Audit of the Medicaid Drug Rebate Program in Montana

EXECUTIVE SUMMARY:

The objective of this audit was to evaluate whether the Montana Department of Public Health and Human Services (Department) had established adequate accountability and internal controls over the Medicaid drug rebate program.  We determined that the Department had adequate controls over the collections of drug rebates from the manufacturers.  However, the Department did not have adequate controls to account for receivables as required by Federal regulations.  Drug rebate receivables were perpetually understated and it was likely that the Department did not receive all rebate payments due from manufacturers.  Moreover, the lack of sufficient internal controls increased the risk for fraud, waste, or abuse of drug rebate program funds.