WI Improperly Claimed $3M in Medicaid Drug Reimbursement

March 30, 2017 - Wisconsin’s Department of Health Services failed to correctly invoice providers for over $3 million in Medicaid drug reimbursement, says the Office of the Inspector General (OIG) in a new report, leading to improper reimbursement from federal funding instead.

According to the report, the state agency did not invoice manufacturers for rebates on single-source drugs and top-20 multiple source drugs. Both types of drugs were inadequately invoiced that totaled millions in federal dollars.  

Under the Medicaid drug rebate program, drug manufacturers must agree to rebate terms administered by CMS and pay quarterly rebates to the state in order to receive Medicaid reimbursement.

The report is part of a larger look by OIG into country-wide inconsistencies for drug reimbursement.

“A prior Office of Inspector General review found that States did not always invoice and collect all rebates due for drugs administered by physicians,” OIG said. 

“For this audit, we reviewed the Wisconsin Department of Health Services’ invoicing for rebates for physician administered drugs for the period January 1, 2012, through December 31, 2014.”

In order to collect rebates, states must submit drug utilization data containing National Drug Codes (NDCs) for single-source and top-20 multi-source drugs. The state agency is responsible for collecting rebates, paying claims, and submitting invoices based off provider-generated claims.

OIG’s findings reveal that the Wisconsin Department of Health did not invoice manufacturers for rebates totalling $2,877,019 in single-source drugs, because they did not submit proper NDCs and utilization data.

In the top-20 multi-source category, the WI state agency improperly claimed $164,691 for drugs they did not rebate.

“Before 2012, CMS provided the State agency, on a yearly basis, with a listing of top-20 multiple-source HCPCS codes and their respective NDCs,” OIG said.

“However, the State agency did not always submit the utilization data to the drug manufacturers for rebate purposes. Because the State agency did not submit utilization data to the manufacturers to secure rebates, the State agency improperly claimed Federal reimbursement for these top-20 multiple-source physician-administered drugs.”

OIG was unable to determine whether or not the state agency was required to invoice for other physician drugs outside of the two main categories.

OIG recommends that the state agency should take four actions in order to properly reimburse Medicaid-sponsored drug rebates.

Firstly, the state agency should refund the federal government $1,732,222 in claims for single source physician-administered drugs ineligible for reimbursement, and another $99,156 for top-20 multiple-source physician-administered drug claims.

OIG suggests the WI Department of health should cooperate with CMS to determine if other remaining claims could have been invoiced as manufacturer rebates, and to refund those amounts to the federal government.

Following the OIG’s findings, the state agency did not concur with certain results of the report. However the WI Department of Health agreed to work with CMS and refund federal dollars after rebates are received from manufacturers.

“After reviewing the State agency’s comments, we maintain that all of our findings and recommendations remain valid,” said OIG.

“We recognize that the drug rebate process is fluid and ongoing, but as of the date we issued our draft report, the claims that are included in our finding amounts had not been invoiced to the drug manufacturers to secure rebates.”