Idaho Did Not Bill Manufacturers for Rebates for Some Medicaid Physician-Administered Drugs

During calendar year (CY) 2010, the Idaho Department of Health and Welfare (State agency) did not always comply with Federal Medicaid requirements for billing manufacturers for rebates for physician-administered drugs. Of the $7.3 million in paid claims reviewed, the State agency properly billed for rebates associated with $4.7 million. However, the State agency did not bill for rebates associated with $2.6 million because the rebate contractor did not receive the related claim lines to bill manufacturers for rebates.

The rebate contractor did not receive claim lines totaling $2.1 million ($1.5 million Federal share) because the data warehouse contractor incorrectly excluded these claim lines from the claim extract provided to the rebate contractor. The data warehouse contractor excluded the claim lines on the basis of inaccurate State agency instructions. In addition, the rebate contractor did not receive claim lines totaling $496,000 ($343,000 Federal share) because National Drug Codes (NDCs) were not present or valid NDCs were not captured. The State agency did not ensure that its Medicaid Management Information System (MMIS) captured valid NDCs for all claim lines for physician-administered drugs.

Because the State agency did not bill manufacturers for rebates associated with $2.6 million ($1.8 million Federal share), we are setting aside this amount for CMS resolution.

We recommended that the State agency (1) work with CMS to determine the amount that should be billed to manufacturers for rebates associated with the $2.6 million ($1.8 million Federal share) in claim lines for physician-administered drugs, (2) bill manufacturers for rebates associated with the claim lines for any physician-administered drugs that were incorrectly excluded from the rebate process after CY 2010, (3) ensure that the MMIS captures valid NDCs for all claim lines for physician-administered drugs, and (4) ensure that all physician-administered drugs eligible for rebates are processed for rebates. The State agency concurred with our findings and provided information on actions that it had taken or planned to take to implement our recommendations.