Medicaid Investigators Recovered $98M Through Fraud and Abuse Cases from Behavioral Health Providers

The behavioral health industry saw $98.4 million in Medicaid funding clawed back through civil and criminal actions in federal fiscal 2021, according to a new report released by the Office of Inspector General (OIG) of the Health and Human Services Department.

In total, Medicaid Fraud Control Units (MFCUs) recovered about $1.7 billion — $856.6 million in criminal recoveries and $826.2 million in civil recoveries. The nation’s 53 MFCUs investigate and prosecute Medicaid provider fraud and patient abuse or neglect and are jointly funded by federal and state governments.

“Reducing Medicaid fraud is a top priority for OIG, and its role in overseeing MFCUs helps achieve that priority,” the report states.


The Medicaid program is a vital source of funding for behavioral health in the U.S. It’s the largest single payer for mental health services and has an increasing role in paying for substance use disorder treatment.

The vast majority of the Medicaid funding recovered from behavioral health-related organizations and organizations came from criminal and civil actions regarding fraud, according to a review of the report by Behavioral Health Business. Less than one percent of money recovered was for patient abuse.

The three entities or providers that saw the largest amount of Medicaid funding — including from criminal and civil actions — were nonresidential mental health facilities ($36.1 million), substance abuse treatment centers ($25.1 million) and nonresidential developmental disability facilities ($21.5 million).


Across the 11 behavioral health-related entity and provider types, the Medicaid funding recovered by the MFCUs splits at exactly two-thirds ($65.7 million) in criminal recoveries and one-third ($32.7 million) for civil recoveries.

Across all recovery efforts, regardless of medical specialty or facility type, the number of total convictions obtained by MFCUs was down from an annual pre-pandemic level of just over 1,500 to 1,105 in fiscal 2021. The number of civil settlements and judgments totaled 716 in fiscal 2021, down from fiscal 2020’s 786 but up from fiscal 2019’s 658.

OIG reports often highlight potential shortcomings of government-related health care efforts within the federal government or within the health care sector.

In September, OIG released two reports that assessed states where telebehavioral health services are administered to residents receiving Medicaid. These reports investigated problems that states have encountered while providing telehealth services to Medicaid enrollees and the opportunities for strengthening the evaluation and oversight of remote care.

In August, OIG found that Medicare beneficiaries could be struggling to access medication-assisted treatment (MAT) and opioid overdose reversal drugs like naloxone. The report found that 25% of all Medicaid prescription drug plan enrollees were prescribed opioids and that about 43,000 suffered overdoses. At the same time, the number of beneficiaries who received MAT drugs increased at a slower rate in 2020 than in years past and the number of naloxone prescriptions didn’t increase.

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