Department of Health and Human Services

Office of Inspector General -- AUDIT

"Multistate Review of Medicaid Drug Rebate Programs," (A-06-03-00048)

July 6, 2005

Complete Text of Report is available in PDF format (732 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


This was a summary report of audits in 49 States and the District of Columbia.  Our objective was to determine whether States had established adequate accountability and internal controls over their Medicaid drug rebate programs.  We found that only 4 States had no weaknesses in accountability and internal controls, while the other 45 States and the District of Columbia did have weaknesses, including:  (1) unreliable information submitted to CMS on the Medicaid Drug Rebate Schedule (37 States), (2) improper accounting for interest on late rebate payments (27 States), (3) an inadequate rebate collection system (17 States), (4) an inadequate dispute resolution and collection process (15 States), and (5) other significant problems (13 States).

We recommended that CMS:  (1) reemphasize the requirement that States submit accurate and reliable information on Form CMS 64.9R, and (2) emphasize to States their need to place a priority on their billing and collecting of drug rebates.  CMS agreed with our recommendations.