Objective

To determine the extent of implementation of the six recommendations included in our initial audit report, Improper Medicaid Payments for Childhood Vaccines (Report 2017-S-41).

About the Program

The Vaccines for Children Program (VFC Program) is a federally funded Medicaid benefit that provides free vaccines to eligible children younger than 19 years of age whose parents or guardians may not be able to afford them. The VFC Program helps ensure children receive their recommended vaccines and are protected from a number of diseases. The Centers for Disease Control and Prevention (CDC) is responsible for implementation of the VFC Program. The CDC purchases vaccines from drug manufacturers at a discount and distributes the vaccines to state health departments and certain local and territorial public health agencies at no cost. These agencies then distribute the vaccines at no cost to physicians and public health clinics enrolled in the VFC Program. Because the federal government purchases the vaccines, providers are not reimbursed for the cost of the vaccines. Instead, they are paid a fee for administering the vaccines. For children enrolled in Medicaid, the Medicaid program pays the vaccine administration fee.

We issued our initial audit report on December 6, 2018. The audit objective was to determine whether Medicaid made improper payments for free vaccines available through the VFC Program. The audit covered the period January 1, 2012 to May 31, 2017. We identified $32.7 million in improper Medicaid payments, which included payments for free vaccines and inaccurate payments for the administration fee. Of this amount, managed care organizations (MCOs) made improper payments totaling $29.8 million, and the Department made improper fee-for-service payments totaling $2.9 million. The improper payments occurred because providers did not bill claims according to Medicaid policies and because of control weaknesses in the MCOs’ and the Department’s claims processing systems.

Key Finding

Department officials have made some progress in addressing the problems identified in the initial audit report, yet significant action is still required to prevent future Medicaid overpayments. All six of the report’s audit recommendations were 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.