Audit of the Medicaid Drug Rebate Program in Iowa

The audit objective was to evaluate whether the Iowa Department of Human Services (DHS) had established adequate accountability and internal controls over the Medicaid drug rebate program.  We found that the DHS lacked sufficient internal controls with regard to the Medicaid drug rebate program as required by Federal rules and regulations.  Drug rebate receivables were perpetually understated and it is likely that the DHS did not receive all drug rebates and interest on disputed or late rebate payments due from manufacturers.  In addition, the DHS did not have reasonable assurance that drug rebate balances and collections reported to CMS were accurate.  Moreover, the lack of sufficient internal controls increased the risk for fraud, waste, or abuse of drug rebate program funds.