Administration Threatens Medicaid Funding for Noncompliant MFCUs

The work of each state’s Medicaid Fraud Control Unit (MFCU) probably flies under the radar for most people, but the Department of Health and Human Services (HHS) Office of Inspector General (OIG) is now emphasizing that states may risk losing federal Medicaid funds if they fail to ensure their MFCUs are effectively combatting fraud.

MFCUs receive federal funds to investigate and prosecute under state law Medicaid provider fraud and patient abuse or neglect. In most cases, the state’s attorney general is the director of the state’s MFCU.

HHS OIG T. March Bell has sent letters to MFCU directors “to make sure that you are living up to your obligations and using money dedicated for MFCUs to fight fraud,” adding that many MFCUs “have been happy to rake in taxpayer dollars without fighting fraud.” The letter states that HHS will now require MFCUs to comply with their obligation under federal law to receive their MFCU funds, adding that “noncompliance with MFCU obligations can take your state’s entire Medicaid program out of compliance,” thus putting the state’s Medicaid funding in jeopardy.

The HHS OIG will “engage in a robust review” of each MFCU to ensure they fulfill their statutory functions and responsibilities. Those that fail to meet such requirements may be subject to regulatory remedies including: (1) implementation of a corrective action plan or other special conditions on annual recertification; (2) reduction or suspension of MFCU funding; or (3) denial of recertification, which could lead to the loss of all federal grant funds provided to the state’s Medicaid program. As each state’s MFCU’s annual recertification deadline approaches, OIG will contact the MFCU director to review the effectiveness of the MFCU, as well as its compliance with program requirements. The “Trump administration takes its role in this process, and its duty to the American taxpayer, seriously,” the letter concludes.

Federal attempts to withhold Medicaid funding from states has continues to cause discourse, particular as the Trump administration has moved to halt such funds to Democratic-leaning states. We’ll continue to watch this action to see what develops.

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