The Medicaid Single-State Agency Requirement and Fraud Investigations

Never ignore a request for records by the single-state agency in your state.

One of the best examples that illustrates the importance of the “single state agency” involves a Medicaid fraud scheme in Illinois involving four women. It’s a real-life Bonnie and Clyde – if Bonnie and Clyde stole healthcare dollars and lived in Illinois.

Based on the evidence found by the Medicaid Fraud Control Unit (MFCU), “Bonnie” (her real nickname), reportedly the ringleader, and three other women defrauded Illinois Medicaid by over $1 million. Tarnavis A. “Bonnie” Lee, 41, owner and operator of Lee’s Toddler Town, Inc., apparently conspired with other companies, including Jitter Bugs, Inc., Tater Tots, Inc., and LaShanda Hudson, 39, who owned and operated a daycare business in her name. The four defendants face up to 20 years in prison, per count. There are multiple counts.

The indictments allege that the defendants allegedly defrauded a government child-care subsidy program. Each woman owned and operated a licensed daycare in Chicago that allegedly submitted false claims for payment for child-care services that were not provided, or were not provided to the extent charged.   

Never ignore a request for records by the single-state agency in your state. This entity will generally be the department of health and human services or a similarly named agency within your state, and each is charged with managing the Medicaid dollars for their state.

One of my clients was forced to ignore a request from the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). It was unintentional and unavoidable. Two of her employees contracted COVID-19, and she had to shut down her office temporarily. Whenever you receive letters from a single state entity, meaning the state government, respond. The most important entities in Medicare and Medicaid are government agencies. The buck stops with them.

42 CFR § 431.10, Single State Agency, states that the “Medicaid agency is the single state agency for the Medicaid program.” What this means is that in every state, that agency is the Centers for Medicare & Medicaid Services (CMS) for Medicare, and the state health division for Medicaid. Both Medicare and Medicaid use contractors – Medicare Administrative Contractors (MACs) or managed care organizations – to run day-to-day dealings with providers. However, they are limited with their authority.

The most important section in the aforementioned regulation is subsection e. (e) Authority of the single state agency. Each Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.

In other words, subsection (e) forbids vendors, MACs, MCOs, or other similar entities from exercising their own decisions to determine whether fraud exists. The contracted entities love to act important, and as if they are the rule-makers, but in reality, they are rule followers.

The Illinois single state entity is IDHS, which administers the state’s Child Care Assistance Program with tax dollars.

In the aforementioned indictment, the defendants will be issued a summons to appear for arraignment in federal court in Springfield. The charges were investigated by the Illinois state government and federal government. No MCO, MAC, or other vendor was involved.

When it comes to healthcare fraud, the government does not rely on the kindness of others. If you get a letter from your single state agency, do not do nothing. Respond.

Programming Note: Knicole Emanuel, Esq. is a permanent panelist on Monitor Mondays. Listen to her RAC Report every Monday at 10 a.m. EST.


Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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