(a) Rate of FFP. (1) Subject to the limitation of this section, the Secretary of Health and Human Services must reimburse each State by an amount equal to 90 percent of the allowable costs incurred by a certified Unit during the first 12 quarters of operation that are attributable to carrying out its functions and responsibilities under this part. Each quarter of operation must be counted in determining when the Unit has accumulated 12 quarters of operation and is, therefore, no longer eligible for a 90-percent matching rate. Quarters of operation do not have to be consecutive to accumulate.

(2) Beginning with the 13th quarter of operation, the Secretary must reimburse 75 percent of allowable costs incurred by a certified Unit.

(b) Retroactive certification. OIG may grant certification retroactive to the date on which the Unit first met all the requirements of section 1903(q) of the Act and of this part. For any quarter with respect to which the Unit is certified, the Secretary will provide reimbursement for the entire quarter.

(c) Total amount of FFP. FFP for any quarter must not exceed the higher of $125,000 or one-quarter of 1 percent of the sums expended by the Federal, State, and local governments during the previous quarter in carrying out the State Medicaid program.

(d) Costs eligible for FFP. (1) FFP is allowable under this part for the expenditures attributable to the establishment and operation of the Unit, including the cost of training personnel employed by the Unit and efforts to increase referrals to the Unit through program outreach. Reimbursement is allowable only for costs attributable to the specific responsibilities and functions set forth in this part and if the Unit has been certified and recertified by OIG.

(2) Establishment costs are limited to clearly identifiable costs of personnel that meet the requirements of § 1007.13 of this part.

(e) Costs not eligible for FFP. FFP is not allowable under this part for expenditures attributable to:

(1) The investigation of cases involving program abuse or other failures to comply with applicable laws and regulations, if these cases do not involve substantial allegations or other indications of fraud, as described in § 1007.11(a) of this part;

(2) Routine verification with beneficiaries of whether services billed by providers were actually received, or, except as provided in § 1007.20, efforts to identify situations in which a question of fraud may exist by the screening of claims and analysis of patterns and practice that involve data mining as defined in § 1007.1.

(3) The routine notification of providers that fraudulent claims may be punished under Federal or State law;

(4) The performance of any audit or investigation, any professional legal function, or any criminal, civil or administrative prosecution of suspected providers by a person who does not meet the professional employee requirements in § 1007.13(d);

(5) The investigation or prosecution of fraud cases involving a beneficiary's eligibility for benefits, unless the suspected fraud cases also involve conspiracy with a provider;

(6) Any payment, direct or indirect, from the Unit to the Medicaid agency, other than payments for the salaries of employees on detail to the Unit; or

(7) Temporary duties performed by professional employees that are not required functions and responsibilities of the Unit, as described at § 1007.13(d)(3).

(a) Notwithstanding § 1007.19(e)(2), a Unit may engage in data mining as defined in this part and receive FFP only under the following conditions:

(1) The Unit identifies the methods of coordination between the Unit and the Medicaid agency, the individuals serving as primary points of contact for data mining, as well as the contact information, title, and office of such individuals;

(2) Unit employees engaged in data mining receive specialized training in data mining techniques;

(3) The Unit describes how it will comply with paragraphs (a)(1) and (2) of this section as part of the agreement required by § 1007.9(d); and

(4) OIG, in consultation with CMS, approves in advance the provisions of the agreement as defined in paragraph (a)(3) of this section.

(i) OIG will act on a request from a Unit for review and approval of the agreement within 90 days after receipt of a written request, or the request shall be considered approved if OIG fails to respond within 90 days after receipt of the written request.

(ii) If OIG requests additional information in writing, the 90-day period for OIG action on the request begins on the day OIG receives the information from the Unit.

(iii) The approval is for 3 years.

(iv) A Unit may request renewal of its data-mining approval for additional 3-year periods by submitting a written request for renewal to OIG, along with an updated agreement with the Medicaid agency.

(a) Notice of disallowance and of right to reconsideration. When OIG determines that a Unit's claim or portion of a claim for FFP is not allowable, OIG shall promptly send to the Unit notification that meets the requirements listed at 42 CFR 430.42(a).

(b) Reconsideration of disallowance. (1) The Principal Deputy Inspector General will reconsider Unit disallowance determinations made by OIG.

(2) To request a reconsideration from the Principal Deputy Inspector General, the Unit must follow the requirements in 42 CFR 430.42(b)(2) and submit all required information to the Principal Deputy Inspector General. Copies should be sent via registered or certified mail to the Principal Deputy Inspector General.

