Review of Medicaid Drug Rebate Collections State of Vermont Office of Vermont Health Access as of June 30, 2002

EXECUTIVE SUMMARY:

The objective of this audit was to evaluate whether the State agency had established adequate accountability and internal controls over the Medicaid drug rebate program. We found that the State agency generally followed adequate accounting procedures and had sufficient controls over the drug rebate program as required by Federal rules and regulations.  In addition, we noted that the Federal share of drug rebate amounts, for the most part, was properly offset from Federal Medicaid reimbursement.  In this regard, we noted that the State agency needs to improve its monitoring on overdue drug rebate receivables to ensure that all interest applicable to these receivables is collected and reported properly.  We also found that the State agency needs to improve its procedures for reconciling and reporting its pending drug rebate amounts on reports to the Centers for Medicare and Medicaid Services (CMS).  We recommended that the State agency establish policies and procedures for the proper monitoring and collection of interest owed by manufacturers for late, disputed, and unpaid drug rebate amounts, and develop a pending drug rebate ageing schedule for use in the proper preparation of the CMS report.  The State agency agreed to work with EDS, its contractor, in implementing our audit recommendations.

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