New Jersey Medicaid Fraud Control Unit: 2017 Onsite Review

WHY WE DID THIS STUDY

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.

HOW WE DID THIS STUDY

We conducted the onsite review of the New Jersey MFCU in November 2017. We focused our review primarily on the unimplemented recommendation from the 2013 OIG report. We also analyzed the Unit's operations and adherence to the 12 MFCU performance standards and applicable Federal laws, regulations, and policy transmittals. We based our review on an analysis of data from eight sources: (1) Unit documentation; (2) financial documentation; (3) structured interviews with key stakeholders; (4) survey of Unit staff; (5) structured interviews with Unit managers and selected staff; (6) review of a simple random sample of case files that were open at some point during the review period; (7) review of all convictions submitted to OIG for program exclusion and all adverse actions submitted to the National Practitioner Data Bank during the review period; and (8) observation of Unit operations. Our review of the Unit's financial documentation covered fiscal years (FY) 2014-2016. All other aspects of our review covered the 3-year period of FYs 2015-2017.

WHAT WE FOUND

For FYs 2015-2017, the New Jersey MFCU reported 56 indictments; 56 convictions; 42 global civil settlements and judgments; and total recoveries of $58.6 million. From the data we reviewed, we found that the Unit did not comply with all applicable legal requirements or adhere to all performance standards. Specifically we identified six areas in which the Unit should improve its adherence to program requirements: (1) the Unit Director lacked supervisory authority over Unit detectives and independent decision-making authority over day-to-day Unit operations; (2) the Unit pursued few "nonglobal" civil fraud cases, and the memorandum of understanding (MOU) with the Office of the State Comptroller's Medicaid Fraud Division (MFD) lacked guidance for handling such cases; (3) although the Unit and the MFD communicated regularly, fraud referrals from the MFD were low and had decreased in recent years; (4) low staffing levels affected the Unit's ability to investigate cases and accept referrals; (5) the Unit did not always follow its internal control procedures for time and attendance; and (6) 34 percent of case files lacked documentation of supervisory oversight.

WHAT WE RECOMMEND

We recommend that the Unit (1) change the supervisory structure to provide the Unit Director with supervision of all Unit staff, oversight of all its caseload, and independence to make management decisions; (2) develop and implement a plan to pursue more nonglobal fraud cases as civil matters, and revise the MOU with the MFD to include guidance for handling such cases; (3) take additional steps to ensure that the Unit receives an adequate number and quality of fraud referrals from the MFD; (4) assess the adequacy of existing staffing levels and, if appropriate, consider a plan to expand the size of the Unit; (5) follow its internal controls for time and attendance; and (6) ensure that all case files include documentation of supervisory oversight. The Unit concurred with all six recommendations.