Objective

To determine the extent of implementation of the six recommendations made in our initial audit report, Improper Payments for Sexual and Erectile Dysfunction Drugs, Procedures, and Supplies Provided to Medicaid Recipients, Including Sex Offenders (Report 2018-S-16).

About the Program

The Department of Health (Department) administers the State’s Medicaid program. Federal and State laws prohibit Medicaid payment of drugs for the treatment of sexual or erectile dysfunction (herein collectively referred to as ED) for all Medicaid recipients, including registered sex offenders. Also, Medicaid must not pay for ED drugs, unless that drug has another FDA-approved use and the recipient’s treatment is for that other use. In addition to drugs, State law prohibits Medicaid payment for procedures and supplies to treat ED for registered sex offenders.

We issued our initial audit report on June 3, 2019. The audit objective was to determine whether Medicaid recipients, including sex offenders, inappropriately received Medicaid-funded ED drugs, procedures, and supplies, and whether controls were in place to prevent abuse and misuse of these products. The audit covered the period from April 1, 2012 to July 1, 2018. The audit identified $933,594 in improper payments for drugs, procedures, and supplies to treat ED. Of that amount, Medicaid paid $63,301 for 47 sex offenders. Medicaid also made payments of $13.5 million for ED drugs that are approved to also treat other medical conditions, primarily benign prostatic hyperplasia (BPH) and pulmonary arterial hypertension (PAH). We found about $11.6 million of the $13.5 million in payments were made without verifying recipient sex offender status through the Department’s system, as required – consequently, auditors found Medicaid paid $285,641 on behalf of 14 sex offenders. Additionally, the audit found between $2.8 million and $5.2 million in questionable payments for ED drugs that treat BPH and PAH that were made without the recipient having a diagnosis of BPH or PAH on their Medicaid claims within the two prior months ($5.2 million) or within the six prior months ($2.8 million) of the drug prescription.

Overall, we determined inadequate Department guidance and oversight, and incomplete control systems allowed payments for recipients, including sex offenders, to obtain drugs and services to treat ED. We recommended the Department review the payments we identified and make recoveries, as appropriate, and improve guidance, oversight, and control systems.

Key Finding

Department officials made some progress in addressing the problems identified in the initial audit report; however, more improvements are needed to prevent payments for excluded ED drugs, procedures, and supplies for Medicaid recipients, including sex offenders. Further, the Department had not recovered a significant amount of the identified improper payments for ED drugs, procedures, or supplies. Of the initial report’s six audit recommendations, one was implemented and five 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 the follow-up report.