For a covered outpatient drug to be eligible for reimbursement under the Medicaid drug rebate program, a manufacturer has to enter into a rebate agreement with CMS and pay quarterly rebates to the states, according to the OIG. To collect rebates on physician-administered drugs, states must submit to the manufacturers the national drug codes for all single-source drugs and the top 20 multiple-source drugs.
In Maryland in particular, the Department of Health and Mental Hygiene is responsible for billing and collecting drug rebates for physician-administered drugs. However, an OIG audit showed the state agency didn’t always comply with federal requirements for billing manufacturers for rebates.
During the audit period, the agency didn’t capture the national drug codes and submit utilization data to collect rebates for claim lines totaling $5.8 million, according to the OIG. Therefore, the agency improperly claimed reimbursement for the $3.5 million federal share of those claim lines. The OIG was also unable to determine the portion of an additional $3.6 million ($2.3 million federal share) for which Maryland may have improperly claimed reimbursement.
The OIG report recommended the state refund the $3.5 million in unallowable federal reimbursement. The state should also work with CMS to determine what portion of the additional $2.3 million was unallowable and refund that amount, according to the report. Furthermore, the OIG recommended that the state work with CMS to determine and refund any unallowable reimbursements claimed after the audit period.
The state should also update its Medicaid management information system edits to require national drug codes for payment on all drug claims and work to ensure all claims for physician-administered drugs are processed for rebates.
The state concurred with these recommendations in principle but asked the OIG to reduce the unallowable amount because of corrective actions it has already taken. However, those actions took place outside the audit period, and subsequently the OIG has decided not to modify its recommendations, according to the report.
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