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EXECUTIVE SUMMARY:
The objective of this review was to evaluate whether the State of Idaho Department of Health and Welfare (the State Agency) had established adequate accountability and internal controls over the Medicaid drug rebate program. We found that although the State Agency had policies and procedures for the drug rebate program, it did not revise the policies and procedures to reflect current practices. In addition, the State Agency had not established adequate internal controls over the Medicaid drug rebate program as required by 45 Code of Federal Regulations (CFR) Part 74.21. As a result, the State Agency did not properly report drug rebate information to the Centers for Medicare & Medicaid Services (CMS). We identified weaknesses in the following areas: (1) quarterly reporting, (2) accounts receivable system, (3) adjustments, dismissals and write-offs, (4) segregation of duties, and (5) dispute resolution. Federal regulations require effective control and accountability for all funds, property, and other assets. As a result, the State Agency did not maintain adequate policies, procedures, and internal controls to account for drug rebate program transactions. The State Agency believed the reports filed to CMS regarding drug rebate receivables were accurate and that it reconciles the ending balance of uncollected rebates to the receivable account. It also believed the present general ledger system was adequate. The State Agency generally concurred with the remaining findings and recommendations.