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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of the Medicaid Drug Rebate Program in New Jersey," (A-02-03-01024)

October 14, 2004

Complete Text of Report is available in PDF format (504 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The objectives of this audit were to (1) evaluate the New Jersey State Medicaid Agency’s accountability to the Centers for Medicare and Medicaid Services (CMS) for reporting outstanding rebate balances and (2) evaluate its processes and controls for drug rebate billings, collections, and dispute resolutions.  The State Agency produced timely rebate billings and collections but there were opportunities to improve the reporting of program results and accountability to CMS and to strengthen the processes for late and disputed rebates.  We recommended that the State Agency revise its procedures for reporting outstanding rebates, reduce its drawdown of Federal funds to consider the drug rebates it has collected, implement procedures to offer hearings  when disputes are not resolved, estimate and accrue interest on overdue rebate balances, report $1,134,372 ($567,186 Federal share) of interest collected on late rebate payments to CMS and update its procedures to prevent such problems in the future.