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Series: States' Collection of Rebates on Physician-Administered Drugs

Announced on  | Last Modified on  | Series Number: W-00-24-31400
Status
Active
Agency
Centers for Medicare and Medicaid Services

OBJECTIVE

States are required to collect rebates on covered outpatient drugs administered by physicians in order to be eligible for Federal matching funds (SSA § 1927(a)). Previous OIG work identified concerns with States' collection and submission of data to Centers for Medicare & Medicaid Services, including national drug codes that identify drug manufacturers, thus allowing States to invoice the manufacturers responsible for paying rebates (Deficit Reduction Act of 2005). We will determine whether States have established adequate accountability and internal controls for collecting Medicaid rebates on physician-administered drugs. We will assess States' processes for collecting national drug code information on claims for physician-administered drugs and subsequent processes for billing and collecting rebates.

There are 5 projects in this series.

Project titles will remain unpublished until projects are complete and reports are posted.

ACTIVE PROJECTS IN THIS SERIES (1)

Project A-07-23-06113 • Announced on Jun 23, 2023

COMPLETED PROJECTS IN THIS SERIES (4)

Pennsylvania

Project A-03-24-00206 • Completed on November 5, 2025

West Virginia

Project A-07-23-06109 • Completed on February 4, 2025

South Carolina

Project A-07-22-07010 • Completed on August 28, 2024

State Agencies

Project A-07-23-06111 • Completed on May 9, 2024

TIMELINE

  • July 18, 2022
    Series Number W-00-24-31400 Assigned
  • July 18, 2022
    Project Announced

    South Carolina - A-07-22-07010

  • May 10, 2023
    Projects Announced

    West Virginia - A-07-23-06109

  • State Agencies - A-07-23-06111

  • June 23, 2023
    Project Announced

    Project A-07-23-06113

  • February 20, 2024
    Project Announced

    Pennsylvania - A-03-24-00206

  • May 9, 2024
    Project Complete - A-07-23-06111

    State Agencies has been marked as complete. This audit resulted in 3 recommendations.

  • August 28, 2024
    Project Complete - A-07-22-07010

    South Carolina has been marked as complete. This audit resulted in 4 recommendations.

  • February 4, 2025
    Project Complete - A-07-23-06109

    West Virginia has been marked as complete. This audit resulted in 5 recommendations.

  • November 5, 2025
    Project Complete - A-03-24-00206

    Pennsylvania has been marked as complete. This audit resulted in 3 recommendations.

  • Today
    1 Audit In-Progress
  • Est FY2026
    Estimated Fiscal Year for Series Completion

4 REPORT PUBLISHED

Pennsylvania Correctly Invoiced Rebates to Manufacturers for Most Physician-Administered Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations (A-03-24-00206)
  • Pennsylvania generally complied with applicable Federal Medicaid requirements but did not invoice all rebate eligible physician-administered drugs dispensed to MCO enrollees.
  • Specifically, Pennsylvania did not invoice for rebates totaling $488,051 ($284,617 Federal share):

26-A-03-009.01 to CMS - Open Unimplemented
Update expected on 05/04/2026
We recommend that the Pennsylvania Department of Human Services invoice for and collect from manufacturers rebates totaling $488,051 ($284,617 Federal share) for single-source and top-20 multiple-source physician-administered drugs and refund the Federal share of rebates collected.

26-A-03-009.02 to CMS - Open Unimplemented
Update expected on 05/04/2026
We recommend that the Pennsylvania Department of Human Services continue to review exclusion reports and invoice manufacturers for rebate-eligible drugs dispensed after our audit period.

26-A-03-009.03 to CMS - Open Unimplemented
Update expected on 05/04/2026
We recommend that the Pennsylvania Department of Human Services update its policies and procedures to require steps to regularly review exclusion reports for rebate eligible NDCs, and invoice for rebate those drugs identified as rebate eligible.

View in Recommendation Tracker

South Carolina Did Not Always Invoice Rebates to Manufacturers for Physician-Administered Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations (A-07-22-07010)

24-A-07-102.01 to CMS - Closed Implemented
Closed on 12/09/2024
We recommend that the South Carolina Department of Health and Human Services invoice for and collect manufacturers' rebates totaling $12,204,259 (Federal share) for single-source and top-20 multiple-source physician-administered drugs and refund the Federal share of rebates collected.

