OIG Issues FY 2016 Annual Report of the Medicaid Fraud Control Units

The U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued the Medicaid Fraud Control Units Fiscal Year 2016 Annual Report in May 2017. The Annual Report is based on analysis of statistical data submitted by the fifty Medicaid Fraud Control Units (MFCUs) operated throughout the country, as well as data submitted to OIG annually for the purpose of recertifying each state’s MFCU for compliance with Federal requirements. MFCUs are typically part of a state’s Attorney General’s office and investigate and prosecute Medicaid provider fraud and patient abuse or neglect in health care facilities. MFCUs operate at the state level in forty-nine states and the District of Columbia. The OIG exercises oversight over the fifty MFCUs.

The FY 2016 Annual Report summarizes the results of the investigations and prosecutions conducted by the MFCUs for FY 2016. According to the statistical data analyzed, the number of Medicaid convictions, civil settlements, and judgments continued to increase in FY 2016, reaching a 5-year high. MFCUs reported 1,564 convictions, with fraud cases accounting for seventy-four percent of the total and patient abuse or neglect cases accounting for twenty-six percent. Almost half of the fraud convictions involved unlicensed providers.

Convictions involving personal care services providers were reported to be the largest category of convictions, with thirty-five percent (552 of 1,564) of the convictions involving personal care services attendants, representatives of personal care services agencies, or other home care aides. Of the 552 convictions, 500 involved provider fraud and 52 involved patient abuse or neglect.

The second largest category of convictions involved nursing care, with eleven percent (171 of 1,564) of total convictions involving licensed practical nurses (LPNs), registered nurses (RNs), physician assistants (PAs), or nurse practitioners (NPs). Another ten percent of convictions (153 of 1,564) were of nurse aids. These convictions typically involved patient abuse or neglect, the provision of health services without a license, and services that were billed but not rendered. Nurse Aides were reported as the provider type that accounted for the greatest number of patient abuse or neglect convictions.

The Annual Report also noted an upward trend from FY 2015 to FY 2016 in drug diversion cases involving false or improper claims to the Medicaid program. Drug diversion investigations typically involve a provider fraudulently billing Medicaid for a drug not delivered to the intended beneficiary. In such cases, the drug is diverted from legal and medically necessary uses.

There were also 998 civil settlements and judgments reported. Almost half of the settlements (463 or 46%) were with pharmaceutical manufacturers, the provider type with the greatest number of settlements and judgments. According to the report, settlements with pharmaceutical manufacturers typically relate to the marketing of prescription drugs. In addition, seventy settlements and judgments involved laboratories, sixty-seven involved medical device manufacturers, and fifty-seven involved retail and wholesale pharmacies.
A total of $1.9 billion in criminal and civil recoveries was reported to be recovered in the Annual Report. For additional information on the FY 2016 Annual Report, please contact Hedy S. Rubinger or Genevieve M. Razick.

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