OIG: Medicaid Drug Rebate Collections Uneven

While the majority (86 percent) of states responding to a federal audit claim to meet the legal requirements to collect on claims for certain physician-administered drugs, the results of the audit are decidedly mixed.

The audit, conducted by the Office of Inspector General, provides a mixed picture of states' efforts to collect Medicaid drug rebates from pharmaceutical companies. The Deficit Reduction Act (DRA) requires states to collect rebates on all claims for certain physician-administered drugs for Federal matching funds to be available.

Most states appear to have made significant improvements in the collection process over the last decade, but the quality of the reporting was so poor in some cases, that OIG said it "could not determine the financial impact of collecting rebates for physician-administered drugs because of incomplete and potentially inaccurate data provided by States."

Those are some of the findings in the audit – States' Collection of Medicare Rebates for Physician-Administered Drugs-- released this month by the Department of Health and Human Services Office of  Inspector General. 

The OIG audit tried to determine how many states were meeting federal requirements for the collection of physician-administered drugs in the first six months of June 2009; the dollar amount of what the states requested and what they collected from drug makers in those six months; and what issues prevented states from collecting rebates. 

The audit found that 36 of 49 states that responded to OIG's query reported collecting rebates on single-source physician-administered drugs, and 20 multiple-source, physician-administered drugs with the highest dollar value. An additional 12 states reported collecting rebates but were not in full compliance with federal requirements.

OIG last conducted an audit of states' efforts to collect Medicaid drug rebates in 2001, and found at that time that only 17 states had done so, and that most states reported at the time that they had no way of determining which drugmaker was responsible for which rebates.

That prompted the federal government in 2005 to require states to collect the rebates or risk losing matching federal funds. To help, the federal government created national drug codes that identified a drug's manufacturer.