the liaison to OIG for particular Unit activities, such as
investigation-related activities.
F. Definition of Health Care Facility
Comment: One commenter objected to the definition of ``health care
facility,'' for purposes of the Units' investigations of patient abuse
or neglect, as a provider that ``furnishes . . . services to four or
more persons unrelated to the proprietor.'' The commenter suggested
that the definition be revised to include providers who furnish
services to two or more persons. The commenter acknowledged that
facilities with fewer than four residents could be investigated under
the ``board and care'' authority, but that the authority for board and
care cases is optional, and the authority to investigate patient abuse
or neglect at a health care facility is mandatory.
Response: We do not believe it is appropriate to establish our own
definition of health care facility for purposes of the MFCU program.
The definition of health care facility was adopted from the CMS
definition, contained in 42 CFR 447.10(b), of a ``facility'' as ``an
institution that furnishes health care services to inpatients'' and 42
CFR 435.1010, which defines an ``institution'' as ``an establishment
that furnishes (in single or multiple facilities) food, shelter, and
some treatment or services to four or more persons unrelated to the
proprietor . . . .''
We therefore decline to revise the definition of health care
facility.
G. Definition of Program Abuse
Comment: One commenter expressed concern that the proposed
definition of ``program abuse'' at Sec. 1007.1, in providing examples
such as an ``unnecessary cost to Medicaid'' and ``reimbursement for
services that are not medically necessary,'' blurs the line between
administrative misconduct on the one hand and criminal conduct on the
other.
Response: We agree with the commenter that the examples cited do
not clearly illustrate the distinction between administrative and
criminal misconduct. In revising the definition, we are not including
the examples. We also simplified the definition, as suggested by the
commenter, and revised the definition to refer to civil or criminal
fraud under ``State law,'' rather than ``Federal and State law,'' since
the Units' statutory function extends only to ``violations of all
applicable State laws . . . .''
H. Definition of Provider
Comment: One commenter stated that the proposed definition of
``provider'' insufficiently addresses the wide range of providers whose
actions fall within the scope of the Units' authority. The commenter
suggested that, along with several other definitions contained in the
Proposed Rule, the definition be expanded to incorporate definitions of
``provider'' that would be accepted under a State's laws.
The commenter also suggested that the definition be expanded to
include ``prescribing'' physicians, in addition to ``ordering'' or
``referring'' physicians, since State law may authorize the ability to
prescribe as distinct from ordering or referring.
Response: We agree that the definition for ``provider'' should be
expanded to reflect varying definitions under State law for health care
providers, as well as to clarify that it applies to ``prescribing
physicians'' as one example of a provider. We are therefore expanding
the definition of provider to include ``any individual or entity that
may operate as a health care provider under applicable State law'' as
well as ``an individual or entity that is required to enroll in a State
Medicaid program, such as an ordering, prescribing, or referring
physician.''
Comment: Two commenters expressed concern that the definition of
provider be expanded to specifically reference providers who provide
items or services in a managed care setting, as well as managed care
companies themselves, which do not provide items or services directly
but instead provide management services for other providers. The
commenters suggested that the definition of provider refer specifically
to managed care plans as well as individuals or entities that provide
items or services in a managed care network and who subcontract with
those plans.
[[Page 10706]]
Response: With respect to providers operating in a managed care
network, we agree and have clarified in the definition that a provider
includes individuals and entities that are part of a managed care
network. We had intended in the Proposed Rule that such providers were
included as ``an individual or entity that furnishes items or services
for which payment is claimed under Medicaid,'' but have added the
specific reference to managed care organizations (MCOs) and other
contracting entities because of the increasing role of managed care
networks in providing Medicaid items and services.
With respect to MCOs themselves, we decline to expand the
definition to specifically mention MCOs as a type of provider. While
MCOs play an integral and growing role in most State Medicaid programs,
they do not appear to be universally regarded as a type of
``provider.'' However, MCOs may play varying roles depending on the
terms of their contract with the State. To the extent that an MCO's
actions (or those of other entities or persons) are implicated in the
potentially fraudulent submission of claims by or on behalf of a
Medicaid provider, they may be the subject of a MFCU investigation or
prosecution, regardless of their own status as a provider.
Comment: One commenter objected that the regulation would expand
the definition of provider to include ordering and referring
physicians, arguing that this is not appropriate, since such physicians
do not participate in the program, may render services free of charge,
and have little or no reason or opportunity to game the system.
Therefore, the commenter expressed the view that these physicians
should not be subject to the administrative requirements of the
program.
Response: The definition of provider describes those individuals or
entities who may be subject to an investigation, but does not expand
the current authority of the Units. The MFCU mission is the
``investigation and prosecution of violations of all applicable State
laws regarding any and all aspects of fraud in connection with . . .
any aspect of the provision of medical assistance and the activities of
providers of such assistance . . . .'' To the extent that an ordering
or referring physician violates State law regarding Medicaid fraud, the
Units currently have the authority to include ordering or referring
physicians as the subject of an investigation or prosecution.
MFCU investigative authority is not limited to participating
providers or to individuals who may have an obvious financial incentive
to defraud the program. Fraud is an intent-based crime, so an
investigation or ultimate prosecution would reveal whether an ordering
or referring physician had the requisite intent to commit fraud. By
excluding ordering or referring physicians from the definition of
provider, Units might be unable to hold responsible under State law
those individuals responsible for a fraudulent claim to the program.
We therefore do not believe that the comment warrants a change to
the definition of ``provider.''
I. Single Identifiable Entity Requirements
Comment: Two commenters expressed concerns with the proposed
requirement at Sec. 1007.5(b)(3) that all Units ``[h]ave the
headquarters office and any field offices each in their own contiguous
space.''
One commenter stated that, while this arrangement is a best
practice for Unit operations, ``some Units may need special exceptions
based on the history of their respective Units and unique difficulties
recruiting employees.'' The commenter suggested that OIG grant an
exception to existing Units with other arrangements on either a
temporary or permanent basis.
Another commenter requested that the proposed rule be rewritten to
allow flexibility in the physical location of Unit employees while
still requiring effective, multidisciplinary collaboration. The
commenter requested that the wording of Sec. 1007.5(b)(3) be revised
to require that Unit offices be in their own contiguous space, ``or
otherwise ensure that all employees have a work location arrangement
that allows for real-time collaboration with the other professional
disciplines within the Unit, that non-Unit personnel have no
unauthorized access to Unit files, and that Unit personnel exert 100
percent of their efforts on Unit business.'' Alternatively, the
commenter requested, similar to the request of the other commenter on
this topic, that existing Units with noncontiguous space arrangements
be granted an exception when the arrangement allows for effective
collaboration.
Response: Our purpose in proposing a requirement regarding physical
office space was to ensure that Units exist as a ``single, identifiable
entity'' and to reflect our observation that Units generally exist in
contiguous space that is separate from the other parts of the Office of
Attorney General or other parent organization. As stated in the
Proposed Rule, we believe that having Unit offices in a single space
contributes to the team concept of the Units and helps to ensure that
employees are devoted exclusively to the mission of the Unit.
We recognize, however, that there can be extenuating circumstances
for locating staff in noncontiguous space when there are advantages for
Unit operations in such an arrangement. Therefore, as suggested by both
commenters, we have provided Units with the opportunity to demonstrate
to OIG that certain employees warrant a different arrangement. OIG will
review arrangements and approve or disapprove of exceptions to the
contiguous space requirement based on a demonstration by the Unit that
circumstances warrant a different arrangement for certain employees. We
have not provided a ``grandfathering'' process, but we are prepared to
review any existing arrangements that do not comport with a single
space requirement.
Therefore, we have revised the requirement in Sec. 1007.5 to
specify that the headquarters office and any field offices must have
their own contiguous space unless the Unit demonstrates to OIG that
circumstances warrant a different arrangement for certain employees.
In considering exceptions to the space requirement, OIG would
consider favorably the following situations as examples of when
employees could be located in noncontiguous space:
Employees working at home on a temporary or long-term
basis.
Employees sharing space with OIG or other agencies that
provide advantages to the Unit's collaboration with those agencies.
Employees assigned to small offices, including field
offices, where space is limited and the only available office space is
not contiguous.
J. Relationship With Medicaid Agency
Comment: One commenter suggested several clarifications, not
contained in the sections of the Proposed Rule proposed to be modified
by OIG. Specifically, the commenter requested that we clarify the
current regulation at Sec. 1007.9(b).
The commenter expressed that the language of the paragraph should
be revised to clarify that (1) the phrase ``Medicaid agency'' is
intended to refer to the agency in the same State in which the Unit
exists, (2) the proscription on the Medicaid agency to not ``review or
overrule the referral of a suspected criminal violation'' be expanded
to refer to ``decisions'' of the Unit in addition to referrals, and (3)
the Medicaid agency's and the Unit's respective roles be clear
[[Page 10707]]
and distinct, particularly with regard to decisions as to ``which law
enforcement or prosecutorial authority is best for a given matter.''
Response: We generally agree with the substance of the commenter's
concerns but decline to make the suggested revisions.
First, in the Proposed Rule OIG did not propose to modify the
paragraph of the regulation relating to the role of the Medicaid agency
in reviewing the activities of the Unit, so the comment is beyond the
scope of the Proposed Rule.
Secondly, in referring to the ``Medicaid agency'' throughout the
regulation, OIG is referring to the Medicaid agency for the same State
in which the Unit exists, not that of another State. We do not believe
that text of the regulation needs to be modified to clarify this.
