Purpose

To determine the extent of implementation of the six recommendations made in our audit report, Improper Payments for Controlled Substances That Exceed Allowed Dispensing Limits (Report 2013-S-59).

Background

The State’s Medicaid program provides a wide range of health care services, including prescription drugs, to individuals who are economically disadvantaged and/or have special health care needs. The New York State Controlled Substances Act (Act) was enacted to combat the illegal use of controlled substances. The Act limits the quantities of controlled substances that pharmacies can dispense when prescriptions are ordered by telephone or fax.

Our initial audit report, which was issued on February 6, 2015, determined that, for the period January 1, 2009 through December 31, 2013, Medicaid overpaid pharmacies $1,183,601 for 13,705 fee-for-service claims in which quantities of controlled substances exceeded the supply limits allowed by the Act. We further identified 3,323 managed care claims for controlled substances in which the quantities dispensed exceeded the limits set by the Act. In addition, we determined the Department’s claims processing system did not contain controls to deny claims from pharmacies for controlled substances that exceeded supply limits allowed by the Act. We recommended that the Department review the improper pharmacy claims we identified and make recoveries. We also recommended that the Department and managed care organizations implement certain controls to prevent further improper payments.

Key Finding

Department officials made progress in addressing the problems we identified in the initial audit report. This included implementing controls to prevent the payment of pharmacy claims for quantities of controlled substances that exceeded supply limits allowed by the Act. These actions resulted in the denial of approximately $3.3 million in claims through July 2016. Pharmacies were also formally reminded of the supply limits on controlled substances. However, further actions were still needed. In particular, only $49,600 of the $1,183,601 in improper payments identified in the initial audit had been recovered. Of the initial report’s six audit recommendations, five were implemented and one was partially implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

Department of Health: Medicaid Program - Improper Payments for Controlled Substances That Exceed Allowed Dispensing Limits (2013-S-59)