Legal Matters

HHS Tightens Scrutiny of Compliance With Medicaid Drug Rebate Program Regulations (Part 5 of 6)

From Drug Benefit Trends®Posted 02/12/2004

By Diane Ung, JD; George Kenny, JD


OIG Audits of States' Medicaid Drug Rebate Programs

The OIG's Office of Audit Services has nearly completed its efforts to audit each state's Medicaid drug rebate programs by the end of 2003.[17] The OIG is attempting to identify uncollected rebates, evaluate accountability and internal controls over state rebate policies, and review state procedures for resolving rebate disputes. The reports have recommended improvements in policies and procedures in numerous states, including Connecticut, Rhode Island, Pennsylvania, Delaware, Kentucky, Tennessee, South Carolina, Georgia, Florida, Alabama, Lou isiana, Arkansas, Missouri, Iowa, Kansas, Oklahoma, South Dakota, Wyoming, Utah, Nevada, New Mexico, Oregon, Washington, Alaska, and Hawaii, and also the District of Columbia.[18]

The OIG audits have uncovered a number of systemic problems in the states' administration of the MDRP. Among some of the more common issues observed were those that impacted states' ability to accrue and report interest on late/disputed payments, record accounts receivable, track and report rebates collected and reconcile Medicaid expenditure reporting, and resolve disputes with manufacturers.

The majority of audited states have agreed with the OIG's assessments and have pledged to make the necessary improvements. Because Medicaid dollars spent by the states on prescription drugs are matched by federal dollars, the US government has a strong interest in ensuring that Medicaid rebates due from the pharmaceutical manufacturers are being accurately calculated and collected by the states.


Drug Benefit Trends 16(1):16-18, 2004. © 2004 Cliggott Publishing, Division of CMP Healthcare Media

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