With respect to whether the proscription on interference by the
Medicaid agency should refer to ``decisions'' of the Unit in addition
to ``activities,'' we agree that the Medicaid agency does not have the
authority to interfere with decisions pertaining to the investigation
or prosecution of a Unit's cases. On the other hand, we note that there
may be administrative actions in which both the Unit and Medicaid
agency are both involved. For example, a Unit as part of a criminal or
civil case may make a decision or recommendation regarding an
administrative remedy or action. Such decisions may in fact be subject
to some type of review by the Medicaid agency. As another example, for
those Units with authority to conduct data mining under Sec. 1007.20,
the decision of whether to develop a data mining algorithm is subject
to review and input by the Medicaid agency.
We therefore decline to expand the proscription on interference by
the Medicaid agency to include all ``decisions'' by the Unit.
Finally, with regard to the respective roles of the Medicaid agency
and the Unit, we agree that law enforcement decisions pertaining to the
appropriate investigative and prosecutorial authority for a particular
case are the province of the Unit, not the Medicaid agency. We believe
this separation of roles is widely understood in the MFCU and State
agency community and is how OIG interprets the existing language of
Sec. 1007.9(b).
K. Role of Managed Care Organizations (MCOs) in the Agreement With the
Medicaid Agency
Comment: Several commenters observed the important role of MCOs in
those States that provide Medicaid services in a managed care setting
and suggested that the section of the regulation addressing the
relationship of the MFCU to the Medicaid agency, 42 CFR 1007.9, be
expanded to describe the role of MCOs. One commenter observed that
activities to combat Medicaid fraud, waste, and abuse would be more
effective if Units collaborated with MCOs on a routine basis to share
information. Another commenter, noting the important role of MCOs,
suggested that the proposed regulation's provision regarding regular
communication between the Unit and the Medicaid agency be expanded to
include managed care plans. The commenter specifically requested that
MCO Special Investigation Units (SIUs) be permitted to attend the
meetings between the Unit and the Medicaid agency, since SIUs can
contribute valuable information to the meetings.
Response: We agree about the critical role of MCOs in those States
that have chosen to provide Medicaid services in this manner. We also
believe it is a best practice that the Unit or State program integrity
officials collaborate with the MCO SIUs and that SIU officials attend
regular meetings on referral issues. However, we are also mindful that
States should have the discretion to define the relationship with MCOs
within the confines of existing law and regulation. States should have
the ability to choose the manner in which the Unit and Medicaid program
integrity unit communicate with the MCOs.
Comment: Another commenter requested more narrowly regarding Sec.
1007.9 that the written agreement between the Unit and the Medicaid
agency include a provision regarding how the Unit will receive
referrals of potential fraud from MCOs either directly or through the
Medicaid agency.
Response: Medicaid regulations pertaining to MCOs, 42 CFR
438.608(a)(7), require that MCOs, under the terms of their contracts
with the Medicaid agency, refer any case of potential fraud, waste, or
abuse to the Medicaid agency's program integrity unit or any potential
fraud directly to the Unit. Also, under 42 CFR 455.21, the Medicaid
agency must refer all cases of suspected provider fraud to the Unit.
Consistent with these requirements, we agree that the inclusion of
a provision in the written agreement between the Unit and the Medicaid
agency regarding referrals from MCOs would be consistent with other
requirements and would be an appropriate addition to the MFCU
regulations and the CMS companion regulation. We have thus modified the
rules to include such a provision.
L. Payment Suspension
Comment: One commenter requested that, to effectuate MCO
involvement in the payment suspension process, payment suspension
information be communicated to MCOs in a timely manner. The commenter
also requested that clarification of MCO responsibilities with respect
to payment suspension be included in this final rule.
Response: These suggestions are outside the scope of this
rulemaking. State Medicaid agencies, not the Units, suspend payments.
M. Civil Authorities
Comment: One commenter stated that Sec. 1007.11(a)(3), in defining
applicable State laws to include both criminal statutes ``as well as
civil false claims statutes or other civil authorities,'' seems
misplaced, affecting the flow of the description of the fraud-focused
mission of the Units. The commenter recommended instead that the
regulation, in describing the broad function of the Units in paragraph
(a), be expanded to state ``[t]he Unit must conduct a statewide program
for investigating and prosecuting (or referring for prosecution)
violations of all applicable State laws, including criminal statutes as
well as civil false claims statutes or other civil authorities . . .
.''
Response: We agree and have modified the rule.
N. Misappropriation of Patient or Resident Funds
Comment: A commenter expressed concern about language in the
Proposed Rule that would make mandatory the review of complaints of
``misappropriation of a patient's funds . . .'' when that review is
currently optional for the Units. The commenter noted that the current
regulation at Sec. 1007.11(b)(1) states that the ``Unit will also
review complaints alleging abuse or neglect of patients in health care
facilities . . .,'' but the Unit ``may review complaints of the
misappropriation of patient's private funds in such facilities.'' In
the Proposed Rule, those two clauses are combined and would require in
paragraph (b)(2) that the Unit ``must also review complaints alleging
abuse or neglect of patients, including complaints of the
misappropriation of a patient's funds, in health care facilities
receiving payments under Medicaid.'' The commenter expressed concern
that making financial cases mandatory ``may
[[Page 10708]]
stretch already scare resources within the Units.''
Response: We have accepted the comment and have retained language
in the final rule to the effect that Units ``may'' review complaints of
misappropriation of a patient's or resident's private funds. In
addition to the concern about workload, we believe this language is
consistent with the changes we are making to the definition of abuse of
patients or residents, where we have recognized the existence of
differing State legal definitions of what constitutes abuse.
Although we have retained the option for financial misappropriation
cases, we continue to believe that financial misappropriation is a
significant issue and that Units should continue to devote resources to
such cases. Financial misappropriation may arise when family members or
others are granted power of attorney for a patient or resident and
abuse the patient's or resident's trust by diverting funds to their own
or another's benefit. Financial misappropriation may arise in
conjunction with physical abuse or may occur in isolation.
O. MFCU Authority in Board and Care Facilities
Comment: Several commenters expressed policy concerns about the
expansion of MFCU authority in board and care facilities, which
typically do not participate in State Medicaid programs or receive
Medicaid funding.
Response: The authority to investigate patient abuse or neglect in
non-Medicaid board and care facilities is a feature of the Ticket to
Work and Work Incentives Improvement Act of 1999. The addition to the
MFCU regulations merely codifies that statutory requirement. The policy
concerns raised by the commenters are therefore outside the scope of
this rulemaking.
P. Duties and Responsibilities of Units
Comment: In the Proposed Rule, we proposed at Sec. 1007.11(a),
(b)(1), (b)(3), (b)(4), (c), and (d) to replace the word ``will'' with
``must'' to highlight the mandatory nature of the responsibilities of a
Unit. A commenter expressed reservations about this change and
requested that we retain the term ``will'' in the paragraphs. The
commenter stated that the word ``will'' would make the responsibilities
of the Unit sufficiently clear. The commenter also expressed that the
term ``will'' would provide the appropriate discretion for a Unit in
determining whether to accept a referral, thus promoting the Unit's
efficient use of resources.
Response: We have retained the term ``will'' in Sec. 1007.11 and,
for consistency, in other parts of the regulation, including Sec.
1007.13, for staffing requirements. We did not intend to propose a
revision to the mandatory nature of a Unit's responsibilities and agree
that retaining the term ``will'' would avoid confusion in this regard.
Comment: One commenter noted that proposed Sec. 1007.11(c)
addresses the responsibilities of the Units to recover overpayments or
refer the overpayment recovery to an appropriate ``State'' agency. The
commenter noted that there are governmental programs in various States
which process and expend Medicaid dollars at the local level (county or
city). For instance, some States operate single- or multi-county
special needs programs or mental health programs. If an overpayment is
identified in one of these county-administered programs, for example,
the responsibility for the recovery may more appropriately rest with
county officials rather than State officials. The commenter suggested
that the last clause in Sec. 1007.11(c) should include ``or refer the
matter to an appropriate agency for collection'' [emphasis added].
Response: We agree with the suggestion and have modified the
regulation text.
Comment: One commenter expressed a technical concern with a
longstanding provision in the regulations at Sec. 1007.11(d) that
requires Units, for cases that are tried by non-Unit prosecutors, to
provide the prosecutors with ``the fullest opportunity to participate
in the investigation from its inception.'' The commenter, while not
disputing the importance of cooperating with non-Unit prosecutors,
suggested that this section, as written, is not consistent with patient
confidentiality obligations as required by performance standards. The
commenter suggested that Units, consistent with those obligations, must
have the discretion to determine what cases will be investigated and
when to notify the prosecuting authority to control the flow of
confidential information outside of the Unit. Therefore, the commenter
suggested that the original regulation language of Sec. 1007.11(d) be
rewritten to eliminate the language about participation in the
investigations from their inception: Specifically, the commenter stated
that the language should specify that where a prosecuting authority
other than the Unit is to assume responsibility for the prosecution of
a case investigated by the Unit, the Unit will ensure that those
responsible for the prosecutorial decision and the preparation of the
case for trial are provided all necessary assistance.
Response: While we generally agree with the commenter's position
that the Units must have the discretion to determine what cases will be
investigated and when to notify an outside prosecuting authority, we
cannot make the requested change, as we did not propose to modify this
provision. We also do not believe the suggested change is necessary to
address the commenter's concern. While the current provision permits
non-Unit prosecutors the fullest opportunity to participate in the
MFCU's investigation, it is the Unit's responsibility to determine if
that participation is appropriate or would interfere with the effective
investigation of a case. We thus believe that the current provision
affords the Unit discretion in determining when to involve prosecutors,
as long as there is full cooperation.
Q. Coordination With Federal Authorities
Comment: One commenter expressed concern with a provision of the
Proposed Rule that requires a Unit to disclose case information to
Federal investigators and attorneys not involved with a particular
case. Proposed Sec. 1007.11(e)(1), similar to the existing requirement
contained in paragraph (e), states that the Unit, if requested, will
make available to OIG investigators and attorneys, other Federal
investigators, and prosecutors all information in the Unit's possession
concerning investigations or prosecutions conducted by the Unit.
