Iowa Claimed Unallowable Federal Reimbursement for Some Medicaid Physician-Administered Drugs

The Iowa Department of Human Services (State agency) did not always comply with Federal Medicaid requirements for invoicing drug manufacturers for rebates for physician-administered drugs. To collect these rebates, States submit to the manufacturers the national drug codes (NDCs) for all single-source and the top 20 multiple-source physician-administered drugs. Federal reimbursement for covered outpatient drugs administered by a physician is not available to States that do not comply with Federal requirements for capturing data to invoice and collect rebates.

The State agency did not did not submit utilization data to manufacturers for rebates associated with $174,000 (Federal share) in physician-administered drugs. Of this amount, $155,000 (Federal share) was for single-source drugs, and $19,000 (Federal share) was for top-20 multiple-source drugs. We were unable to determine whether the State agency improperly claimed Federal reimbursement for an additional $111,000 (Federal share) for other physician-administered drug claims that were not for single-source drugs or top-20 multiple-source drugs.

The State agency required providers to include NDCs on all physician-administered drug claims, and the State agency notified providers that it would deny claims that did not include NDCs. However, the State agency's internal controls did not always ensure that it invoiced manufacturers for rebates for all eligible physician-administered drugs.

We recommended that the State agency (1) refund to the Federal Government $155,000 (Federal share) for claims for single-source physician-administered drugs that were ineligible for Federal reimbursement; (2) refund to the Federal Government $19,000 (Federal share) for claims for top-20 multiple-source physician-administered drugs that were ineligible for Federal reimbursement; (3) work with CMS to determine the unallowable portion of the $111,000 (Federal share) for other claims for outpatient physician-administered drugs that were ineligible for Federal reimbursement and refund that amount; (4) work with CMS to determine and refund the unallowable Federal reimbursement for physician-administered drugs that were not invoiced for rebates after December 31, 2012; and (5) strengthen its internal controls to ensure that all physician-administered drugs eligible for rebates are invoiced. The State agency concurred with our recommendations and described corrective actions that it had taken or planned to take.