(3) The Unit may request to retain FFP during the reconsideration of the disallowance under section 1116(e) of the Act, in accordance with 42 CFR 433.38.

(4) The Unit is not required to request reconsideration before seeking review from the Departmental Appeals Board.

(5) The Unit may also seek reconsideration, and following the reconsideration decision, request a review from the Departmental Appeals Board.

(6) If the Unit elects reconsideration, the reconsideration process must be completed or withdrawn before requesting review by the Departmental Appeals Board.

(c) Procedures for reconsideration of a disallowance. (1) Within 60 days after receipt of the disallowance letter, the Unit shall, in accordance with paragraph (b)(2) of this section, submit in writing to the Principal Deputy Inspector General any relevant evidence, documentation, or explanation.

(2) After consideration of the policies and factual matters pertinent to the issues in question, the Principal Deputy Inspector General shall, within 60 days from the date of receipt of the request for reconsideration, issue a written decision or a request for additional information as described in paragraph (c)(3) of this section.

(3) At the Principal Deputy Inspector General's option, OIG may request from the Unit any additional information or documents necessary to make a decision. The request for additional information must be sent via registered or certified mail to establish the date the request was sent by OIG and received by the Unit.

(4) Within 30 days after receipt of the request for additional information, the Unit must submit to the Principal Deputy Inspector General all requested documents and materials.

(i) If the Principal Deputy Inspector General finds that the materials are not in readily reviewable form or that additional information is needed, he or she shall notify the Unit via registered or certified mail that it has 15 business days from the date of receipt of the notice to submit the readily reviewable or additional materials.

(ii) If the Unit does not provide the necessary materials within 15 business days from the date of receipt of such notice, the Principal Deputy Inspector General shall affirm the disallowance in a final reconsideration decision issued within 15 days from the due date of additional information from the Unit.

(5) If additional documentation is provided in readily reviewable form under paragraph (c)(4) of this section, the Principal Deputy Inspector General shall issue a written decision within 60 days from the due date of such information.

(6) The final written decision shall constitute final OIG administrative action on the reconsideration and shall be (within 15 business days of the decision) mailed to the Unit via registered or certified mail to establish the date the reconsideration decision was received by the Unit.

(7) If the Principal Deputy Inspector General does not issue a decision within 60 days from the date of receipt of the request for reconsideration or the date of receipt of the requested additional information, the disallowance shall be deemed to be affirmed.

(8) No section of this regulation shall be interpreted as waiving OIG's right to assert any provision or exemption under the Freedom of Information Act.

(d) Withdrawal of a request for reconsideration of a disallowance. (1) A Unit may withdraw the request for reconsideration at any time before the notice of the reconsideration decision is received by the Unit without affecting its right to submit a notice of appeal to the Departmental Appeals Board. The request for withdrawal must be in writing and sent to the Principal Deputy Inspector General via registered or certified mail.

(2) Within 60 days after OIG's receipt of a Unit's withdrawal request, a Unit may, in accordance with (f)(2) of this section, submit a notice of appeal to the Departmental Appeals Board.

(e) Implementation of decisions for reconsideration of a disallowance. (1) After undertaking a reconsideration, the Principal Deputy Inspector General may affirm, reverse, or revise the disallowance and shall issue a final written reconsideration decision to the Unit in accordance with paragraphs (c)(4) and (5) of this section.

(2) If the reconsideration decision requires an adjustment of FFP, either upward or downward, a subsequent grant action will be made in the amount of such increase or decrease.

(3) Within 60 days after receipt of a reconsideration decision from OIG, a Unit may, in accordance with paragraph (f) of this section, submit a notice of appeal to the Departmental Appeals Board.

(f) Appeal of disallowance. (1) The Departmental Appeals Board reviews disallowances of FFP under Title XIX of the Act, including disallowances issued by OIG to the Units.

(2) A Unit that wishes to appeal a disallowance to the Departmental Appeals Board must follow the requirements in 42 CFR 430.42(f)(2).

(3) The appeals procedures are those set forth in 45 CFR part 16 for Medicaid and for many other programs, including the Units, administered by the Department.

(4) The Departmental Appeals Board may affirm the disallowance, reverse the disallowance, modify the disallowance, or remand the disallowance to OIG for further consideration.

(5) The Departmental Appeals Board will issue a final written decision to the Unit consistent with 45 CFR part 16.

(6) If the appeal decision requires an adjustment of FFP, either upward or downward, a subsequent grant action will be made in the amount of such increase or decrease.