This final rule amends the regulation governing State Medicaid Fraud Control Units (MFCUs or Units). The rule incorporates statutory changes affecting the Units as well as policy and practice changes that have occurred since the regulation was initially issued in 1978. These changes include a recognition of OIG’s delegated authority; Unit authority, functions, and responsibilities; disallowances; and issues related to organization, prosecutorial authority, staffing, recertification, and the Units’ relationship with Medicaid agencies. The rule is designed to assist the MFCUs in understanding their authorities and responsibilities under the grant program, clarify the flexibilities the MFCUs have to operate their programs, and reduce administrative burden, where appropriate, by eliminating duplicative and unnecessary reporting requirements.