Department of Health and Human Services

Office of Inspector General -- AUDIT

"Review of Medicaid Outpatient Drug Expenditures in Colorado for the Period October 1, 2002, Through September 30, 2004," (A-07-07-04113)

February 15, 2008


PDF File Complete Text of Report is available in PDF format (2.6 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.


EXECUTIVE SUMMARY:

Our objective was to determine whether the Colorado Department of Health Care Policy and Financing's (the State agency) claims for reimbursement of Medicaid outpatient drug expenditures complied with Federal requirements.

The State agency’s claims for reimbursement of Medicaid outpatient drug expenditures for fiscal years 2003 and 2004 did not fully comply with Federal requirements.  Of the $489 million ($255 million Federal share) claimed, $21,678 (Federal share) represents expenditures for drug products that were not eligible for Medicaid coverage because they were terminated drugs for which the termination dates were listed on the CMS quarterly drug tapes before the drugs were dispensed.  An additional $459,604 (Federal share) represents expenditures for drug products that were not listed on the quarterly drug tapes.  Because the State agency did not verify whether the drugs missing from the tapes were eligible for Medicaid coverage, these drug expenditures may not be allowable for Medicaid reimbursement.  

We recommended that the State agency (1) refund $21,678 to the Federal Government for drug expenditures that were not eligible for Medicaid coverage, (2) work with CMS to resolve $459,604 in payments for drugs that were not listed on the quarterly drug tapes and that may not have been eligible for Medicaid coverage, and (3) strengthen internal controls to ensure that claimed Medicaid drug expenditures comply with Federal requirements.  The State agency concurred with our first recommendation, did not concur with our second recommendation, and partially concurred with our third recommendation.