On May 13, Vice President Vance, the chair of the White House Task Force to Eliminate Fraud, held a press conference. He announced the deferral of $1.3 billion in federal Medicaid matching payments owed to California, which received considerable attention. He also announced that the HHS Inspector General had by letter that day warned state Attorneys General that they needed to be more aggressive in prosecuting fraud against Medicaid. That received considerably less attention. Then on June 4, Andrew Ferguson, the Chairman of the Federal Trade Commission and co-chair of the White House Task Force, announced that the HHS IG had denied the Hawaii Attorney General’s request for recertification of her state’s Medicaid Fraud Control Unit, cutting off $3 million in federal funds for the costs of operating that unit. Since other shoes are likely to drop, it’s worth understanding just how nonsensical the IG’s actions are.
By way of background, state Medicaid programs are required to operate a Medicaid Fraud Control Unit. The MFCU is usually located in the office of the state’s Attorney General. Its responsibilities are to investigate and prosecute (1) fraud against the Medicaid program and (2) abuse and neglect of patients in long-term care facilities receiving Medicaid payments and, at state option, of Medicaid patients in community settings. The federal government pays 75 percent of the cost of operating a MFCU that meets performance standards. These include “cooperation with federal and other state authorities on fraud cases.” The HHS Office of Inspector General—not CMS—oversees the MFCUs, assessing their compliance with federal requirements, recertifying them annually as eligible for federal matching funds, and administering the payment of those funds to the MFCUs. OIG also posts annual performance data for each MFCU.