Existing paragraph (e) reads the same, except that it does not
clarify that information be provided ``if requested.''
The commenter agreed that case information should be shared with
Federal investigators and attorneys working jointly on a case, but
expressed concern about broadly requiring the Unit to disclose case
information to Federal officials who have no involvement in the case.
The commenter noted that case information could include confidential
grand jury or other information with legal restrictions on its
disclosure. Therefore, the commenter suggested that proposed Sec.
1007.11(e)(1) should be revised to state that the Unit, if requested,
will make available to OIG investigators and attorneys, or other
Federal investigators and prosecutors, on the case, all information in
the Unit's possession concerning investigations or prosecutions
conducted by the Unit.
[[Page 10709]]
Response: We do not agree that a revision is necessary to the
longstanding requirement contained in Sec. 1007.11(e) that Unit
information be shared with Federal investigators and attorneys. We
agree there could be State grand jury and other information that,
because of criminal law restrictions on the use of the information, may
not be disclosed to Federal investigators and attorneys who are not
involved with a case. However, the Unit, OIG, and DOJ have
contemporaneous jurisdiction for all allegations of Medicaid provider
fraud. While unusual, we believe there could be situations in which OIG
or DOJ personnel would have a legitimate need to seek information about
an ongoing investigation or prosecution.
Comment: At proposed Sec. 1007.11(e)(1) and (2), Units are
required to make all information pertaining to Medicaid fraud available
to Federal investigators, prosecutors, and OIG attorneys, and
subsequently the Unit must coordinate with such officials on any
Federal and State investigations or prosecutions involving the same
suspects or allegations. One commenter noted that MCOs are very likely
to possess information to assist in fraud detection and requested that
Units be required to make information available to MCOs during fraud
investigations. The commenter also requested that MCOs be included in
the coordination of investigations and prosecutions by asking
prosecutors to include MCO encounter information, and not only State
fee-for-service claims, in investigated and/or charged conduct. In
addition, the commenter asked for clarification as to the disposition
of MCO funds recovered as a result of investigations, civil suits, and
prosecutions.
Response: We decline these suggestions. We have observed that MCOs
in many States are successfully included in the sharing of information
about ongoing and potential fraud cases and believe that this
participation by MCOs is a best practice. However, MCOs are private,
nongovernmental entities, and States should have the ability to
restrict the sharing of information with them. The suggestions about
including MCO encounter information in prosecutions and the disposition
of MCO recoveries are beyond the scope of this regulation.
Comment: One commenter noted that proposed Sec. 1007.11(e)(2) does
not clearly state what it means to ``coordinate with'' Federal
investigators, Federal attorneys, and Federal prosecutors. The
commenter noted that coordination can include deconfliction of case
lists and joint investigative activities, including avoiding
duplication of efforts in joint cases.
Response: We agree with this comment and believe that the commenter
has described appropriate examples of coordination--deconfliction of
case lists and joint investigative activities. We decline to further
revise Sec. 1007.11(e) beyond the expectation that the Unit establish
a practice of regular meetings or communication with OIG investigators
and Federal prosecutors. Our intention is for Units to have flexibility
to coordinate in a manner that is appropriate for that State, as
coordination may look different depending on variables such as the type
of case, size of the State, or the presence or absence of Federal
partners in the State.
Comment: Another commenter noted ambiguity in the language of
proposed Sec. 1007.11(e)(2) where we proposed that the Unit will
coordinate with OIG investigators and attorneys, other Federal
investigators, and prosecutors on any Unit cases involving the same
suspects or allegations.
Specifically, the commenter was unclear as to which ``prosecutors''
are the focus of this provision. The commenter also believed that OIG
should be permitted latitude to manage at its discretion those
circumstances in which OIG's resources are limited and other Federal
agencies are summoned to assist or supplement assistance as
appropriate. To address these comments, the commenter recommended that
Sec. 1007.11(e)(2) be revised to state that the Unit will coordinate
with OIG investigators and OIG attorneys, as OIG and the Unit deem
appropriate, joint activities involving other Federal investigators and
Federal prosecutors on Unit cases and Federal cases that involve the
same suspects, providers, or allegations.
Response: We agree that the proposed provision does not make clear
to which prosecutors the provision refers. We intended to specify
``Federal'' prosecutors and have modified the regulation text at
paragraph (e)(2) as well as paragraph (e)(1) to remove the ambiguity.
We also added wording to paragraph (e)(2) to improve clarity. However,
we did not modify the text in paragraph (e)(2) to include the
commenter's suggested language regarding ``as OIG and the Unit deem
appropriate'' because we believe that considering the appropriateness
of involvement in a case would be part of coordinating. We are also
reluctant to limit coordination to ``joint activities'' involving the
same suspects or allegations because we believe Units need to
coordinate with their Federal counterparts even on cases not being
worked jointly. Thus, we are modifying paragraph (e)(2) to state that
the Unit will coordinate with OIG investigators and attorneys, or with
other Federal investigators and prosecutors, on any Unit cases
involving the same suspects or allegations that are also under
investigation or prosecution by OIG or other Federal investigators or
prosecutors [emphasis added].
Comment: Proposed Sec. 1007.11(e)(3) specifies that a Unit
establish a practice of regular meetings or communication with OIG
investigators and Federal prosecutors. One commenter recommended that
the SIUs of MCOs be permitted to attend these meetings, or that similar
meetings be held with the SIUs of MCOs. The commenter also requested
that at Sec. 1007.11, paragraphs (a) through (c), MCOs also be
included under references to ``Medicaid'' for which the Unit is
responsible.
Response: We believe that attendance by MCOs at meetings may be a
best practice, but we decline to identify in regulation those
participants required at particular meetings. As noted previously, MCOs
are private, nongovernmental entities, and States should have the
ability to restrict the sharing of information with them.
Comment: One commenter noted that proposed Sec. 1007.11(e)(5)
requires the Unit to ``establish written procedures'' but leaves
unclear the level of detail or depth of such written procedures. The
commenter expressed concern about this paragraph posing a potential
burden. To permit greater discretion, the commenter recommended
revising the regulation to require Units to establish ``policy'' rather
than written procedures.
Response: We agree with the suggestion that Units establish
``policy'' rather than the more prescriptive ``written procedures.'' We
have revised the paragraph accordingly. This revision will reduce
burden on Units and enhance Unit flexibility.
Comment: One commenter expressed support for proposed Sec.
1007.11(g)(3) for the accommodation granted in allowing Units to
transmit the requested information ``as soon as practicable'' due to
the specified delays. However, the commenter observed that Units have
encountered delays that are not due directly to the ``[receipt of] . .
. information'' from the ``sentencing court,'' but that remained beyond
the Unit's control or capacity. For example, long queues at court
clerks' offices, sometimes in locations far away from the Unit, can
compromise a Unit's ability to communicate effectively and timely with
court staff, which can
[[Page 10710]]
further delay the Unit's efforts to finalize sentencing-related
dispositions. As such, the commenter requested that the term ``court''
replace the term ``sentencing court'' so that the paragraph states that
such information will be transmitted to OIG within 30 days of
sentencing, or as soon as practicable if the Unit encounters delays,
such as in receiving the necessary information from the court [emphasis
added].
Response: OIG agrees that Units could encounter delays that are
more broadly described as ``court delays'' rather than the more
specific delays in receiving information from the ``sentencing court''
and accepts the commenter's suggestion. However, we do not intend for
delays ``in receiving the necessary information from the court'' to be
an example of a possible delay, but to be the only acceptable reason
that transmitting information to OIG should be delayed. Therefore, we
are replacing the term ``sentencing court'' with ``court,'' but we are
not including the phrase ``such as'' as part of the paragraph.
R. Staffing Requirements
Comment: One commenter suggested that, in addition to modifying the
attorney role in Sec. 1007.13(b)(1) to more specifically convey the
prosecution and advisory role of Unit attorneys, OIG should revise the
description of the investigator role as well. Specifically, the
commenter suggested that we clarify that investigators should be
capable of conducting investigations of Medicaid fraud and patient
abuse and neglect matters.
Response: We agree with the comment and have modified the final
regulatory language.
Comment: One commenter expressed concern that the proposed minor
change at Sec. 1007.13(b)(2) concerning the qualifications of auditors
did not include information on how the auditors would perform
operational audits of health care entities.
Response: MFCU auditors do not conduct operational audits of health
care entities. Units are restricted at Sec. 1007.19(e)(1) from
receiving FFP for expenditures attributable to cases involving
``program abuse or other failures to comply with applicable laws and
regulations.'' Therefore, we decline to make modifications to the rule
to address operational auditing.
Comment: A commenter expressed concern about the limitation in the
proposed rule at Sec. 1007.13(g)(2) that a Unit may not ``rely on
individuals not employed directly by the Unit for the investigation or
prosecution of cases.'' The commenter asked that we clarify that a Unit
``may hire special counsel or other investigative or litigation support
services to work jointly with the Unit to assist in specific, discrete
investigations or cases, where the Unit can demonstrate that additional
assets or expertise may be needed for the discrete case.''
Response: We agree with the concern that Units should be able to
hire experts to support the investigative and prosecutorial work of the
Units, as long as the experts do not actually conduct investigations
and prosecutions of Medicaid fraud or of patient or resident abuse or
neglect. We believe, however, that this need is addressed by proposed
paragraph (g)(1), which stated that the Unit may employ, or have
available through consultant agreements or other contractual
arrangements, individuals who have forensic or other specialized skills
that support the investigation and prosecution of cases.
We believe that the proposed regulatory language provides the right
distinction that Units may not ``rely'' on contractors to investigate
or prosecute cases, but may have contracts or consultant agreements
with experts who may ``support'' the investigation and prosecution.
