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Medicare Compliance & Reimbursement

Pharmaceuticals:

Watch For Tighter Medicaid Rebate Enforcement

Published on Wed Feb 18, 2004

AWP could shrink to AMOP after government pricing investigation.

Drugmakers, you saw this one coming. Medicaid drug pricing is taking a seat at the top of the congressional "to-do" list.

The Committee on Energy and Commerce is launching an "extensive investigation" into pharmaceutical reimbursement under Medicaid, and that means drug companies can expect to see states become more aggressive about collecting Medicaid rebates.

In a letter to the General Accounting Office Feb. 4, Subcommittee on Oversight & Investigations Chairman James Greenwood (R-PA) says he wants the watchdog agency to set its sights on controlling Medicaid drug costs which have raced past all other spending growth in the program in recent years.

Lean times mean Medicaid's over-sized budget is a sore spot - among states, the program's spending is second only to elementary and secondary education, and ranks third largest in the federal budget, topping out at $258 billion in 2002.

Out-of-control payments for prescription drugs are to blame, says Greenwood.  He's calling on the GAO for help in sizing up states' Medicare drug reimbursement approaches across the spectrum, from the most generous to the most stringent.

Some questions the GAO may soon be asking include:

  • How much would Medicaid save if reimbursements were calculated on a "market-oriented" price - such as manufacturers price - rather than the average wholesale price and wholesale acquisition cost?

  • Do current laws regarding AMP data and reporting need to be changed to allow Medicare a more thorough review?

  • Are states getting all the reimbursement they are entitled to under the Medicaid drug rebate program (particularly for physician administered drugs)?

  • Do current drug reimbursement methodologies encourage providers to give certain drugs preferential treatment over cheaper equivalents?

    The Committee's present investigation into Medicaid builds upon earlier work on drug pricing practices in the Medicare program.

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