Medicaid Program: Improper Payments for Drugs Without a Federal Drug Rebate Agreement
Learn how the AI-generated research projects were createdOverall Conclusion
The audit found that the Department’s oversight of Medicaid drug payments and the capitation rate adjustment process were inadequate, resulting in a substantial amount of improper MCO payments for drugs from manufacturers without an NDRA; the Department should revise the rate adjustment methodology and pursue recovery of identified improper payments, with emphasis on including all applicable encounter claims and physician-administered drugs.
Source Document
Audit Scope
Period covered: January 2017 through March 2023. Assessed the Department of Health’s oversight of Medicaid managed care drug payments, capitation rate adjustments, and related data systems (MDW and eMedNY). Analyzed encounter claims for prescription drugs, OTC drugs, compound drugs, and physician-administered drugs from manufacturers without an active NDRA. Excluded some post-March 2023 data until the rate adjustment process was completed.
Key Findings Summary
The Department lacked adequate oversight of Medicaid managed care payments for drugs, which led to improper MCO payments for drugs from manufacturers without an NDRA at the time of service.
Flaws in the Department’s managed care capitation rate adjustment methodology intended to offset improper managed care payments for drugs from manufacturers without an NDRA, resulting in a significant number of encounter claims not being included in the rate adjustments.
Identified nearly $50.3 million in improper MCO payments for drugs from manufacturers without NDRAs at the time of service that were not included in the rate adjustments, including 2.5 million encounter claims totaling over $41.7 million for prescription, OTC, and compound drugs and 84,554 encounter claims totaling nearly $8.6 million for physician-administe…
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AI-Assisted
AI Scope Summary
The audit’s objective was to determine whether Medicaid paid for drugs from manufacturers that had not entered into a National Drug Rebate Agreement (NDRA), during January 2017 through March 2023, and to assess the effectiveness of the Department of Health’s oversight and capitation rate adjustments. The findings show significant deficiencies in oversight and methodology, resulting in about $50.3 million in improper MCO payments not captured in rate adjustments, and recommend actions to maximize recoveries, extend rate adjustments to physician-administered drugs, and ensure all NDRA-less claims are incorporated, with a focus on timely recoupment and process enhancements for future audits.
AI-Generated Insight
This report highlights gaps in governance around Medicaid drug payments under managed care and illustrates the critical role of robust data reconciliation between the Medicaid Data Warehouse and rate-adjustment processes to prevent improper payments.
Audit Objectives
To determine whether Medicaid inappropriately paid for drugs from manufacturers that did not enter into a national drug rebate agreement (NDRA), for the period January 2017 through March 2023.
Audit Findings (4)
The Department lacked adequate oversight of Medicaid managed care payments for drugs, which led to improper MCO payments for drugs from manufacturers without an NDRA at the time of service.
Flaws in the Department’s managed care capitation rate adjustment methodology intended to offset improper managed care payments for drugs from manufacturers without an NDRA, resulting in a significant number of encounter claims not being included in the rate adjustments.
Identified nearly $50.3 million in improper MCO payments for drugs from manufacturers without NDRAs at the time of service that were not included in the rate adjustments, including 2.5 million encounter claims totaling over $41.7 million for prescription, OTC, and compound drugs and 84,554 encounter claims totaling nearly $8.6 million for physician-administered drugs.
Rate adjustments did not include physician-administered drugs and OTC drugs were included only for the first two years; MDW data limitations prevented identification of all NDCs and many NDCs without an active NDRA were not on the MDW table.
Recommendations (4)
Review the $50.3 million in managed care encounter claims for drugs from manufacturers without an NDRA, and determine the appropriate course of action to maximize recoveries.
Review the capitation rate adjustment process to ensure all applicable encounter claims for prescription drugs, OTC drugs, and compound drug ingredients from manufacturers without an NDRA are incorporated.
Include physician-administered drug encounter claims for drugs from manufacturers without an NDRA in the capitation rate adjustments.
Continue adjusting capitation rates for encounter claims for drugs from manufacturers without NDRAs for all service dates prior to the effective date of the requirement for Medicaid recipients to receive prescription drugs through FFS (April 1, 2023).