S. Recertification Requirements
Comment: Proposed Sec. 1007.17(a)(2)(iv) states that Units are to
submit statistical reports on staffing, caseload, and outcomes,
including monetary recoveries. A commenter made technical comments on
the definitions of the types of monetary recoveries reported.
Response: While we appreciate the comments, we do not believe that
addressing detailed technical comments about statistical reporting is
appropriate in the rule itself. We will consider the commenter's
concerns outside of the rulemaking.
Comment: Proposed Sec. 1007.17(b)(2) requires the Units to provide
``other information OIG deems necessary or warranted.'' One commenter
noted that in the past the Units have been asked to provide additional
information to OIG, but the requested data is not routinely kept by the
Units. The commenter also noted that while not every contingency can be
predicted, a request for ``other information'' without prior notice is
cumbersome and potentially void of a high level of accuracy. The
commenter suggested adding language that advance notice would be
provided to the Unit for other information OIG deems necessary and
warranted.
Response: While we decline to accept this level of prescription in
the final rule, we agree about the need to provide Units advance notice
of information requests. OIG needs to maintain the ability to collect
information from the Units but will always strive to provide advance
notice and to be sensitive to requesting data that is not routinely
kept by the Units.
T. Federal Financial Participation
Comment: A commenter endorsed the approach of the Proposed Rule to
limit those situations, other than through ``data mining,'' in which
FFP would be prohibited for the identification of potential fraud
cases. The Proposed Rule accomplished this by proposing to modify the
language in Sec. 1007.19(e)(2), which currently prohibits FFP for
``efforts to identify [other than through an approved data mining
waiver] situations in which a question of fraud may exist, including
the screening of claims and analysis of patterns of practice . . .''
with ``efforts to identify situations of fraud . . . by the screening
of claims and analysis of patterns of practice . . .'' [emphasis
added]. The purpose of the change was to acknowledge ways in which a
Unit may identify possible fraud that would not interfere with
activities of the Medicaid agency, such as undercover operations. The
commenter also suggested that we further clarify the issue by adding
the following sentence to this preamble:
This subsection is not intended to limit the Unit's ability to
engage in activities, other than routine verification of services
received and data mining, to identify potential civil or criminal
fraud in the Medicaid program.
Response: We agree that the suggested additional sentence correctly
describes those activities to identify potential fraud, in addition to
an approved data mining program, that would be permissible for purposes
of receiving FFP, and we adopt the sentence here. This clarification is
consistent with the proposed changes to the subsection and does not
require a change to the text of the regulation.
Comment: A commenter expressed concern with the longstanding
prohibition, modified in the Proposed Rule at Sec. 1007.19(e)(5), that
a Unit may not receive FFP for cases ``involving a beneficiary's
eligibility for benefits, unless the suspected fraud also involves
conspiracy with a provider.'' The existing regulation similarly
prohibits FFP for the ``investigation or prosecution of cases of
suspected beneficiary fraud not involving suspected conspiracy with a
provider.'' The commenter expressed that the language in Sec.
1007.19(e)(5) is too limiting regarding the types of permissible
beneficiary fraud cases because the word ``suspected'' modifies
[[Page 10711]]
the word ``fraud.'' The commenter observed that there are cases that
involve conspiracy between a beneficiary and provider but that may
involve suspected conduct other than fraud, such as alleged identity
theft. The commenter suggested that the prohibition be modified to
refer to conspiracy involving ``joint criminal conduct'' rather than
narrowly to ``fraud.''
Response: We decline to make the proposed revision regarding the
reference to ``suspected fraud.'' We agree that identity theft (or
other activities not strictly involving fraudulent billing to the
program) could be identified as integral to, or evidence of, a
conspiracy between a beneficiary and provider. However, the underlying
conduct, consistent with the authority of the Unit to receive FFP, must
involve ``fraud.'' As long as the other criminal conduct identified as
part of the conspiracy, such as identity theft, has a connection to the
fraud allegations, the Unit may receive FFP for the investigation and
prosecution of the case. To promote clarity, we have amended the
provision to refer to the investigation or prosecution of ``fraud''
cases involving a beneficiary's eligibility for benefits, unless the
suspected fraud ``cases'' also involve conspiracy with a provider.
U. Disallowances of FFP
Comment: One commenter suggested that the language proposed in
Sec. 1007.21(a), regarding OIG's determination that a claim or portion
of a claim for grant funding is not allowable, should be consistent
with the contents of the Federal regulation to which it refers, 42 CFR
430.42(a), by clarifying that OIG's determination should be made
``promptly.''
Response: We agree and have included the word ``promptly'' in the
final regulation. The proposed changes were intended to mirror the
disallowance procedures in 42 CFR 430.42(a), including that OIG's
determination be made ``promptly.''
III. Provisions of the Final Rule
This final rule incorporates most of the provisions in the Proposed
Rule but with some substantive and technical changes to the regulatory
text that are described in this section and in section II above.
We are finalizing, with certain revisions described in section II,
all of the proposed definitions. We made revisions to the definitions
of several kinds of conduct, such as ``fraud'' and ``abuse of patients
or residents,'' to more clearly adopt those definitions of conduct as
contained in applicable State laws. We also similarly expanded the
definition of ``provider'' to adopt applicable State law, as well as to
reference managed care and prescribing physicians. We also expanded
references to abuse and neglect of patients to include ``residents.''
We are finalizing the characteristics of what it means to be a
single, identifiable entity at Sec. 1007.5. We included a
clarification to the requirement that the headquarters office and any
field offices should each have their own contiguous space, unless a
Unit demonstrates to OIG that circumstances may warrant a different
arrangement for certain employees.
We are finalizing the proposed changes to the prosecutorial
authority requirements of a Unit at Sec. 1007.7, with one additional
modification. At Sec. 1007.7(b), we are finalizing the requirement for
a Unit to establish formal written procedures for referring cases of
patient or resident abuse and neglect prosecutions, in addition to
fraud cases, to the appropriate prosecuting authority, when there is no
State agency with statewide authority and capability for patient or
resident abuse prosecutions. Similarly, we are making a technical
amendment to Sec. 1007.7(a) to clarify that if a Unit is located in
the office of the State Attorney General or another office with
statewide prosecutorial authority, it must have the authority to
prosecute individuals for violations of criminal laws with respect to
patient or resident abuse and neglect in addition to fraud.
We are finalizing the provisions pertaining to the Unit's
relationship and agreement with the Medicaid agency at both Sec.
1007.9 and the companion CMS regulation at Sec. 455.21(c), with one
additional provision. As described in detail in section II, we are
adding a new paragraph at Sec. 1007.9(d)(3) and at Sec. 455.21(c)(3)
requiring the Unit and the Medicaid agency to agree to establish
procedures by which the Unit will receive referrals of potential fraud
from MCOs, as applicable, either directly or through the Medicaid
agency.
We are finalizing a number of provisions proposed, some with
certain modifications, related to the duties and responsibilities of a
Unit found at Sec. 1007.11. However, for reasons explained above, we
are not finalizing the proposal to make mandatory the review of
complaints of misappropriation of patients' or residents' funds and
have retained language in the final rule to continue that authority as
optional. We are also not finalizing the word ``must'' to describe a
Unit's responsibilities at Sec. 1007.11(a), (b)(1), (b)(3), (b)(4),
(c), and (d), and are retaining the word ``will'' in the final rule.
We are finalizing the provision to clarify that applicable State
laws pertaining to Medicaid fraud include criminal statutes as well as
civil false claims statutes and other civil authorities, but we have
incorporated the clarification into Sec. 1007.11(a) in the final rule,
rather than in the proposed paragraph (a)(3). We are finalizing the
provision at Sec. 1007.11(c), with a slight modification, to clarify
that when a Unit discovers that overpayments have been made to a
provider or facility, the Unit will either recover the overpayment as
part of its resolution of a fraud case or refer the matter to the
appropriate agency for collection.
We are finalizing provisions pertaining to coordination with
Federal investigators and attorneys at Sec. 1007.11(e), with slight
modifications to the proposed language. At paragraph (e)(5), we have
modified the final rule such that a Unit will establish written policy
consistent with paragraph (e), rather than establish written
procedures.
We are finalizing a provision at Sec. 1007.11(g) requiring a Unit
to transmit to OIG, for purposes of excluding convicted individuals and
entities from participation in Federal health care programs under
section 1128 of the Act, pertinent documentation on all convictions
obtained by the Unit. We made a minor modification to paragraph (3)
requiring transmission of information within 30 days of sentencing, or
as soon as practicable if the Unit encounters delays in receiving the
necessary information from the ``court,'' rather than the ``sentencing
court'' as was proposed.
We are finalizing all of the provisions in the Proposed Rule
related to the staffing requirements of a Unit at Sec. 1007.13, with
the following modifications. We are finalizing clarifications at Sec.
1007.13(b) to the qualifications of attorneys, auditors, and
investigators, but we made one modification to paragraph (3) to specify
that the investigators be capable of conducting investigations of
health care fraud and patient or resident abuse and neglect matters.
Additionally, we are not finalizing the use of the word ``must'' to
describe a Unit's staffing requirements at Sec. 1007.13(c), (d)(1),
(d)(4), and (h) and have modified the final rule to use the
sufficiently prescriptive word ``will.'' For consistency with the other
paragraphs, we have modified paragraph (b) to use the word ``will''
rather than the original rule's use of ``must.''
[[Page 10712]]
In Sec. 1007.17, to reduce burden on the Units, we are eliminating
the specific requirement of providing an ``annual report'' to OIG.
However, we continue to receive information from the Units that allows
OIG to evaluate the Unit's performance for purposes of recertification.
Finally, we have made editorial and other nonsubstantive changes to
the final rule, where appropriate, to clarify our meaning.
