Iowa Did Not Invoice Rebates to Manufacturers for Physician-Administered Drugs of Medicaid Managed-Care Organizations

Before the start of our audit, the Iowa Department of Human Services, Iowa Medicaid Enterprise (State agency), did not invoice rebate-eligible physician-administered drugs dispensed to enrollees of Medicaid managed-care organizations (MCOs) in the State. Specifically, the State agency did not invoice drug manufacturers for rebates totaling $709,000 ($401,000 Federal share). These errors occurred because the State agency was still in the process of developing policies and procedures to ensure that it accurately invoiced manufacturers to collect rebates for physician-administered drugs dispensed to enrollees of MCOs.

We recommended that the State agency refund to the Federal Government $401,000 (Federal share) for rebates for physician-administered drugs dispensed to enrollees of MCOs that were not invoiced to manufacturers; work with the Centers for Medicare & Medicaid Services to determine and refund the unallowable portion of Federal reimbursement for physician-administered drugs that were not invoiced for rebates after December 31, 2014; and develop and implement policies and procedures to ensure that all physician-administered drugs dispensed to enrollees of MCOs and eligible for rebates are invoiced. The State agency partially concurred with our first recommendation, concurred with our other two recommendations, and described corrective actions that it had taken or planned to take.