Office of Inspector General's Partnership Plan: Drug Delivery System for Montana's Medicaid Program

EXECUTIVE SUMMARY:

This review of the Drug Delivery System for Montana's Medicaid Program for State Fiscal Years (FY) 1994 and 1995 was conducted by the Montana Legislative Auditor (MLA) as part of our partnership efforts with State Auditors to expand coverage of the Medicaid program. The objectives of the review were to (1) identify the Department of Public Health and Human Services' (Department) procedures to achieve cost savings in the acquisition and delivery of drugs and (2) determine if a mail order delivery system would be more cost effective.

As part of the review, the Office of Audit Services assisted the MLA by providing technical support through the Medicaid Partnership Plan. In addition, we have performed sufficient work to satisfy ourselves that the attached MLA audit report can be relied upon and used by the Health Care Financing Administration in meeting its program oversight responsibilities.

The MLA determined that the Department had adequate procedures in place to contain costs in the acquisition and delivery of drugs. The Department averted approximately $980,000 in annual program expenses at annual costs of approximately $590,000. In addition, the Department has collected over $5 million in manufacturers rebates in FY 1994 and 1995. The MLA concluded that another type of drug delivery system does not appear to be more cost effective than the current system. Since the MLA had no recommendations for corrective actions, an attachment with a listing of the coded recommendations will not be prepared.

We plan to share this report with other States to encourage their participation in our partnership efforts.