IV. Regulatory Impact Statement
We have examined the impact of this rule, as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995, Pub. L. 104-4), Executive Order 13132 on Federalism (August 4,
1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive
Order 13771 on Reducing Regulation and Controlling Regulatory Costs
(January 30, 2017).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects; distributive impacts; and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
This rule does not reach the economic threshold, and thus is not
considered a major rule. Since the regulation only implements current
practice and policy, we believe the economic impact to be negligible.
The RFA requires agencies to analyze options for regulatory relief
of small entities. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and small governmental
jurisdictions. Most hospitals and most other providers and suppliers
are small entities, either by nonprofit status or by having revenues of
$7.5 million to $38.5 million in any 1 year. Individuals and States are
not included in the definition of a small entity. We did not prepare an
analysis for the RFA because we have determined, and the Secretary of
Health and Human Services certifies, that this final rule will not have
a significant economic impact on a substantial number of small
entities.
In addition, section 1102(b) of the Act requires us to prepare a
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 604 of the RFA. For purposes of section
1102(b) of the Act, we define a small rural hospital as a hospital that
is outside of a Metropolitan Statistical Area for Medicare payment
regulations and has fewer than 100 beds. We did not prepare an analysis
for section 1102(b) of the Act because we have determined, and the
Secretary of Health and Human Services certifies, that this final rule
will not have a significant impact on the operations of a substantial
number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. This rule has
no consequential effect on State, local, or Tribal governments or on
the private sector.
Executive Order 13132 establishes certain principles and criteria
that an agency must follow when it implements a regulation or other
policy that has Federalism implications, defined in Order 13132 to mean
that the regulation or policy has substantial direct effects on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Order 13132 also requires a level of
consultation with State or local officials when an agency formulates
and implements a regulation that has Federalism implications, imposes
substantial direct compliance costs on State and local governments, and
is not required by statute.
We do not believe that this regulation has Federalism implications
as it does not have a substantial direct effect on the States or on the
relationship or distribution of power and responsibilities among levels
of government. Nor do we believe the regulation imposes substantial
direct compliance costs on States. Rather, the regulation reflects
certain statutory changes governing operation of the Units that have
already been implemented and codifies policy and practice involving the
organization and operation of the Units. We believe the content of the
regulation is consistent with the partnership between the Federal and
State Governments that has been established for the financing and
administration of the larger Medicaid program. We further believe that
any costs related to compliance with the regulation are minimal and not
substantial.
However, to the extent that that the regulation is seen as having
Federalism implications, the regulation is consistent with the
principles and criteria established in Order 13132. The regulation
would strictly adhere to constitutional principles and would be
deferential to the States with respect to the policymaking and
administration of State operations related to the investigation and
prosecution of Medicaid provider fraud and patient or resident abuse or
neglect. With regard to consultation, the policies contained in the
regulation were developed in consultation and collaboration with the
States.
Executive Order 13771 requires an agency to identify at least two
deregulatory actions for each new regulation that the agency proposes
or otherwise promulgates. Any new incremental costs associated with a
new regulation must, to the extent permitted by law, be offset by the
elimination of existing costs through deregulatory actions. It has been
determined that this rule is a deregulatory action.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
V. Paperwork Reduction Act
This rule revises the scope of our annual collection of information
at 42 CFR 1007.17. Under the Paperwork Reduction Act of 1995 (PRA),
Federal agencies generally must take certain steps, such as seeking
public comment on proposed collections of information and submitting
proposed collections for review and approval by the Office of
Management and Budget, before requiring or requesting information from
the public. Accordingly, we solicited public comment on the information
required in proposed 42 CFR 1007.17 for OIG's annual review and
recertification of Units. After we published the Proposed Rule,
however, the Inspector General Empowerment Act of 2016 (Empowerment
Act), Public Law No. 114-317, was signed into law on December 16, 2016.
Section 2 of the Empowerment Act added subsection (k) to section 6 of
the Inspector General Act of 1978. Under new subsection (k), the PRA
does not apply to ``the collection of information during the conduct of
an audit, investigation, inspection, evaluation, or other review
conducted by . . . any Office of Inspector General
[[Page 10713]]
. . . .'' As a result, the collection of information under 42 CFR
1007.17 of this rule is exempt from the requirements of the PRA.
List of Subjects
42 CFR Part 455
Fraud, Grant programs-health, Health facilities, Health
professions, Investigations, Medicaid, Reporting and recordkeeping
requirements
42 CFR Part 1007
Administrative practice and procedure, Fraud, Grant programs-
health, Medicaid, Reporting and recordkeeping requirements
The Centers for Medicare & Medicaid Services (CMS) and the Office
of Inspector General (OIG), respectively, amend 42 CFR part 455 and
1007 as follows:
PART 455--PROGRAM INTEGRITY: MEDICAID
0
1. The authority citation for part 455 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
0
2. Section 455.21 is amended by adding paragraph (c) to read as
follows:
Sec. 455.21 Cooperation with State Medicaid fraud control units.
* * * * *
(c) The agency must enter into a written agreement with the unit
under which:
(1) The agency will agree to comply with all requirements of Sec.
455.21(a);
(2) The unit will agree to comply with the requirements of Sec.
1007.11(c) of this title; and
(3) The agency and the unit will agree to--
(i) Establish a practice of regular meetings or communication
between the two entities;
(ii) Establish procedures for how they will coordinate their
efforts;
(iii) Establish procedures for Sec. Sec. 1007.9(e) through
1007.9(h) of this title;
(iv) Establish procedures by which the unit will receive referrals
of potential fraud from managed care organizations, if applicable,
either directly or through the agency, as required at Sec.
438.608(a)(7) of this title; and
(v) Review and, as necessary, update the agreement no less
frequently than every five (5) years to ensure that the agreement
reflects current law and practice.
0
3. Part 1007 is revised to read as follows:
PART 1007--STATE MEDICAID FRAUD CONTROL UNITS
Sec.
Subpart A--General Provisions and Definitions
1007.1 Definitions.
1007.3 Statutory basis and organization of rule.
Subpart B--Requirements for Certification
1007.5 Single identifiable entity requirements of Unit.
1007.7 Prosecutorial authority requirements for Unit.
1007.9 Relationship and agreement between Unit and Medicaid agency.
1007.11 Duties and responsibilities of Unit.
1007.13 Staffing requirements of Unit.
1007.15 Establishment and certification of Unit.
1007.17 Annual recertification of Unit.
Subpart C--Federal Financial Participation
1007.19 FFP rate and eligible FFP costs.
1007.20 Circumstances of permissible data mining.
1007.21 Disallowance of claims for FFP.
Subpart D--Other Provisions
1007.23 Other applicable HHS regulations.
Authority: 42 U.S.C. 1302, 1396a(a)(61), 1396b(a)(6),
1396b(b)(3), and 1396b(q).
Subpart A--General Provisions and Definitions
Sec. 1007.1 Definitions.
As used in this part, unless otherwise indicated by the context:
Abuse of patients or residents means any act that constitutes abuse
of a patient or resident of a health care facility or board and care
facility under applicable State law. Such conduct may include the
infliction of injury, unreasonable confinement, intimidation, or
punishment with resulting physical or financial harm, pain, or mental
anguish.
Board and care facility means a residential setting that receives
payment (regardless of whether such payment is made under Title XIX of
the Social Security Act) from or on behalf of two or more unrelated
adults who reside in such facility, and for whom one or both of the
following is provided:
(1) Nursing care services provided by, or under the supervision of,
a registered nurse, licensed practical nurse, or licensed nursing
assistant.
(2) A substantial amount of personal care services that assist
residents with the activities of daily living, including personal
hygiene, dressing, bathing, eating, toileting, ambulation, transfer,
positioning, self-medication, body care, travel to medical services,
essential shopping, meal preparation, laundry, and housework.
Data mining means the practice of electronically sorting Medicaid
or other relevant data, including, but not limited to, the use of
statistical models and intelligent technologies, to uncover patterns
and relationships within that data to identify aberrant utilization,
billing, or other practices that are potentially fraudulent.
Director means a professional employee of the Unit who supervises
all Unit employees, either directly or through other Unit managers.
Exclusive effort means that a Unit's professional employees, except
as otherwise permitted in Sec. 1007.13, dedicate their efforts
``exclusively'' to the functions and responsibilities of a Unit as
described in this part. Exclusive effort requires that duty with the
Unit be intended to last for at least one (1) year and includes an
arrangement in which an employee is on detail or assignment from
another government agency, but only if the detail or arrangement is
intended to last for at least one (1) year.
Fraud means any act that constitutes criminal or civil fraud under
applicable State law. Such conduct may include deception, concealment
of material fact, or misrepresentation made intentionally, in
deliberate ignorance of the truth, or in reckless disregard of the
truth.
Full-time employee means an employee of the Unit who has full-time
status as defined by the State.
Health care facility means a provider that receives payments under
Medicaid and furnishes food, shelter, and some treatment or services to
four or more persons unrelated to the proprietor in an inpatient
setting.
Misappropriation of patient or resident funds means the wrongful
taking or use, as defined under applicable State law, of funds or
property of a patient or resident of a health care facility or board
and care facility.
Neglect of patients or residents means any act that constitutes
neglect of a patient or resident of a health care facility or board and
care facility under applicable State law. Such conduct may include the
failure to provide goods and services necessary to avoid physical harm,
mental anguish, or mental illness.
Part-time employee means an employee of the Unit who has part-time
status as defined by the State.
Professional employee means an investigator, attorney, or auditor.
Program abuse means provider practices that do not meet the
definition of civil or criminal fraud under applicable State law, but
nonetheless are inconsistent with sound fiscal, business, or medical
practices.
[[Page 10714]]
Provider means:
(1) An individual or entity that furnishes or arranges for the
furnishing of items or services for which payment is claimed under
Medicaid, including an individual or entity in a managed care network;
(2) An individual or entity that is required to enroll in a State
Medicaid program, such as an ordering, prescribing, or referring
physician; or
(3) Any individual or entity that may operate as a health care
provider under applicable State law.
