Alerts and Updates

State Medicaid Fraud Control Units' Data Mining Likely to Increase Through Federal Funding

June 11, 2013

The final rule broadens the scope of data that can analyzed beyond Medicaid claims to encompass non-Medicaid data, such as information from other federal or state programs, and from commercial payers.

On May 17, 2013, the Office of Inspector General, U.S. Department of Health and Human Services (OIG), announced a final regulation that would permit, effective June 17, 2013, state Medicaid fraud control units (MFCU) to use federal matching funds to pay for data mining activities to detect potentially fraudulent utilization and billing patterns. Historically, MFCUs have been prohibited from using federal matching funds to pay for the cost of data mining. Given the financial constraints facing MFCUs, this funding is likely to result in a substantial increase in activities by MFCUs across the United States.

The funding made available can be used by MFCUs to engage in data mining to identify potentially fraudulent practices. Significantly, the final rule broadens the scope of data that can be analyzed beyond Medicaid claims to encompass non-Medicaid data, such as information from other federal or state programs, and from commercial payers.

While this rule in and of itself is noteworthy, it is likely to have a more significant impact on healthcare providers when coupled with the regulation implementing the Patient Protection and Affordable Care Act (ACA) that requires states to suspend all Medicaid payments to a provider upon credible allegation of fraud during, or triggering, a Medicaid investigation. Prior to the recent amendments implemented by virtue of the ACA, states had far more discretion in determining when and if Medicaid payments should be suspended.

States already strapped for funds are likely to take advantage of the federal matching funds and jump on the data mining bandwagon to help generate additional revenue.

For Further Information

If you have any questions about this Alert, please contact Gregory A. Brodek, Emmy S. Monahan, any member of the Health Law Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.