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

The Texas Health and Human Services Commission (State agency) did not always comply with Federal Medicaid requirements for billing manufacturers for rebates for physician-administered drugs. Of the $28.9 million in paid claims reviewed for our audit period, July through September 2011, the State agency properly billed for rebates associated with $20.5 million in paid claims and did not bill for rebates associated with $1.1 million in paid claims for which rebates were not required.

However, the State agency did not bill for rebates associated with $7.3 million in paid claims. The State agency did not have valid National Drug Codes (NDCs) to submit drug utilization data to bill rebates for some claims, and the State agency did not identify all claims that were eligible for rebate. As a result, the State agency improperly claimed reimbursement for $6.8 million ($3.9 million Federal share). In addition, we were unable to determine the portion of $529,000 ($308,000 Federal share) for which the State agency may have improperly claimed reimbursement. This amount was for claim lines for drugs for which there was insufficient information to determine whether the drugs were required to be invoiced for rebates.

The State agency did not always bill manufacturers for rebates because the State agency's Medicaid Management Information System did not have an edit to ensure that NDCs were present on drug claims and an edit to validate NDCs if submitted.

We recommended that the State agency (1) refund $3.9 million (Federal share) for claim lines for single-source and top-20 multiple-source physician-administered drugs that were ineligible for Federal reimbursement, (2) work with CMS to determine the portion of the $308,000 (Federal share) for other claim lines for physician-administered drugs that was ineligible for Federal reimbursement and refund that amount, (3) determine and refund the unallowable Federal reimbursement for single-source and top-20 multiple-source physician-administered drugs for which the rebates were not invoiced before and after our audit period, and (4) establish and implement processes to ensure that all physician-administered drugs eligible for rebates are invoiced for rebates. The State agency did not state whether it concurred with our recommendations but described some of the corrective actions that it has taken or plans to take to address them.