Unit means State Medicaid Fraud Control Unit.
Sec. 1007.3 Statutory basis and organization of rule.
(a) Statutory basis. This part codifies sections 1903(a)(6) and
1903(b)(3) of the Social Security Act (the Act), which establish the
amounts and conditions of Federal matching payments for expenditures
incurred in establishing and operating a State MFCU. This part also
implements section 1903(q) of the Act, which establishes the basic
requirements and standards that Units must meet to demonstrate that
they are effectively carrying out the functions of the Unit in order to
be certified by OIG as eligible for FFP under Title XIX of the Act.
Section 1902(a)(61) of the Act requires a State to provide in its
Medicaid State plan that it operates a Unit that effectively carries
out the functions and requirements described in this part, as
determined in accordance with standards established by OIG, unless the
State demonstrates that a Unit would not be cost effective because of
minimal Medicaid fraud in the covered services under the plan and that
beneficiaries under the plan will be protected from abuse and neglect
in connection with the provision of medical assistance under the plan
without the existence of such a Unit. CMS retains the authority to
determine a State's compliance with Medicaid State plan requirements in
accordance with section 1902(a) of the Act.
(b) Organization of this part. Subpart A of this part defines terms
used in this part and sets forth the statutory basis and organization
of this part. Subpart B specifies the certification requirements that a
Unit must meet to be eligible for FFP, including requirements for
applying and reapplying for certification. Subpart C specifies FFP
rates, costs eligible and not eligible for FFP, and FFP disallowance
procedures. Subpart D specifies other HHS regulations applicable to the
MFCU grants.
Subpart B--Requirements for Certification
Sec. 1007.5 Single, identifiable entity requirements of Unit.
(a) A Unit must be a single, identifiable entity of the State
government.
(b) To be considered a single, identifiable entity of the State
government, the Unit must:
(1) Be a single organization reporting to the Unit director;
(2) Operate under a budget that is separate from that of its parent
agency; and
(3) Have the headquarters office and any field offices each in
their own contiguous space, unless the Unit demonstrates to OIG that
circumstances warrant a different arrangement for certain employees.
Sec. 1007.7 Prosecutorial authority requirements of Unit.
A Unit must be organized according to one of the following three
options related to a Unit's prosecutorial authority:
(a) The Unit is in the office of the State Attorney General or
another department of State government that has statewide authority to
prosecute individuals for violations of criminal laws with respect to
fraud and patient or resident abuse or neglect in the provision or
administration of medical assistance under a State plan implementing
Title XIX of the Act.
(b) If there is no State agency with statewide authority and
capability for criminal fraud or patient or resident abuse or neglect
prosecutions, the Unit has established formal written procedures
ensuring that the Unit refers suspected cases of criminal fraud in the
State Medicaid program or of patient or resident abuse and neglect to
the appropriate prosecuting authority or authorities, and coordinates
with and assists such authority or authorities in the prosecution of
such cases.
(c) The Unit has a formal working relationship with the office of
the State Attorney General, or another office with statewide
prosecutorial authority, and has formal written procedures for
referring to the State Attorney General or other office suspected
criminal violations and for effective coordination of the activities of
both entities relating to the detection, investigation, and prosecution
of those violations relating to the State Medicaid program. Under this
working relationship, the office of the State Attorney General, or
other office, must agree to assume responsibility for prosecuting
alleged criminal violations referred to it by the Unit. However, if the
State Attorney General finds that another prosecuting authority has the
demonstrated capacity, experience, and willingness to prosecute an
alleged violation, he or she may refer a case to that prosecuting
authority, as long as the office of the State Attorney General
maintains oversight responsibility for the prosecution and for
coordination between the Unit and the prosecuting authority.
Sec. 1007.9 Relationship and agreement between Unit and Medicaid
agency.
(a) The Unit must be separate and distinct from the Medicaid
agency.
(b) No official of the Medicaid agency will have authority to
review the activities of the Unit or to review or overrule the referral
of a suspected criminal violation to an appropriate prosecuting
authority.
(c) The Unit will not receive funds paid under this part either
from or through the Medicaid agency.
(d) The Unit must enter into a written agreement with the Medicaid
agency under which:
(1) The Medicaid agency will agree to comply with all requirements
of Sec. 455.21(a) of this title;
(2) The Unit will agree to comply with the requirements of Sec.
1007.11(c) of this title; and
(3) The Medicaid agency and the Unit will agree to:
(i) Establish a practice of regular meetings or communication
between the two entities;
(ii) Establish procedures for how they will coordinate their
efforts;
(iii) Establish procedures for Sec. Sec. 1007.9(e) through
1007.9(h) of this title;
(iv) Establish procedures by which the Unit will receive referrals
of potential fraud from managed care organizations, if applicable,
either directly or through the Medicaid agency, as required at Sec.
438.608(a)(7) of this title; and
(v) Review and, as necessary, update the agreement no less
frequently than every five (5) years to ensure that the agreement
reflects current law and practice.
(e)(1) The Unit may refer any provider with respect to which there
is pending an investigation of a credible allegation of fraud under the
Medicaid program to the Medicaid agency for payment suspension in whole
or part under Sec. 455.23 of this title.
(2) Referrals may be brief but must be in writing and include
sufficient information to allow the Medicaid agency to identify the
provider and to explain the credible allegations forming the grounds
for the payment suspension.
[[Page 10715]]
(f) Any request by the Unit to the Medicaid agency to delay
notification to the provider of a payment suspension under Sec. 455.23
of this title must be made promptly in writing.
(g) The Unit should reach a decision on whether to accept a case
referred by the Medicaid agency in a timely fashion. When the Unit
accepts or declines a case referred by the Medicaid agency, the Unit
promptly notifies the Medicaid agency in writing of the acceptance or
declination of the case.
(h) Upon request from the Medicaid agency on a quarterly basis
under Sec. 455.23(d)(3)(ii), the Unit will certify that any matter
accepted on the basis of a referral continues to be under
investigation, thus warranting continuation of the payment suspension.
Sec. 1007.11 Duties and responsibilities of Unit.
(a) The Unit will conduct a statewide program for investigating and
prosecuting (or referring for prosecution) violations of all applicable
State laws, including criminal statutes as well as civil false claims
statutes or other civil authorities, pertaining to the following:
(1) Fraud in the administration of the Medicaid program, the
provision of medical assistance, or the activities of providers.
(2) Fraud in any aspect of the provision of health care services
and activities of providers of such services under any Federal health
care program (as defined in section 1128B(f)(1)of the Act), if the Unit
obtains the written approval of the Inspector General of the relevant
agency and the suspected fraud or violation of law in such case or
investigation is primarily related to the State Medicaid program.
(b)(1) The Unit will also review complaints alleging abuse or
neglect of patients or residents in health care facilities receiving
payments under Medicaid and may review complaints of the
misappropriation of funds or property of patients or residents of such
facilities.
(2) At the option of the Unit, it may review complaints of abuse or
neglect, including misappropriation of funds or property, of patients
or residents of board and care facilities, regardless of whether
payment to such facilities is made under Medicaid.
(3) If the initial review of the complaint indicates substantial
potential for criminal prosecution, the Unit will investigate the
complaint or refer it to an appropriate criminal investigative or
prosecutorial authority.
(4) If the initial review does not indicate a substantial potential
for criminal prosecution, the Unit will, if appropriate, refer the
complaint to the proper Federal, State, or local agency.
(c) If the Unit, in carrying out its duties and responsibilities
under paragraphs (a) and (b) of this section, discovers that
overpayments have been made to a health care facility or other
provider, the Unit will either recover such overpayment as part of its
resolution of a fraud case or refer the matter to the appropriate State
agency for collection.
(d) Where a prosecuting authority other than the Unit is to assume
responsibility for the prosecution of a case investigated by the Unit,
the Unit will ensure that those responsible for the prosecutorial
decision and the preparation of the case for trial have the fullest
possible opportunity to participate in the investigation from its
inception and will provide all necessary assistance to the prosecuting
authority throughout all resulting prosecutions.
(e)(1) The Unit, if requested, will make available to OIG
investigators and attorneys, or to other Federal investigators and
prosecutors, all information in the Unit's possession concerning
investigations or prosecutions conducted by the Unit.
(2) The Unit will coordinate with OIG investigators and attorneys,
or with other Federal investigators and prosecutors, on any Unit cases
involving the same suspects or allegations that are also under
investigation or prosecution by OIG or other Federal investigators or
prosecutors.
(3) The Unit will establish a practice of regular Unit meetings or
communication with OIG investigators and Federal prosecutors.
(4) When the Unit lacks the authority or resources to pursue a
case, including for allegations of Medicare fraud and for civil false
claims actions in a State without a civil false claims act or other
State authority, the Unit will make appropriate referrals to OIG
investigators and attorneys or other Federal investigators or
prosecutors.
(5) The Unit will establish written policy consistent with
paragraphs (e)(1) through (4) of this section.
(f) The Unit will guard the privacy rights of all beneficiaries and
other individuals whose data is under the Unit's control and will
provide adequate safeguards to protect sensitive information and data
under the Unit's control.
(g)(1) The Unit will transmit to OIG pertinent information on all
convictions, including charging documents, plea agreements, and
sentencing orders, for purposes of program exclusion under section 1128
of the Act.
(2) Convictions include those obtained either by Unit prosecutors
or non-Unit prosecutors in any case investigated by the Unit.
(3) Such information will be transmitted to OIG within 30 days of
sentencing, or as soon as practicable if the Unit encounters delays in
receiving the necessary information from the court.
Sec. 1007.13 Staffing requirements of Unit.
(a) The Unit will employ sufficient professional, administrative,
and support staff to carry out its duties and responsibilities in an
effective and efficient manner.
