HHS-OIG Audit South Carolina Identifies Failure to Invoice $14.2 Million for Drug Rebates
The HHS Office of Inspector General (HHS-OIG) audited the South Carolina Department of Health and Human Services, South Carolina’s Medicaid agency, to assess compliance with the Medicaid requirements for invoicing manufacturers for rebates for physician-administered drugs dispensed to MCO enrollees. For a covered outpatient drug to be eligible for federal reimbursement under the Medicaid program’s drug rebate requirements, manufacturers must pay rebates to the states for the drugs. HHS-OIG has conducted previous audits that indicate states do not always invoice and collect rebates for MCO’s enrollees.
This was the latest in a series of audits to assess compliance with the Medicaid drug rebate program, which took effect in 1991. HHS-OIG reviewed physician-administered drug claims paid by the MCOs between January 1, 2016, and December 31, 2019, which totaled $168,590,761. After removing claims for drugs that were not eligible for rebates or where invoices for rebates were sent, HHS-OIG identified physician-administered drug claims totaling $45,244,489 and then worked with the state agency to calculate the amounts that had been invoiced.
The state agency had submitted invoices for rebates but did not do so consistently. HHS-OIG determined that the state agency did not invoice and collect rebates from manufacturers totaling a federal share of $14.2 million, $12.1 million of which was for single-source drugs and $65,691 was for 20 multiple-source drugs. HHS-OIG also identified $1.9 million for other multiple-source drugs, which HHS-OIG was unable to determine whether, in some cases, the state was required to invoice for rebates.
HHS-OIG recommended the South Carolina Medicaid agency issue invoices to collect the $12.2 million single-source and top-20 multiple-source physician-administered drugs and refund the federal share, work with the CMS to determine whether invoices should be submitted for the $1.9 million, ensure that invoices on physician-administered drugs eligible for rebates are submitted moving forward, and to strengthen its internal controls to ensure that invoices for rebates are consistently issued. South Carolina concurred with all of the recommendations.
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