NC Medicaid Drug Rebate Program Rated one of the Best in Nation

An audit of the 50 state Medicaid programs showed that North Carolina is one of only four states with no problems in billing and collection of drug rebates. The Medicaid drug rebate program requires pharmaceutical companies to pay rebates to states in order to have their drugs covered by Medicaid.

“This is an important program,” said Medicaid Director Dr. Allen Dobson. “In the last twelve months, North Carolina Medicaid received $370 million in rebates from drug makers. It is essential that we make sure that North Carolina is receiving all of the money that we are due under this program. Prescription drug costs are the largest item in most state Medicaid budgets. In North Carolina, we spent $1.6 billion on prescription drugs in the last fiscal year.”

Dobson said that DMA employees are to be applauded for their fine work in making the drug rebate program a national model. “The employees responsible for this program are to be applauded for running it so flawlessly,” he said.

The audit was conducted by the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services. The OIG concluded that North Carolina was one of four states that had “no weaknesses in accountability and internal controls over their drug rebate program.”

Under the Medicaid drug rebate program, drug makers provide price data to the Centers for Medicare and Medicaid Management Services (CMS), which administers the Medicaid program. CMS uses the information from the drug makers to compute the rebate and supplies states with that information. The state then bills the drug companies for the rebates.

North Carolina was the largest state Medicaid program to get a clean audit. Illinois, Maryland and Minnesota programs were also found to have no problems in accountability and internal controls.

Major problems in the other 46 state Medicaid programs included submitting inaccurate information to CMS, improperly accounting for interest on late rebate payments and having inadequate rebate billing/collection processes.

Medicaid is a health insurance program for certain low-income and needy people paid with federal, state, and county dollars. It covers more than 1.5 million people in our state, including children, the aged, blind, and/or disabled, and people who are eligible to receive federally assisted income maintenance payments.

The complete audit is available online at http://www.oig.hhs.gov/oas/reports/region6/60300048.pdf

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Last Modified: June 29, 2005 July 29, 2005