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

The Nebraska Department of Health and Human Services, Division of Finance and Support (State agency), did not always comply with Federal Medicaid requirements for billing 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 bill and collect rebates.

The State agency did not collect the NDCs (from claims submitted by providers) that were required for it to invoice manufacturers for rebates associated with about $2.5 million (Federal share) in physician-administered drugs. Of this amount, $2 million (Federal share) was for single-source drugs and $441,000 (Federal share) was for top-20 multiple-source drugs. In addition, the State agency did not capture the utilization and coding data necessary to collect rebates for all physician-administered drugs. Without the NDCs, we were unable to determine whether the State agency improperly claimed Federal reimbursement for an additional $869,000 (Federal share) for other physician-administered drug claims that were not classified as either single-source 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 they would deny claims that did not include NDCs. However, the State agency did not have a system edit in place to reject all of the claims that were submitted without NDCs. As a result, the State agency did not collect the drug utilization data necessary to bill the manufacturers for rebates associated with these physician-administered drug claims, and the claims were therefore ineligible for Federal reimbursement.

We recommended that the State agency (1) refund $2 million (Federal share) for single-source physician-administered drug claims that were ineligible for Federal reimbursement; (2) refund $441,000 (Federal share) for top-20 multiple-source physician-administered drug claims that were ineligible for Federal reimbursement; (3) work with the Centers for Medicare & Medicaid Services (CMS) to determine the portion of the $869,000 (Federal share) for other outpatient physician-administered drug claims 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 claimed without NDCs and not billed for rebates after January 1, 2012; and (5) update its system edits to require NDCs for payment on all drug claims to ensure that all drugs eligible for drug rebates are invoiced.

The State agency partially agreed with our first two recommendations, disagreed with our third recommendation, and agreed with our fourth and fifth recommendations. We maintain that all of our recommendations are valid.