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California State Medicaid Fraud Control Unit: 2015 Onsite Review


OIG oversees all State Medicaid Fraud Control Units (MFCUs or Units). As part of this oversight, OIG conducts periodic reviews of all Units and prepares public reports based on these reviews. The reviews assess Unit performance in accordance with the 12 MFCU performance standards and monitor Unit compliance with Federal grant requirements.


We conducted an onsite review of the California Unit in February 2015. We analyzed data from seven sources: (1) a review of any documentation related to the Unit's policies and procedures, operations, staffing, and Federal fiscal years (FYs) 2012-2014 caseload, (2) a review of financial documentation for FYs 2012-2014; (3) structured interviews with key stakeholders; (4) a survey of Unit staff; (5) structured interviews with the Unit's management and selected staff; (6) an onsite review of a sample of case files associated with cases that were open at any point during FYs 2012-2014; and (7) an onsite review of Unit operations.


During FYs 2012-2014, the Unit expended $83 million and generated 337 convictions, 67 civil judgments and settlements, and total recoveries of $795 million, $531 million of which was attributed to cases investigated directly by the Unit. Our review of the Unit found that it was generally in compliance with applicable laws, regulations, and policy transmittals. However, we identified some aspects of Unit operations that should be improved. Specifically, some Unit case files lacked certain required documentation, the Unit lacked a training plan for its investigators and auditors, and the Unit did not report most adverse actions or convictions in appropriate timeframes. Although the Unit generally exercised proper fiscal control of its resources, it improperly claimed some indirect costs during FYs 2012-2014. We noted three practices, among others, that the Unit reported were beneficial to Unit operations. Specifically, the Unit: (1) took steps to ensure it received fraud referrals from managed care organizations, (2) used a field representative to conduct outreach and provide training, and (3) co-located Unit investigators in an OIG field office.


We recommend that the California Unit: (1) develop and implement procedures to ensure that the Unit documents relevant information in its case files, (2) fully implement the new training plans for investigators and auditors, (3) develop and implement procedures to overcome challenges in obtaining information needed to report convictions and adverse actions to Federal partners within required timeframes, and (4) develop and implement procedures to ensure that the Unit properly claims its indirect costs. The Unit concurred with all four of our recommendations.