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

EXECUTIVE SUMMARY:

The audit objective was to evaluate whether the Kentucky Department for Medicaid Services had established adequate accountability and internal controls over the Medicaid drug rebate program.  The audit covered Medicaid drug rebates through June 30, 2002.  We found that the State's accounting records did not support amounts reported on the Centers for Medicare and Medicaid Services (CMS).  As a result, there was no assurance that the program has provided CMS with an accurate picture of the drug rebate program.  Additionally, there was a material amount of uncollected rebate dollars outstanding.  State officials agreed with our findings and have taken steps to correct the identified weaknesses.