Follow-up Review of the Medicaid Drug Rebate Program in Kentucky

In a follow-up audit of Kentucky's Medicaid drug rebate program, we found that the State had implemented, as of June 30, 2006, the recommendations from our prior audit.  Under the drug rebate program, manufacturers receive Federal Medicaid funding for covered outpatient drugs by entering into a rebate agreement with CMS and paying quarterly rebates to the States.  The State had implemented our recommendations related to verifying rebate amounts reported on the Form CMS-64.9R, reconciling accounts receivable amounts to subsidiary records, and collecting older outstanding drug rebates. Additionally, the State had established controls over collecting rebates on single-source drugs administered by physicians. Therefore, this report offered no recommendations.