Review of the Commonwealth of Pennsylvania's Medicaid Drug Rebate Program

EXECUTIVE SUMMARY:

The objective of this audit was to evaluate whether the Pennsylvania Department of Public Welfare (DPW)  had established adequate accountability and internal controls over the Medicaid drug rebate program.  We found the  DPW had not (1) reconciled rebates received from drug manufacturers with the invoices submitted for payment by National Drug Codes, nor did it age its outstanding drug rebate accounts receivable; (2) kept accurate records of outstanding  disputed amounts for each manufacturer; (3) reviewed quarterly payments received from drug manufacturers' to determine if interest was owed when payment was received 38 days after the due date and verified the accuracy of interest payments on disputes either when received from or owed to drug manufacturers; (4) reconciled the Center for Medicare and Medicaid Services from 64.9R outstanding balances in the drug rebate program to DPW's accounting records; and (5) maintained all prior years' information, since the inception of the program that is needed for input into the new Medicaid management information system.