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

Washington did not fully comply with Federal Medicaid requirements for billing manufacturers for rebates for drugs dispensed to enrollees of Medicaid managed-care organizations. Washington properly billed manufacturers for some rebates for pharmacy and physician-administered drugs. However, it did not bill for and collect from manufacturers rebates of $34.1 million ($17 million Federal share). For drugs that were eligible for rebates, Washington did not bill for rebates of $14.2 million (Federal share) for pharmacy drugs and $2.4 million (Federal share) for single-source and top-20 multiple-source physician-administered drugs. For drugs that may have been eligible for rebates, Washington did not bill for rebates of $395,746 (Federal share) for non-top-20 multiple source physician-administered drugs with National Drug Codes. In addition, Washington did not bill for rebates for 17,140 claim lines for other physician-administered drugs. 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).

We recommended that Washington (1) bill for and collect from manufacturers rebates for pharmacy drugs and refund $14.2 million (Federal share); (2) bill for and collect from manufacturers rebates for single-source and top-20 multiple-source physician-administered drugs and refund $2.4 million (Federal share); (3) work with CMS to determine whether the non-top-20 multiple-source physician-administered drugs were eligible for rebates and, if so, upon receipt of the rebates, refund $395,746 (Federal share) of the rebates collected; and (4) work with CMS to determine the amount of any rebates due for the 17,140 claim lines that we set aside and refund the Federal share of rebates collected. We also made a recommendation related to pharmacy and physician-administered drugs that were not billed for rebates after our audit period and a procedural recommendation to improve oversight of the processes for determining drug rebate eligibility.

Washington concurred with all of our recommendations and provided information on actions that it had taken or planned to take to address our recommendations.