Arkansas Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered Drugs

Arkansas did not always comply with Federal Medicaid requirements for invoicing manufacturers for rebates for physician-administered drugs. Arkansas did not invoice manufacturers for rebates associated with $9.9 million (Federal share) in physician-administered drugs. Of this amount, $8.5 million was for single-source drugs, and $1.4 million was for top-20 multiple-source drugs. Because Arkansas' internal controls did not always ensure that it invoiced manufacturers to secure rebates, Arkansas improperly claimed Federal reimbursement for these single-source drugs and top-20 multiple-source drugs.

Further, Arkansas did not submit the utilization data necessary to secure rebates for all other physician-administered drug claims totaling $1.4 million (Federal share).

We recommended to Arkansas that it refund $9.9 million and work with CMS to determine the proper resolution of the $1.4 million for the other drug claims in question.

We also made procedural recommendations.

In written comments on our draft report, Arkansas concurred with our recommendation to determine the proper resolution of $1.4 million for other drug claims and concurred with our procedural recommendations. Arkansas did not concur that it should refund the Federal share of $9.9 million in physician-administered drugs that were ineligible for Federal reimbursement because it anticipated that all rebate-eligible drug units would be invoiced "so no Federal funds will need to be refunded to CMS."