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The District of Columbia Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered Drugs

The District of Columbia's Department of Health Care Finance (State agency) did not always comply with Federal Medicaid requirements for billing manufacturers for rebates for physician-administered drugs. The State agency properly billed for rebates for claim lines totaling $2.2 million in our judgmental sample. However, the State agency did not bill for rebates for claim lines totaling $4.3 million. Of this amount, we identified $3.1 million ($2.4 million Federal share) for which the State agency should have billed for rebates on claim lines for single-source and top-20 multiple-source drugs. Because the State agency did not capture National Drug Codes (NDCs) or did not bill the manufacturers for rebates, it improperly claimed Federal reimbursement for these claim lines.

We were unable to determine the portion of the remaining $1.3 million ($983,000 Federal share) for which the State agency may have improperly claimed reimbursement. This amount included claim lines for drugs that were not top-20 multiple-source and claim lines for which there was insufficient information to determine whether the drugs were eligible for rebates.

The State agency said that it did not capture NDCs or submit these claims for rebates because of many issues with its Medicaid Management Information System (MMIS) and rebate system. The State agency did not require that providers include NDCs on physician-administered drug claims until June 2008 and did not begin to bill for rebates until 2010.

We recommended that the State agency (1) refund to the Federal Government $2.3 million (Federal share) for single-source and top-20 multiple-source physician-administered drug claims that were ineligible for Federal reimbursement; (2) work with CMS to determine the unallowable portion of the $983,000 (Federal share) for other physician-administered drug claims that were ineligible for Federal reimbursement and refund that amount; (3) work with CMS to determine and refund the unallowable Federal reimbursement for physician-administered drugs claimed without NDCs after January 1, 2011; (4) ensure that its MMIS edits require valid NDCs for payment on all drug claims; and (5) improve its rebate processes to ensure that all physician-administered drug claims are submitted for rebates. The State agency partially concurred with our first two recommendations and fully concurred with our remaining recommendations.

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Office of Inspector General, U.S. Department of Health and Human Services | 330 Independence Avenue, SW, Washington, DC 20201