Corporate Compliance

OIG: Colorado should repay $1.9 million

Compliance Monitor, December 7, 2005

The OIG has recommended that Colorado refund the federal government $1.9 million in light of an OIG audit that determined the state lacks sufficient controls over its Medicaid drug rebate program.

The OIG found that Colorado had adopted measures to strengthen controls with regard to billing and tracking $0 unit rebate amounts, adjusting collections, and retaining records for at least three years. The OIG also found that Colorado

  • continued to allocate an estimated percentage of Medicaid drug rebates to the Old Age Pension Health and Medical Care Program (OAP) program

  • could not properly process OAP adjustments submitted by two manufacturers

  • had disputes pending for three years because it was not active enough in its efforts to resolve disputes and did not offer the state's hearing mechanism to manufacturers

  • did not verify, record, or report rebate interest

    To conduct the audit, the OIG

  • reviewed applicable rules and regulations

  • examined copies of Form CMS-64.9R and applicable line items of the CMS-64 reports for the period July 1, 2001, through December 31, 2004

  • interviewed state agency staff who performed functions related to the drug rebate program

  • compared the total Medicaid drug program rebates collected during each quarter to what Colorado reported on the quarterly CMS-64 report

  • examined the reconciliation of state invoice forms submitted by certain manufacturers that disputed their rebate payments because of allocations Colorado made to the OAP program

      Click here to read the audit report, "Review Follow-up Audit of the Medicaid Drug Rebate Program in Colorado," (A-07-05-04048) issued November 17, 2005.

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