Federal government owed nearly $15M by state

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(The Center Square) — Nearly $15 million is owed by Alabama to the federal government because it did not invoice rebates from manufacturers on prescription drugs covered by Medicaid, a report says.

Under Medicaid’s outpatient drug rebate requirements that began in 1991, pharmaceutical manufacturers must pay any rebates for those drugs to the states. Each state is required to invoice the manufacturers for the rebates to be eligible for federal reimbursement of drug costs.

The Centers for Medicare & Medicaid Services receives a list of covered drugs and prices from the manufacturers and calculates a unit rebate amount for each drug and provides these amounts to the states each quarter.

The report by the U.S. Health and Human Services Administration’s Office of Inspector General found that the Alabama Medicaid Agency didn’t invoice manufacturers for rebates for $21 million ($14.9 million federal share) in outpatient drugs.

Auditors scrutinized $3.43 billion ($2.44 billion federal share) in Medicaid-reimbursed drug costs from Jan. 1, 2016, through Dec. 31, 2019.

Health and Human Services recommended the state refund $14.9 million, work with Medicaid to determine how much it needed to refund the federal government for drugs not invoiced for rebates after Dec. 31, 2019, and tighten its internal controls to ensure all drugs eligible for federal reimbursement have their rebates invoiced with the manufacturers.

In a response, the state says it will collect the rebates on its next invoice cycle and will pay the federal share on any rebate it receives. State officials also told the Office of Inspector General that manufacturers would need time to pay the rebate owed and it will comply with the request to tighten internal controls to ensure that rebates are invoiced.

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