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Medicare Compliance & Reimbursement

Pharmaceuticals:

How The Game May Change For Drug Rebates

Published on Thu Apr 01, 2004

What the hunt for lost state revenue means for drugmakers.

Drug manufacturers need to gear up for tougher rebate collection.
 
Ten more states received their grades on Medicaid drug rebate collection from the HHS Office of Inspector General Feb. 26, with all but three agreeing to implement accounting changes.

According to the audits, which are the latest in the OIG's campaign to clean up states' rebate collection process, Kansas, Iowa, Nebraska, Utah, Wyoming and Montana were each found lacking in the controls necessary to ensure money due to Medicaid programs gets actively collected from drug manufacturers.

However, Missouri, North Dakota, Colorado and South Dakota fared slightly better on overall accountability and collection procedures -- but were still advised to shape up weaknesses.

What's in store for drug manufacturers? State agencies are under pressure to watch their repayments vigilantly.  When it comes to doing business with drug manufacturers, here's what's on the OIG's checklist for states:

  • develop and utilize a general ledger control account for drug rebate receivables,
  • square up the balance in the general ledger with the detail totals reflected in the amount reported to the Centers for Medicare & Medicaid Services on form 64.9R,
  • accrue and collect on all interest owed from manufacturers,
  • offer manufacturers the state hearing mechanism to resolve disputes,
  • improve record-keeping,
  • report rebate collections to CMS in the proper time period,
  • include drug utilization data each quarter in invoices submitted to manufacturers,
  • track unit rebate amounts until payment is received,
  • keep state-funded-only separate from federal drug rebate programs, and
  • adhere to thresholds and requirements for any write-offs and adjustments.

    Wyoming, Iowa and Nebraska did not concur fully with the OIG's findings.

    To read the reports, "Six-State Rollup Review of Medicaid Drug Rebate Collections" (A-07-04-04030) and "Region VII Rollup Report for 4-State Review of
    Medicaid Drug Rebate Collections" (A-07-03-04010), go to: http://oig.hhs.gov/oas/oas/cms.html.

    Lesson Learned: Drug companies can expect state agencies to take a more active role in pursuing and collecting Medicaid drug rebates.

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