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States' MCO Medicaid Drug Claims

Under the drug rebate program, Centers for Medicare & Medicaid Services provides States with a quarterly Medicaid drug tape, which, in effect, lists all covered outpatient drugs and indicates a drug's termination date, if applicable. A drug manufacturer must have a rebate agreement with Centers for Medicare & Medicaid Services to have its outpatient drugs covered under Medicaid (SSA § 1927(a)(1)). Centers for Medicare & Medicaid Services guidance instructs the States to use the tape to verify coverage of the drugs for which they claim reimbursement. States contract with managed care organizations (MCOs) to provide Medicaid services, including covered outpatient drugs to enrollees if the MCO is contractually required to provide such drugs. We will determine whether MCO capitation payments included reimbursement for drugs that are not covered under the Medicaid program. MCOs have some flexibility in maintaining formularies of drugs regardless of whether the manufacturers of those drugs participate in the drug rebate program. State Medicaid agencies can establish requirements regarding MCO formularies.

Announced or Revised Agency Title Component Report Number(s) Expected Issue Date (FY)
October 2017 Centers for Medicare & Medicaid Services States' MCO Medicaid Drug Claims Office of Audit Services W-00-17-31520 2018, 2019

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