Objective

To assess the extent of implementation of the two recommendations included in our initial audit report, Accuracy of Drug Rebate Revenue Remitted to the Department of Civil Service (Report 2019-S-51).

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), provides health insurance coverage to over 1.2 million active and retired State, local government, and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, serving 1.1 million members. Civil Service contracted with CVS Health to administer the Empire Plan’s prescription drug program for the period from January 1, 2014 through December 31, 2018. In accordance with the contract, CVS Health was required to negotiate agreements with drug manufacturers for rebates and remit the rebate revenue to Civil Service.

Our initial audit report, issued on August 21, 2020, sought to determine if CVS Health remitted commercial drug rebate revenue related to Empire Plan drug utilization in accordance with its contract with Civil Service. Our audit covered the period from January 1, 2014 through December 31, 2018. We found CVS Health did not collect and remit all rebate revenue that it invoiced to drug manufacturers for rebate-eligible prescription drug claims paid on behalf of the Empire Plan; therefore, Civil Service did not receive all rebate revenue to which it was entitled. As a result, Civil Service was due $453,029 in rebate revenue for the period of January 1, 2014 through December 31, 2018. We also found that CVS Health needed to take corrective steps to ensure all of the Empire Plan’s rebate-eligible drug utilization is invoiced, collected from the manufacturers, and remitted in a timely manner to the Civil Service.

Key Finding

CVS Health officials made progress in addressing the problems we identified in the initial audit. Of the initial report’s two audit recommendations, both 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.