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In a follow-up audit of Nebraska’s Medicaid drug rebate
program, we found that the State had not corrected all of the weaknesses
identified in our previous audit. Manufacturers may make their outpatient drugs
eligible for Federal Medicaid funding by entering into a rebate agreement with
CMS and paying quarterly rebates to the States. The State had corrected the
previously reported weakness in its dispute resolution hearing mechanism.
However, the State had not (1) developed a subsidiary accounts receivable
system that detailed all drug rebate transactions, including adjustments; (2)
reconciled the general ledger to the subsidiary accounts and to the Form
CMS-64.9R; (3) reconciled the quarterly cash receipts log to the Form CMS-64.9R;
(4) estimated and accrued interest on all overdue rebate balances; or (5)
reported interest received on the Form CMS-64 Summary Sheet instead of as a
rebate receivable. Additionally, the State agency did not establish controls
over and accountability for collecting rebates on single-source drugs
administered by physicians.
We recommended that the State agency develop and follow policies and procedures that include (1) ensuring that all adjustments are traceable to the subsidiary accounts receivable system, (2) reconciling the general ledger account to the subsidiary accounts and to the Form CMS-64.9R using actual adjustments supported in the system, (3) documenting procedures for reconciling the quarterly cash receipts log to the Form CMS-64.9R, (4) estimating and accruing interest on all overdue rebate balances, and (5) reporting interest received on the Form CMS-64 Summary Sheet instead of as a rebate receivable. We also recommended that the State begin collecting drug rebates on single-source drugs administered by physicians. The State agreed with all of our findings and recommendations except for the finding and recommendation regarding the reconciliation of the general ledger to subsidiary accounts and to Form CMS-64.9R.