Texas Did Not Bill Manufacturers for Some Rebates for Pharmacy Drugs of Medicaid Managed-Care Organizations

Texas did not fully comply with Federal Medicaid requirements for billing manufacturers for some rebates for pharmacy drugs dispensed to managed-care organization enrollees. Texas properly processed claims for rebates in most instances; however, some claims were bypassed in the Drug Rebate Analysis and Management System and were not processed for rebate. The bypassed claims occurred during the rebate billing for the second quarters of 2012 and 2014. These claims were bypassed because they were loaded during the rebate invoicing process and Texas did not perform the required invoice recalculation to ensure they were applied to the current quarter. The bypassed claims resulted in 220,336 claim lines that were not invoiced for rebate. The rebates associated with these claims total $7.8 million ($4.4 million Federal share).

We recommended that Texas (1) invoice manufacturers for the $7.8 million ($4.4 million Federal share) in rebates and refund the Federal share of rebates collected, and (2) strengthen internal controls to ensure that the invoice recalculation step is performed when needed so that all managed-care pharmacy drugs eligible for rebate are invoiced.

Texas did not indicate concurrence or nonconcurrence with our recommendations. However, Texas stated it has invoiced the rebates of $7.8 million and refunded the $4.4 million Federal share, and strengthened internal controls to ensure that the invoice recalculation step is performed.