(b) The Unit will employ individuals from each of the following
categories of professional employees, whose exclusive effort, as
defined in Sec. 1007.1, is devoted to the work of the Unit:
(1) One or more attorneys capable of prosecuting the Unit's health
care fraud or criminal cases and capable of giving informed advice on
applicable law and procedures and providing effective prosecution or
liaison with other prosecutors;
(2) One or more experienced auditors capable of reviewing financial
records and advising or assisting in the investigation of alleged
health care fraud and patient or resident abuse and neglect; and
(3) One or more investigators capable of conducting investigations
of health care fraud and patient or resident abuse and neglect matters,
including a senior investigator who is capable of supervising and
directing the investigative activities of the Unit.
(c) The Unit will employ a director, as defined in Sec. 1007.1,
who supervises all Unit employees.
(d) Professional employees:
(1) Will devote their exclusive effort to the work of the Unit, as
defined in Sec. 1007.1 and except as provided in paragraphs (d)(2) and
(3) of this section;
(2) May be employed outside the Unit during nonduty hours, only if
the employee is not:
(i) Employed with a State agency (other than the Unit itself) or
its contractors; or
(ii) Employed with an entity whose mission poses a conflict of
interest with Unit function and duties;
(3) May perform non-Unit assignments for the State government only
to the extent that such duties are limited in duration; and
(4) Will be under the direction and supervision of the Unit
director.
(e) The Unit may employ administrative and support staff, such as
[[Page 10716]]
paralegals, information technology personnel, interns, and secretaries,
who may be full-time or part-time employees and must report to the Unit
director or other Unit supervisor.
(f) The Unit will employ, or have available to it, individuals who
are knowledgeable about the provision of medical assistance under Title
XIX of the Act and about the operations of health care providers.
(g)(1) The Unit may employ, or have available through consultant
agreements or other contractual arrangements, individuals who have
forensic or other specialized skills that support the investigation and
prosecution of cases.
(2) The Unit may not, through consultant agreements or other
contractual arrangements, rely on individuals not employed directly by
the Unit for the investigation or prosecution of cases.
(h) The Unit will provide training for its professional employees
for the purpose of establishing and maintaining proficiency in Medicaid
fraud and patient or resident abuse and neglect matters.
Sec. 1007.15 Establishment and certification of Unit.
(a) Initial application. In order to demonstrate that it meets the
requirements for certification, the State or territory must submit to
OIG an application approved by the Governor or chief executive,
containing the following:
(1) A description of the applicant's organization, structure, and
location within State government, and a statement of whether it seeks
certification under Sec. 1007.7(a), (b), or (c);
(2) A statement from the State Attorney General that the applicant
has authority to carry out the functions and responsibilities set forth
in Subpart B. If the applicant seeks certification under Sec.
1007.7(b), the statement must also specify either that:
(i) There is no State agency with the authority to exercise
statewide prosecuting authority for the violations with which the Unit
is concerned, or
(ii) Although the State Attorney General may have common law
authority for statewide criminal prosecutions, he or she has not
exercised that authority;
(3) A copy of whatever memorandum of agreement, regulation, or
other document sets forth the formal procedures required under Sec.
1007.7(b), or the formal working relationship and procedures required
under Sec. 1007.7(c);
(4) A copy of the agreement with the Medicaid agency required under
Sec. Sec. 1007.9 and 455.21(c);
(5) A statement of the procedures to be followed in carrying out
the functions and responsibilities of this part;
(6) A proposed budget for the 12-month period for which
certification is sought; and
(7) Current and projected staffing, including the names, education,
and experience of all senior professional employees already employed
and job descriptions, with minimum qualifications, for all professional
positions.
(b) Basis for, and notification of, certification. (1) OIG will
make a determination as to whether the initial application under
paragraph (a) of this section meets the requirements of Sec. Sec.
1007.5 through 1007.13 and whether a Unit will be effective in using
its resources in investigating Medicaid fraud and patient or resident
abuse and neglect.
(2) OIG will certify a Unit only if OIG specifically approves the
applicant's formal written procedures under Sec. 1007.7(b) or (c), if
either of those provisions is applicable.
(3) If the application is not approved, the applicant may submit a
revised application at any time.
(4) OIG will certify a Unit that meets the requirements of this
Subpart B for 12 months.
Sec. 1007.17 Annual recertification of Unit.
(a) Information required annually for recertification. To continue
receiving payments under this part, a Unit must submit to OIG:
(1) Reapplication for recertification. Reapplication is due at
least 60 days prior to the expiration of the 12-month certification
period. A reapplication must include:
(i) A brief narrative that evaluates the Unit's performance,
describes any specific problems it has had in connection with the
procedures and agreements required under this part, and discusses any
other matters that have impaired its effectiveness. The narrative
should include any extended investigative authority approvals obtained
pursuant to Sec. 1007.11(a)(2).
(ii) For those Units approved to conduct data mining under Sec.
1007.20, all costs expended by the Unit attributed to data mining
activities; the amount of staff time devoted to data mining activities;
the number of cases generated from those activities; the outcome and
status of those cases, including the expected and actual monetary
recoveries (both Federal and non-Federal share); and any other relevant
indicia of return on investment from such activities.
(iii) Information requested by OIG to assess compliance with this
part and adherence to MFCU performance standards, including any
significant changes in the information or documentation provided to OIG
in the previous reporting period.
(2) Statistical reporting. By November 30 of each year, the Unit
will submit statistical reporting for the Federal fiscal year that
ended on the prior September 30 containing the following statistics:
(i) Unit staffing. The number of Unit employees, categorized by
attorneys, investigators, auditors, and other employees, on board, and
total number of approved Unit positions;
(ii) Caseload. The number of open, new, and closed cases
categorized by type of case and the number of open criminal and civil
cases categorized by type of provider;
(iii) Criminal case outcomes. The number of criminal convictions
and indictments categorized by type of case and by type of provider;
the number of acquittals, dismissals, referrals for prosecution,
sentences, and other nonmonetary penalties categorized by type of case;
and the amount of total ordered criminal recoveries categorized by type
of provider; the amount of ordered Medicaid restitution, fines ordered,
investigative costs ordered, and other monetary payment ordered
categorized by type of case;
(iv) Civil case outcomes. The number of civil settlements and
judgments and recoveries categorized by type of provider; the number of
global (coordinated among a group of States) civil settlements and
successful judgments; the amount of global civil recoveries to the
Medicaid program; the amount of other global civil monetary recoveries;
the number of other civil cases opened, filed, or referred for filing;
the number of other civil case settlements and successful judgments;
the amount of other civil case recoveries to the Medicaid program; the
amount of other monetary recoveries; and the number of other civil
cases declined or closed without successful settlement or judgment;
(v) Collections. The monies actually collected on criminal and
civil cases categorized by type of case; and
(vi) Referrals. The number of referrals received categorized by
source of referral and type of case; the number of cases opened
categorized by source of referral and type of case; and the number of
referrals made to other agencies categorized by type of case.
[[Page 10717]]
(b) Other information reviewed for recertification. In addition to
reviewing information required at Sec. 1007.17(a), OIG will review, as
appropriate, the following information when considering recertification
of a Unit:
(1) Information obtained through onsite reviews and
(2) Other information OIG deems necessary or warranted.
(c) Basis for recertification. In reviewing the information
described at Sec. 1007.17(a) and (b), OIG will evaluate whether the
Unit has demonstrated that it effectively carries out the functions and
requirements described in section 1903(q) of the Act as implemented by
this part. In making that determination, OIG will take into
consideration the following factors:
(1) Unit's compliance with this part and other Federal regulations,
including those specified in Sec. 1007.23;
(2) Unit's compliance with OIG policy transmittals;
(3) Unit's adherence to MFCU performance standards as published in
the Federal Register;
(4) Unit's effectiveness in using its resources in investigating
cases of possible fraud in the administration of the Medicaid program,
the provision of medical assistance, or the activities of providers of
medical assistance under the State Medicaid plan, and in prosecuting
cases or cooperating with the prosecuting authorities; and
(5) Unit's effectiveness in using its resources in reviewing and
investigating, referring for investigation or prosecution, or
criminally prosecuting complaints alleging abuse or neglect of patients
or residents in health care facilities receiving payments under the
State Medicaid plan and, at the Unit's option, in board and care
facilities.
(d) Notification. OIG will notify the Unit by the Unit's
recertification date of approval or denial of the recertification
reapplication.
(1) Approval subject to conditions. OIG may impose special
conditions or restrictions and may require corrective action, as
provided in 45 CFR 75.207, before approving a reapplication for
recertification.
(2) Written explanation for denials. If the reapplication is
denied, OIG will provide a written explanation of the findings on which
the denial was based.
(e) Reconsideration of denial of recertification. (1) A Unit may
request that OIG reconsider a decision to deny recertification by
providing written information contesting the findings on which the
denial was based.
(2) Within 30 days of receipt of the request for reconsideration,
OIG will provide a final decision in writing, explaining its basis for
approving or denying the reconsideration of recertification.
Subpart C--Federal Financial Participation (FFP)
Sec. 1007.19 FFP rate and eligible FFP costs.
(a) Rate of FFP. (1) Subject to the limitation of this section, the
Secretary of Health and Human Services must reimburse each State by an
amount equal to 90 percent of the allowable costs incurred by a
certified Unit during the first 12 quarters of operation that are
attributable to carrying out its functions and responsibilities under
this part. Each quarter of operation must be counted in determining
when the Unit has accumulated 12 quarters of operation and is,
therefore, no longer eligible for a 90-percent matching rate. Quarters
of operation do not have to be consecutive to accumulate.
(2) Beginning with the 13th quarter of operation, the Secretary
must reimburse 75 percent of allowable costs incurred by a certified
Unit.
