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Bill introduced in Congress to reduce Medicaid fraud in the territories

Federal legislation pending in the U.S. House encourages American Samoa and other territories to establish Medicaid Fraud Control Units (MFCUs), to ensure that federal taxpayer dollars are not wasted or abused, according to a US House committee report released two weeks ago.


The 7-page report, dated Sept. 8 for the US House Committee on Energy and Commerce’s Subcommittee on Health, was released ahead of a Sept. 11 health subcommittee hearing called “Strengthening Medicaid Program Integrity and Closing Loopholes.”




According to the committee report, MFCUs, which serve as a leading source of health care fraud control, are a single, identifiable entity of State government responsible for investigating and prosecuting Medicaid provider fraud as well as patient abuse and neglect in health care facilities.


It cites a federal investigative report that in fiscal year 2014, MFCUs reported 1,318 criminal convictions involving various types of service providers to Medicaid beneficiaries. It points out that recoveries from criminal cases in 2014 reached nearly $300 million.


According to the committee report, MFCUs are jointly funded by the federal and state governments; with the feds paying 75% of the costs for operating a unit. As part of their Medicaid plans, all Medicaid programs are required to operate an MFCU unless they demonstrate to the US Department of Health and Human Service (USDHHS) that operation of an MFCU would not be cost effective and that other program integrity provisions are in place.


Currently, 49 States and the District of Columbia operate an MFCU; only one State has received a waiver from the Secretary DHSS because operating a MFCU would not be cost effective there.


“None of the U.S. territories that participate in the Medicaid program currently operate a MFCU. The absence of rigorous auditing and independent reviews from MFCUs in the territories could allow Federal taxpayer dollars to be lost to waste, fraud, or abuse,” the congressional committee report points out.


Unlike the 50 states and the District of Columbia, federal Medicaid funding for the territories is subject to an annual limit or cap. Thus, under current law, any funds used for the operation of an MFCU would count against a territory’s cap, reducing the amount that could be spent on health care services for beneficiaries, the committee report states.


On Sept. 8, US Reps. Joseph R. Pitts and Susan Brooks introduced the “Medicaid and CHIP Territory Fraud Prevention Act”, which the committee report says builds upon President Obama’s fiscal year 2016 budget request which would encourage territories to create MFCUs by exempting Federal funding for the fraud control units from territories’ cap on Medicaid funding, and by exempting territories from the statutory ceiling on quarterly federal payments for the units.


Pitts said the bill would operationalize a proposal in the president’s budget to help reduce Medicaid and CHIP fraud in the US territories, according to his written statement in committee records.


USDHHS Office of inspector general (OIG) official John Hagg testified during the committee hearing that the Medicaid statute require all states and the five territories to have an MFCU as a feature of their Medicaid State plan, unless the State receives a waiver from the USDHHS Secretary. Currently, all five U.S. territories and the State of North Dakota do not maintain an MFCU.


Hagg said that the bill could remove the disincentive to establish MFCUs in the territories. “This could be accomplished by exempting MFCU funding from the capped Medicaid appropriation. OIG believes that such a change would also be cost-efficient, especially in Puerto Rico” where the Medicaid enrollment is more than one million people, he said.




The committee report also discussed another measure pertaining to the territories — the Medicaid and CHIP Territory Transparency and Information Act — which was introduced in March this year and sponsored by US Rep. Gus Bilirakis with five co-sponsors including Congresswoman Aumua Amata.


The committee report points out that all five territories operate Medicaid and CHIP (Children’s Health Insurance Program) programs funded with federal dollars and the amount of federal funding for these programs has increased in recent years as the Patient Protection and Affordable Care Act (PPACA, or Obamacare) increased the federal matching rate for the territories, as well as their federal spending caps.


“However, little is known about how these programs operate and their use of federal funds” in the territories, the report said, adding that most reports on Medicaid and CHIP do not include the territories.


Although the Centers for Medicaid and Medicare (CMS) include profiles of the 50 States’ Medicaid and CHIP programs on its website, as well as information on their eligibility and enrollment levels and waivers, the territories are not included. (Puerto Rico was recently added.)


“Congress and the public need additional information about the programs in the territories to ensure the appropriate use of Federal funds and informed future policy-making,” according to the report, which says that Bilirakis’ bill would address this lack of information by requiring CMS to include on its website similar Medicaid and CHIP Program information about the territories as is provided about the States.