Review of Medicaid Drug Rebate Collections - State of Arkansas

The objective of this review was to determine whether the Department of Human Services (DHS) had established adequate accountability over the Medicaid drug rebate program.  We found that the DHS generally had established adequate controls over the drug rebate program as required by federal rules and regulations. However, we identified one area where the DHS could improve accountability over drug rebates.  Specifically, the DHS could improve its accounting for interest payments received from drug manufacturers.  The DHS recorded interest payments in the Rebate Management System without a corresponding entry to establish the interest as a receivable.  In addition, the DHS did not verify that interest payments were accurate.  As a result, the balance of uncollected rebates was understated by $537,979 (the amount of interest received) and the DHS cannot be assured that all interest due was paid.  The DHS agreed with our findings.