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New York Did Not Have Evidence Available in Readily Reviewable Form To Support That It Reimbursed Medicaid Diabetic Testing Supply Rebates to the Federal Government

The New York State Department of Health (Health Department) provided documentation to support that it reimbursed the Federal Government for its share of $36.3 million in recorded rebates from diabetic testing supply manufacturers for 3 calendar quarters (quarters ending June 2010, June 2011, and September 2011). For these 3 calendar quarters, the Health Department reported diabetic testing supply rebates and certain drug rebates on Line 7A2 (Drug Rebate Offset) of its Forms CMS-64 and maintained documentation to support the amounts related to diabetic testing supply rebates. Health Department officials informed us that the Health Department reported $65.1 million in rebates for the remaining 8 quarters on Line 49 (Other Care Services) of its Forms CMS-64. However, the Health Department did not provide documentation to support that this amount related to diabetic testing supply rebates.

According to Health Department officials, the Health Department did not have support for the $65.1 million in rebate collections that it reported for the 8 calendar quarters because of limited staff resources available during those quarters to effectively track and report on rebates as they were being collected.

In response to our draft report, the Health Department compiled from source documents sufficient evidence that the Federal share of $65.1 million in recorded diabetic testing supply rebates were reimbursed to the Federal Government during the period October 1, 2009, through June 30, 2012. While the evidence supported the Health Department's claims on its Forms CMS-64, the supporting documentation had not been compiled in readily reviewable form and made available when it filed these claims.

We recommended that the Health Department ensure that the Federal share of all Medicaid diabetic testing supply rebates collected after June 30, 2012, are reported on its Forms CMS 64 and have supporting documentation compiled in readily reviewable form when it files these claims. The Health Department agreed with the draft's recommendation and, under separate cover, provided evidence that it reimbursed $65.1 million in recorded diabetic testing supply rebates to the Federal Government during the period October 1, 2009, through June 30, 2012. The Health Department also provided evidence that it reimbursed recorded diabetic testing supply rebates for the period July 2012 through December 2014. The Health Department also stated that it will follow CMS direction and accurately report diabetic testing supply rebates on the Form CMS-64.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

Download the complete report.

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