Department of Health and Human Services

Office of Inspector General -- AUDIT

June 6, 2008

Complete Text of Report is available in PDF format (1.68 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.

EXECUTIVE SUMMARY:

In a follow-up audit of Montana’s Medicaid drug rebate program, we found that the State had partially corrected some of the weaknesses reported in our previous audit.  Manufacturers may make their outpatient drugs eligible for Federal Medicaid funding by entering into a rebate agreement with the Centers for Medicare & Medicaid Services and paying quarterly rebates to the States.  However, the State’s accounts receivable system conversion remained incomplete. 

Additionally, the State did not implement recommendations related to (1) tracking $0 unit rebate amounts (URA) to ensure payment; (2) adjusting URA information to ensure that accounts receivable records are accurate; and (3) actively pursuing disputed drug rebates, including utilization of the State’s hearing mechanism.  The State had, however, established controls over collecting rebates on single-source drugs administered by physicians.   

We recommended that the State complete its accounts receivable system conversion by determining an accurate accounts receivable balance for each manufacturer.  We also recommended that the State develop and follow policies and procedures that include (1) tracking $0 URAs to ensure payment; (2) adjusting URA information to ensure that accounts receivable records are accurate; and (3) actively pursuing disputed drug rebates, including utilization of the State’s hearing mechanism.   

In written comments on our draft report, the State generally concurred with all of our findings and recommendations.