The Department of Legal Affairs’ Medicaid Fraud Control Unit (MFCU) is responsible for investigating and prosecuting corruption in the administration of the Medicaid Program and fraud perpetrated by medical service providers.  Of the 316 cases completed by MFCU during the period February 2004 through January 2005, 21 percent resulted in convictions or settlements with total restitution of approximately $54.8 million.  In audit report No. 2004-033, we disclosed significant findings related to the MFCU.  The scope of this audit focused on the current status of those findings during the period February 2004 through January 2005.  Our audit disclosed the following:

Finding No. 1:    MFCU data systems did not provide complete and accurate case information, thereby inhibiting accurate computation and reporting of overpayments and the costs associated with investigation and prosecution.

Finding No. 2:    MFCU continued recipient fraud investigations for 18 of 129 cases identified in audit report No. 2004-033 as not authorized for Federal financial participation.

Finding No. 3:    Some MFCU efforts to identify potential fraud included activities and costs that were not allowable under Federal regulations.

Finding No. 4:    MFCU did not always appropriately and timely distribute restitution received to compensate the Medicaid Program.

Finding No. 5:    MFCU distributed $5.4 million to the Agency for Health Care Administration that should have been made available to the Legislature for appropriation.

Finding No. 6:    MFCU did not always timely transfer checks received to the Department’s Finance and Accounting Office.  Additionally, MFCU did not establish procedures for collecting outstanding restitution amounts.

Finding No. 7:    MFCU did not ensure a proper skills mix among its staff.  Additionally, MFCU employed individuals who did not meet established minimum qualifications.

Finding No. 8:    The MFCU motor vehicle fleet was not utilized effectively and efficiently.

Finding No. 9:    MFCU did not ensure that evidence room inventories were properly conducted or documented.

The Department's response is included in its entirety at the end of this report as Exhibit A.