(b) Retroactive certification. OIG may grant certification
retroactive to the date on which the Unit first met all the
requirements of section 1903(q) of the Act and of this part. For any
quarter with respect to which the Unit is certified, the Secretary will
provide reimbursement for the entire quarter.
(c) Total amount of FFP. FFP for any quarter must not exceed the
higher of $125,000 or one-quarter of 1 percent of the sums expended by
the Federal, State, and local governments during the previous quarter
in carrying out the State Medicaid program.
(d) Costs eligible for FFP. (1) FFP is allowable under this part
for the expenditures attributable to the establishment and operation of
the Unit, including the cost of training personnel employed by the Unit
and efforts to increase referrals to the Unit through program outreach.
Reimbursement is allowable only for costs attributable to the specific
responsibilities and functions set forth in this part and if the Unit
has been certified and recertified by OIG.
(2) Establishment costs are limited to clearly identifiable costs
of personnel that meet the requirements of Sec. 1007.13 of this part.
(e) Costs not eligible for FFP. FFP is not allowable under this
part for expenditures attributable to:
(1) The investigation of cases involving program abuse or other
failures to comply with applicable laws and regulations, if these cases
do not involve substantial allegations or other indications of fraud,
as described in Sec. 1007.11(a) of this part;
(2) Routine verification with beneficiaries of whether services
billed by providers were actually received, or, except as provided in
Sec. 1007.20, efforts to identify situations in which a question of
fraud may exist by the screening of claims and analysis of patterns and
practice that involve data mining as defined in Sec. 1007.1.
(3) The routine notification of providers that fraudulent claims
may be punished under Federal or State law;
(4) The performance of any audit or investigation, any professional
legal function, or any criminal, civil or administrative prosecution of
suspected providers by a person who does not meet the professional
employee requirements in Sec. 1007.13(d);
(5) The investigation or prosecution of fraud cases involving a
beneficiary's eligibility for benefits, unless the suspected fraud
cases also involve conspiracy with a provider;
(6) Any payment, direct or indirect, from the Unit to the Medicaid
agency, other than payments for the salaries of employees on detail to
the Unit; or
(7) Temporary duties performed by professional employees that are
not required functions and responsibilities of the Unit, as described
at Sec. 1007.13(d)(3).
Sec. 1007.20 Circumstances of permissible data mining.
(a) Notwithstanding Sec. 1007.19(e)(2), a Unit may engage in data
mining as defined in this part and receive FFP only under the following
conditions:
(1) The Unit identifies the methods of coordination between the
Unit and the Medicaid agency, the individuals serving as primary points
of contact for data mining, as well as the contact information, title,
and office of such individuals;
(2) Unit employees engaged in data mining receive specialized
training in data mining techniques;
(3) The Unit describes how it will comply with paragraphs (a)(1)
and (2) of this section as part of the agreement required by Sec.
1007.9(d); and
(4) OIG, in consultation with CMS, approves in advance the
provisions of the agreement as defined in paragraph (a)(3) of this
section.
(i) OIG will act on a request from a Unit for review and approval
of the agreement within 90 days after receipt of a written request, or
the request shall be considered approved if OIG fails to respond within
90 days after receipt of the written request.
(ii) If OIG requests additional information in writing, the 90-day
[[Page 10718]]
period for OIG action on the request begins on the day OIG receives the
information from the Unit.
(iii) The approval is for 3 years.
(iv) A Unit may request renewal of its data-mining approval for
additional 3-year periods by submitting a written request for renewal
to OIG, along with an updated agreement with the Medicaid agency.
Sec. 1007.21 Disallowance of claims for FFP.
(a) Notice of disallowance and of right to reconsideration. When
OIG determines that a Unit's claim or portion of a claim for FFP is not
allowable, OIG shall promptly send to the Unit notification that meets
the requirements listed at 42 CFR 430.42(a).
(b) Reconsideration of disallowance. (1) The Principal Deputy
Inspector General will reconsider Unit disallowance determinations made
by OIG.
(2) To request a reconsideration from the Principal Deputy
Inspector General, the Unit must follow the requirements in 42 CFR
430.42(b)(2) and submit all required information to the Principal
Deputy Inspector General. Copies should be sent via registered or
certified mail to the Principal Deputy Inspector General.
(3) The Unit may request to retain FFP during the reconsideration
of the disallowance under section 1116(e) of the Act, in accordance
with 42 CFR 433.38.
(4) The Unit is not required to request reconsideration before
seeking review from the Departmental Appeals Board.
(5) The Unit may also seek reconsideration, and following the
reconsideration decision, request a review from the Departmental
Appeals Board.
(6) If the Unit elects reconsideration, the reconsideration process
must be completed or withdrawn before requesting review by the
Departmental Appeals Board.
(c) Procedures for reconsideration of a disallowance. (1) Within 60
days after receipt of the disallowance letter, the Unit shall, in
accordance with paragraph (b)(2) of this section, submit in writing to
the Principal Deputy Inspector General any relevant evidence,
documentation, or explanation.
(2) After consideration of the policies and factual matters
pertinent to the issues in question, the Principal Deputy Inspector
General shall, within 60 days from the date of receipt of the request
for reconsideration, issue a written decision or a request for
additional information as described in paragraph (c)(3) of this
section.
(3) At the Principal Deputy Inspector General's option, OIG may
request from the Unit any additional information or documents necessary
to make a decision. The request for additional information must be sent
via registered or certified mail to establish the date the request was
sent by OIG and received by the Unit.
(4) Within 30 days after receipt of the request for additional
information, the Unit must submit to the Principal Deputy Inspector
General all requested documents and materials.
(i) If the Principal Deputy Inspector General finds that the
materials are not in readily reviewable form or that additional
information is needed, he or she shall notify the Unit via registered
or certified mail that it has 15 business days from the date of receipt
of the notice to submit the readily reviewable or additional materials.
(ii) If the Unit does not provide the necessary materials within 15
business days from the date of receipt of such notice, the Principal
Deputy Inspector General shall affirm the disallowance in a final
reconsideration decision issued within 15 days from the due date of
additional information from the Unit.
(5) If additional documentation is provided in readily reviewable
form under paragraph (c)(4) of this section, the Principal Deputy
Inspector General shall issue a written decision within 60 days from
the due date of such information.
(6) The final written decision shall constitute final OIG
administrative action on the reconsideration and shall be (within 15
business days of the decision) mailed to the Unit via registered or
certified mail to establish the date the reconsideration decision was
received by the Unit.
(7) If the Principal Deputy Inspector General does not issue a
decision within 60 days from the date of receipt of the request for
reconsideration or the date of receipt of the requested additional
information, the disallowance shall be deemed to be affirmed.
(8) No section of this regulation shall be interpreted as waiving
OIG's right to assert any provision or exemption under the Freedom of
Information Act.
(d) Withdrawal of a request for reconsideration of a disallowance.
(1) A Unit may withdraw the request for reconsideration at any time
before the notice of the reconsideration decision is received by the
Unit without affecting its right to submit a notice of appeal to the
Departmental Appeals Board. The request for withdrawal must be in
writing and sent to the Principal Deputy Inspector General via
registered or certified mail.
(2) Within 60 days after OIG's receipt of a Unit's withdrawal
request, a Unit may, in accordance with (f)(2) of this section, submit
a notice of appeal to the Departmental Appeals Board.
(e) Implementation of decisions for reconsideration of a
disallowance. (1) After undertaking a reconsideration, the Principal
Deputy Inspector General may affirm, reverse, or revise the
disallowance and shall issue a final written reconsideration decision
to the Unit in accordance with paragraphs (c)(4) and (5) of this
section.
(2) If the reconsideration decision requires an adjustment of FFP,
either upward or downward, a subsequent grant action will be made in
the amount of such increase or decrease.
(3) Within 60 days after receipt of a reconsideration decision from
OIG, a Unit may, in accordance with paragraph (f) of this section,
submit a notice of appeal to the Departmental Appeals Board.
(f) Appeal of disallowance. (1) The Departmental Appeals Board
reviews disallowances of FFP under Title XIX of the Act, including
disallowances issued by OIG to the Units.
(2) A Unit that wishes to appeal a disallowance to the Departmental
Appeals Board must follow the requirements in 42 CFR 430.42(f)(2).
(3) The appeals procedures are those set forth in 45 CFR part 16
for Medicaid and for many other programs, including the Units,
administered by the Department.
(4) The Departmental Appeals Board may affirm the disallowance,
reverse the disallowance, modify the disallowance, or remand the
disallowance to OIG for further consideration.
(5) The Departmental Appeals Board will issue a final written
decision to the Unit consistent with 45 CFR part 16.
(6) If the appeal decision requires an adjustment of FFP, either
upward or downward, a subsequent grant action will be made in the
amount of such increase or decrease.
Subpart D--Other Provisions
Sec. 1007.23 Other applicable HHS regulations.
The following regulations from 45 CFR, subtitle A, apply to grants
under this part:
(a) Part 16--Procedures of the Departmental Grant Appeals Board.
(b) Part 75--Uniform Administrative Requirements, Cost Principles,
and Audit Requirements for HHS Awards.
(c) Part 80--Nondiscrimination under Programs Receiving Federal
Assistance through HHS, Effectuation of Title VI of the Civil Rights
Act of 1964.
[[Page 10719]]
(d) Part 81--Practice and Procedure for Hearings under 45 CFR part
80.
(e) Part 84--Nondiscrimination on the Basis of Handicap in Programs
and Activities Receiving Federal Financial Assistance.
(f) Part 91--Nondiscrimination on the Basis of Age in Programs or
Activities Receiving Federal Financial Assistance from HHS.
Daniel R. Levinson,
Inspector General.
Approved: February 1, 2019.
Alex M. Azar II,
Secretary.
[FR Doc. 2019-05362 Filed 3-21-19; 8:45 am]
BILLING CODE 4152-01-P