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Department of Health and Human Services

Office of Inspector General -- AUDIT

"Audit of the Medicaid Drug Rebate Program in the State of Kentucky," (A-04-03-06006)

July 22, 2003

Complete Text of Report is available in PDF format (819 kb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


The audit objective was to evaluate whether the Kentucky Department for Medicaid Services had established adequate accountability and internal controls over the Medicaid drug rebate program.  The audit covered Medicaid drug rebates through June 30, 2002.  We found that the State’s accounting records did not support amounts reported on the Centers for Medicare and Medicaid Services (CMS).  As a result, there was no assurance that the program has provided CMS with an accurate picture of the drug rebate program.  Additionally, there was a material amount of uncollected rebate dollars outstanding.  State officials agreed with our findings and have taken steps to correct the identified weaknesses.