Federal agency cites problems with AG’s Medicaid fraud unit

State officials failed to properly notify the federal government in nearly a quarter of the Medicaid fraud cases they helped prosecute, exposing the government to potential losses, according to a federal report released Tuesday.

The U.S. Department of Health and Human Services’ Office of Inspector General cited the Indiana Attorney General’s Medicaid Fraud Control Unit for failing to notify the federal government within 30 days in about 25 of its 105 convictions between fiscal years 2010 and 2012. In 11 of those cases, the federal government was never notified at all.

Overall, the inspector general’s office said Indiana is performing well, but it cited six criticisms, including a failure to document supervisor approval in about 77 percent of open cases and 18 percent of closed cases.

Matthew Whitmire, director of Indiana’s Medicaid Fraud Control Unit, admitted state investigators hadn’t met the 30-day notification requirement in some cases. He said the delays were the result of “the prosecution system Indiana has in place,” which forces them to go through county prosecutors, who sometimes don’t inform the state when a plea agreement is filed.

“The lack of prosecution power and reliance on 91 county prosecutors makes the 30-day requirement unreasonable,” Whitmire wrote in a June 12 letter to the inspector general’s office. But he said the agency will try to comply.

It is unclear whether anyone convicted of fraud received any subsequent federal payments.

Bryan Corbin, spokesman for the Indiana attorney general’s office, said investigators work closely with the Family and Social Services Administration to ensure people convicted of fraud are not paid federal funds. State officials also seek restitution for any improper funds received.

The inspector general’s office also said Indiana did not exercise “proper fiscal controls” over some of its funds, relating to $4,900 of its $13.2 million expenditures. State officials pointed out the funds at issue represented less than 1 percent of costs, but they agreed to put a procedure in place to ensure it won’t happen again.

The fraud control unit also didn’t maintain a proper training plan, and its agreement with the state’s Medicaid office didn’t reflect current law or practice, according to the report.

The inspector general’s report was based on an on-site review conducted last year.

Richard Stern, director of the Medicaid Fraud Policy and Oversight Division in the inspector general’s office, said Indiana’s Medicaid Fraud Control Unit is performing well overall. The unit recovered more than $110 million in civil and criminal convictions between fiscal year 2010 and 2012, according to the report.

“We made some findings, but nothing that would question their basic ability to investigate fraud and patient abuse and neglect,” Stern said.

Call Star reporter Marisa Kwiatkowski at (317) 444-6135. Follow her on Twitter at @IndyMarisaK.