24-A-07-102.02 to CMS - Closed Implemented
Closed on 12/09/2024
We recommend that the South Carolina Department of Health and Human Services work with CMS to determine whether the claims for other multiple-source physician-administered drugs, totaling $1,947,035 (Federal share), were eligible for rebates and, if so, determine the rebates due for these drugs and, upon receipt of the rebates, refund the Federal share of the rebates collected.

24-A-07-102.03 to CMS - Closed Implemented
Closed on 12/09/2024
We recommend that the South Carolina Department of Health and Human Services ensure that all physician-administered drugs eligible for rebates after our audit period are processed for rebates.

24-A-07-102.04 to CMS - Closed Implemented
Closed on 12/09/2024
We recommend that the South Carolina Department of Health and Human Services continue to review and strengthen its internal controls to ensure that, in line with the State agency's existing policies, all physician-administered drugs eligible for rebates are invoiced.

View in Recommendation Tracker

West Virginia Did Not Always Invoice Rebates to Manufacturers for Physician-Administered Drugs (A-07-23-06109)

25-A-07-043.01 to CMS - Open Unimplemented
Update expected on 03/23/2026
We recommend that the West Virginia Bureau for Medical Services refund to the Federal Government $2,159,071 (Federal share) for claims for single-source physician-administered drugs that were ineligible for Federal reimbursement.

25-A-07-043.02 to CMS - Open Unimplemented
Update expected on 03/23/2026
We recommend that the West Virginia Bureau for Medical Services refund to the Federal Government $14,514 (Federal share) for claims for top-20 multiple-source physician-administered drugs that were ineligible for Federal reimbursement.

25-A-07-043.03 to CMS - Open Unimplemented
Update expected on 03/23/2026
We recommend that the West Virginia Bureau for Medical Services work with CMS to determine the unallowable portion of $488,185 (Federal share) for other claims for multiple-source physician-administered drugs that may have been ineligible for Federal reimbursement, refund that amount, and consider invoicing drug manufacturers for rebates for these drugs if CMS determines that the drug claims are allowable.

25-A-07-043.04 to CMS - Open Unimplemented
Update expected on 03/23/2026
We recommend that the West Virginia Bureau for Medical Services strengthen internal controls for non-crossover claims going forward, to better use collected data to invoice manufacturers and collect rebates for all eligible physician-administered drugs.

25-A-07-043.05 to CMS - Open Unimplemented
Update expected on 03/23/2026
We recommend that the West Virginia Bureau for Medical Services consider revising its payment methodology going forward regarding payments for crossover claims, thereby allowing collection of manufacturers' rebates for associated physician-administered drugs.

View in Recommendation Tracker

State Agencies Could Be Obtaining Hundreds of Millions in Additional Medicaid Rebates Associated With Physician-Administered Drugs (A-07-23-06111)

24-A-07-073.01 to CMS - Closed Implemented
Closed on 12/13/2024
We recommend that the Centers for Medicare & Medicaid Services work with the State agencies to implement internal controls, including policies and procedures, to collect NDCs, in order to facilitate the collection of all rebates for eligible physician-administered drugs.

24-A-07-073.02 to CMS - Closed Implemented
Closed on 12/17/2024
We recommend that the Centers for Medicare & Medicaid Services issue finalized guidance regarding multiple-source physician-administered drugs, to clarify and reinforce the requirement that rebates should be collected for all required physician-administered drugs.

24-A-07-073.03 to CMS - Closed Implemented
Closed on 12/13/2024
We recommend that the Centers for Medicare & Medicaid Services work with and encourage the State agencies to maximize the amount of physician administered drug rebates that can be obtained when feasible, including invoicing for and obtaining rebates in cases when the rebates may not be required.

View in Recommendation Tracker
Work Plan Type
Office of Audit Services
HHS Agencies
Centers for Medicare and Medicaid Services
Issue Areas
Financial Stewardship Prescription Drug
Target Groups
-
Financial Groups
Medicaid