Follow-Up Audit of the Medicaid Drug Rebate Program in New Mexico

In a follow-up audit of New Mexico's Medicaid drug rebate program, we found that the State had implemented the recommendations from our prior audit that related to devoting more resources to the drug rebate program and implementing a sufficiently detailed accounts receivable system.  Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with the Centers for Medicare & Medicaid Services (CMS) and paying quarterly rebates to the States.

We also found that the State had partially implemented the recommendations that related to interest, dispute resolution, and Form CMS-64.9R reconciliation; had not implement the recommendation related to segregation of duties for the receipt of drug rebate funds; and had established controls over collecting rebates for single-source drugs administered by physicians.

We recommended that the State update accounts receivable data from January 1991 through February 2007 and attempt to recover any unpaid rebate balances, including interest, and follow procedures to reconcile all amounts reported on the Form CMS-64.9R to its accounts receivable records.  We also reiterated our recommendation that the State implement policies, procedures, and controls to segregate duties for the receipt of drug rebate funds. In comments on the draft report, the State agency described how it was addressing the recommendations.