Audit of the Medicaid Drug Rebate Program in the State of Alabama

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether the Alabama Medicaid Agency (AMA) had established adequate accountability and internal controls over the Medicaid drug rebate program.

AMA generally followed adequate accounting procedures and had controls over the drug rebate program as required by Federal rules and regulations.  However, we noted AMA did not:  (1) account for the collection of interest as required by rebate agreements between the Centers for Medicare and Medicaid Services and the drug manufacturers or (2) establish write-off criteria for dispute resolution as required by Federal regulations.  The weaknesses occurred because AMA had not established official written policies and procedures.  AMA officials agreed with our finding on the collection of interest; however, they did not agree that official policies and procedures were needed.  Also, AMA officials disagreed with our finding on dispute resolution.