Review of Medicaid Drug Rebate Collections - State of Louisiana

The objective of this review was to determine whether the Louisiana Department of Health and Hospitals (DHH) had established adequate accountability over the Medicaid drug rebate program.  We found that the DHH had established adequate accountability except for (1) the reconciliation of the outstanding balance of drug rebate accounts receivable reported on the Centers for Medicare and Medicaid Services (CMS) 64.9R report to the supporting books and records, and (2) the utilization of the hearing mechanism available under the Medicaid program to resolve disputes with drug manufacturers as prescribed in the rebate agreement between the CMS and the manufacturer(s).  As a result of not reconciling the CMS 64.9R to the supporting books and records, DHH overstated its Medicaid drug rebates accounts receivables as of June 30, 2002 by $33.8 million.  Also, the DHH's records showed $2.9 million in uncollected drug rebates from 1991 through 1995.  The DHH agreed with our finding that the CMS 64.9R was not reconciled to the supporting books and records and implemented a requirement to perform this reconciliation.  The DHH disagreed that the use of hearings were warranted for the $2.9 million, because its analysis indicated that these balances were related to rate changes rather than disputes.