Starting June 17, state Medicaid Fraud Control Units (MFCUs) can use federal funding to pay for data mining, according to a final rule published by the Department of Health and Human Services Office of Inspector General in the Federal Register on May 17. This final rule reverses previous regulations that prohibited MFCUs from using federal matching funds for data mining.

Now that MFCUs can make use of data mining to pursue Medicaid provider fraud, the question is what impact will data mining by state MFCUs have on Medicaid fraud investigations and enforcement actions at the state level? Ellyn Sternfield, an attorney in Mintz Levin’s Health Law Practice, who was the former head of the Oregon Department of Justice Medicaid Fraud Control Unit, says that many state MFCUs won’t be able to take full advantage of data mining’s potential. She enumerates their challenges in OIG Final Rule Allows State MFCUs to Use Federal Funding for Data Mining Technology, an article published last week in Bloomberg BNA’s Health Care Fraud Report.

In addition to a backlog of cases and the challenges of Medicaid managed care growth, she says, some state MFCUs do not have a great working relationship with the Medicaid agency in their state. Still Medicaid providers should prepare for what these new data mining powers may bring as far as fraud investigations and enforcement actions are concerned.