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Tennessee State Medicaid Fraud Control Unit: 2012 Onsite Review


OIG is responsible for overseeing the activities of all Medicaid Fraud Control Units (MFCU or Unit). As part of this oversight, OIG conducts periodic reviews of all Units and prepares public reports based on these reviews. The reviews describe the Units' caseloads; assess performance in accordance with the 12 MFCU performance standards; identify any opportunities for improvement; and identify any instances of noncompliance with laws, regulations, and policy transmittals.


We based our review on an analysis of data from seven sources: (1) a review of policies, procedures and documentation of the Unit's operations, staffing, and caseload; (2) a review of financial documentation; (3) structured interviews with key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the Unit director and supervisors; (6) an onsite review of case files; and (7) an onsite review of Unit operations.


For Federal fiscal years 2009 through 2011, the Tennessee Unit obtained 96 criminal convictions and 22 civil settlements, and reported recoveries of over $181 million. We identified one instance of noncompliance with applicable laws, regulations, and policy transmittals: the Unit investigated a case that was not eligible for Federal funding under Federal regulations. With the exception of this instance, our review of compliance issues found no evidence of significant noncompliance with applicable laws, regulations, or policy transmittals. We identified two instances in which the Unit did not fully meet Performance Standards. The Unit referred all convicted health care providers to OIG for program exclusion, but did not refer nonprovider convictions. Although the Unit had a training plan, it did not establish training hour requirements for each professional discipline. Additionally, despite Unit efforts to increase referrals, the State Medicaid Agency and managed care organizations sent a small number of fraud referrals to the Unit. Finally, Unit staff and stakeholders reported that involvement on various task forces was key to the Unit's productivity.


On the basis of these findings, we recommend that the Tennessee Unit: (1) repay grant funds spent on the case that, under Federal regulations, was not eligible for Federal funding; (2) refer all convictions to OIG, including nonprovider convictions, within 30 days; and (3) establish training hour requirements for professional disciplines. The Unit stated that it felt the case in question was within its purview. We disagree with the Unit's opinion because the case in question was not one of the three eligible case types specified by Medicaid statute and Federal regulations: investigation of allegations of fraud in the administration of the Medicaid program, in the provision of Medicaid services, or in the activities of Medicaid providers. The Unit should work with OIG to determine ineligible costs.