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South Dakota State Medicaid Fraud Control Unit: 2016 Onsite Review


OIG administers the Medicaid Fraud Control Unit (MFCU or Unit) grant awards, annually recertifies the Units, and oversees the Units' performance in accordance with the requirements of the grant. As part of this oversight, OIG conducts periodic reviews of all Units and prepares public reports based on these reviews. These reviews assess the Unit's adherence to the 12 MFCU performance standards and compliance with applicable Federal statutes and regulations.


We conducted an onsite review of the South Dakota Unit in April 2016. We based our review on an analysis of data from six sources: (1) policies, procedures, and documentation related to the Unit's operations, staffing, and caseload; (2) financial documentation for fiscal years (FYs) 2013 through 2015; (3) structured interviews with key stakeholders; (4) structured interviews with the Unit's staff; (5) a review of files for cases that were open at some point during FYs 2013 through 2015; and (6) observation of Unit operations.


For FYs 2013 through 2015, the South Dakota Unit reported 5 criminal convictions, 12 civil judgments and settlements, and combined criminal and civil recoveries of $7 million. We found that the South Dakota Unit was generally in compliance with applicable laws, regulations, and policy transmittals, with some exceptions. Specifically, the Unit did not report program income properly in FY 2013; and a Unit investigator performed non-Unit duties, for which associated costs were not subtracted from claimed Unit expenditures. With respect to adherence to the Performance Standards, we found that the Unit did not always document periodic supervisory reviews in its case files. Further, the Unit did not report all convictions and adverse actions to Federal partners within required timeframes. In addition, we noted that only a small portion of Unit fraud referrals-8 percent-came from the State Medicaid agency's Program Integrity Unit. We also noted that the Unit uses peer education as a means of deterring fraudulent conduct.


We recommend that the South Dakota Unit (1) deduct the Federal share for the unallowable withdrawal from current expenditures and ensure that all program income is reported properly on its Federal financial reports, (2) reimburse the Federal share of unallowable personnel costs related to non-Unit duties and ensure that the Unit claims Federal reimbursement only for appropriate Unit-related duties, (3) implement processes to ensure that all case files include documentation of periodic supervisory reviews, and (4) implement processes to ensure that convictions and adverse actions are reported to Federal partners within required timeframes. The Unit concurred with all four recommendations.