An Inside Look into a Medicaid Fraud Investigation

How OSC’s Medicaid Fraud Division (MFD) Does Its Job

  • Posted on - 03/25/2021
  • Author - Amanda Shiber, Medicaid Fraud Division

The Office of the State Comptroller is home to New Jersey’s Medicaid Fraud Division (MFD), which ensures that funds allocated to the New Jersey Medicaid Program are spent appropriately and responsibly. MFD’s work includes investigating healthcare providers and Medicaid recipients, and overseeing the investigative work performed by the state-contracted Managed Care Organizations.

Investigations often reveal fraud, waste, and abuse – or “FWA” as it’s commonly abbreviated - resulting in recoveries and/or improvements to program oversight. MFD’s Investigations Unit opened 365 cases in fiscal year 2020, resulting in the recovery of $11.2 million in improperly paid Medicaid funds which were returned to taxpayers.

MFD has a team of auditors and investigators who work each day to recover misspent funds on behalf of taxpayers. Here’s an inside look at how they detect fraud, determine how much was misspent, and recover those funds on behalf of taxpayers.

How do cases originate?

The Investigations Unit receives tips regarding possible FWA from a variety of sources. In fiscal year 2020, MFD’s hotline received over 1,800 tips, some resulting in referrals to other agencies as well as MFD investigations. The Investigations Unit also receives internal referrals from MFD’s Data Mining Unit, which consistently monitors data and trends to detect FWA.

What are the responsibilities of the investigator?

MFD’s Investigations Unit is comprised of well-trained investigators who possess the knowledge, skills and experience to investigate FWA in the Medicaid Program.

Investigators are unbiased fact gatherers. Investigators are required to undergo annual training in order to keep their knowledge and skills up to date. They must understand and adhere to all legal requirements, including but not limited to those set forth in the Health Insurance Portability and Accountability Act (HIPAA) and the Social Security Act (SSA).

Confidentiality is of the utmost importance to MFD’s investigative work, which includes safeguarding the identity of confidential sources (e.g. whistleblowers) and sensitive information (e.g. personally indentifiable information, medical information, and proprietary information).

What is the investigative process?

Work Plan - Every case begins by establishing a work plan to define the purpose and scope of the investigation. Throughout an investigation, investigators work collaboratively with MFD's Regulatory Officers, who are attorneys experienced and skilled in handling legal matters concerning the Medicaid program. 

Fact Gathering – The Investigator then collects, verifies, and analyzes evidence through interviews, document reviews, site visits and other means. Investigators memorialize interviews and other fact-gathering information, which is retained in the case file in accordance with applicable document retention requirements.

Documentation & Reports – Investigations typically conclude with a written report or close-out document.  Such reports set forth the facts and applicable law; include evidence supported by the case file; and the recommended resolution (e.g. settlement, debarment, penalties, compliance plan, or even a referral for criminal conduct). Cases that end in a settlement are memorialized in a Settlement Agreement. MFD Settlement Agreements are available on the OSC website.

How can I help?

If you notice any suspicious activity related to the New Jersey Medicaid program, report it to OSC by completing the online complaint form or calling 1-888-937-2835. You may remain anonymous in your complaint.

Waste or Abuse

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Government Waste and Mismanagement Hotline: 1-855-OSC-TIPS (672-8477)