Review of Medicaid Outpatient Drug Expenditures in Nebraska for the Period October 1, 1997, Through September 30, 2004

EXECUTIVE SUMMARY:

Our objective was to determine whether the Nebraska Department of Health and Human Services, Finance and Support's (the State agency) claims for reimbursement of Medicaid outpatient drug expenditures complied with Federal requirements. We found that not all of the State agency's claims for reimbursement of Medicaid outpatient drug expenditures complied with Federal requirements. Specifically, for Federal fiscal years (FYs) 1998 through 2004, the State agency claimed duplicate expenditures for some outpatient drugs and for FYs 2003 and 2004, the State agency claimed unallowable expenditures ($266,752 Federal share) for drugs that were terminated, less than effective, or inadequately supported. The State agency also claimed expenditures ($608,624 Federal share) for drug products that were not listed on the quarterly drug tapes. 

We recommended that the State agency: (1) refund $562,101 to the Federal Government for duplicate reported expenditures and drug expenditures that were not eligible for Medicaid coverage; (2) work with CMS to resolve $608,624 in payments for drugs that were not listed on the quarterly drug tapes and that may not have been eligible for Medicaid coverage; and (3) strengthen internal controls to ensure that claimed Medicaid drug expenditures comply with Federal requirements. The State agency concurred with our recommendations and provided comments on our characterization of two findings.