Nevada Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations

When Nevada billed manufacturers for rebates for physician-administered and pharmacy drugs, it did so correctly. However, Nevada estimated that it did not bill for rebates of $520,137 ($327,624 Federal share) for physician-administered and pharmacy drugs that were eligible for rebates. In addition, Nevada did not bill for rebates for 19,650 claim lines for other physician-administered and pharmacy drugs that may have been eligible for rebates. Because there was insufficient information to determine the amount of any rebates that may have been due, we set aside these claim lines for resolution by the Centers for Medicare & Medicaid Services (CMS). Nevada's internal controls did not ensure that it billed for and collected rebates for all drugs dispensed to enrollees of Medicaid managed-care organizations (MCOs).

We recommended that Nevada (1) bill for and collect from manufacturers rebates for physician-administered and pharmacy drugs that were eligible for rebates and refund to the Federal Government the estimated $327,624 (Federal share); (2) work with CMS to determine the amount of any rebates due for the 19,650 claim lines that we set aside and refund the Federal share of rebates collected; (3) determine which physician-administered and pharmacy drugs were not billed for rebates after our audit period, determine the rebates due, and upon receipt of the rebates, refund the Federal share of the rebates collected; and (4) strengthen its internal controls to ensure that it bills for and collects from manufacturers rebates for all physician-administered and pharmacy drugs dispensed to MCO enrollees.

Nevada concurred with our first, third, and fourth recommendations and partially concurred with our second recommendation. Specifically, Nevada disagreed with the number of claim lines we set aside for our audit period. However, Nevada stated that it was reviewing all claim lines regardless of whether they were within the audit period to determine whether the utilization was eligible for rebates from manufacturers. After reviewing Nevada's comments, we adjusted the number of set-aside claim lines to reflect our audit period.