Nebraska Did Not Invoice Rebates to Manufacturers for Physician-Administered Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations

Before the start of our audit, the Nebraska did not invoice rebate-eligible physician-administered drugs dispensed to enrollees of Medicaid managed-care organizations (MCOs). Specifically, the State agency did not invoice manufacturers for rebates totaling $1.9 million ($1.1 million Federal share). These errors occurred because Nebraska did not have established policies and procedures in place to ensure that it accurately invoiced manufacturers to collect rebates for physician-administered drugs dispensed to enrollees of MCOs.

We recommended that the State agency refund to the Federal Government $1.1 million for rebates for physician-administered drugs dispensed to enrollees of MCOs that were not invoiced to manufacturers; work with the Centers for Medicare & Medicaid Services (CMS) to determine and refund the unallowable portion of Federal reimbursement for physician-administered drugs that were not invoiced for rebates after December 31, 2013; and complete the process of developing and implementing policies and procedures to ensure that all physician-administered drugs dispensed to enrollees of MCOs and eligible for rebates are invoiced.

Nebraska disagreed with our first recommendation, concurred with our third recommendation, and, for our second recommendation, said that it would work with CMS to analyze and resolve any discrepancies. For our first recommendation, Nebraska said that historical MCO claims were identified as outstanding rebate-eligible covered outpatient drugs and were subsequently invoiced. Nebraska said that in addition, it took steps to ensure an accurate outstanding balance of rebates due on claims that had not previously been invoiced. Nebraska added that since our audit, it has invoiced for those rebates for drug claims that overlapped with our audit period.

We maintain that all of our findings and recommendations remain valid. We recognize that the drug rebate process is fluid and ongoing, and we commend Nebraska for the corrective actions it has implemented and plans to implement. When we began our audit work, though, the claims that are included in our findings (and the associated amount in our recommended refund) had not been invoiced to the drug manufacturers to secure rebates. As part of the audit resolution process, Nebraska will have the opportunity to show CMS the portion of the amount conveyed in our first recommendation that it has already refunded.