Objective

To assess the extent of implementation of the five recommendations included in our initial audit report, Improper Medicaid Payments for Terminated Drugs (Report 2019-S-45).

About the Program

The State’s Medicaid program is administered by the Department of Health (Department) and is overseen at the federal level by the Centers for Medicare & Medicaid Services (CMS). The Medicaid program covers medically necessary prescription and non-prescription drugs. Drugs may be removed from the market (i.e., terminated) for safety or commercial reasons. To ensure terminated drugs will not be dispensed or paid for, CMS requires state Medicaid programs to reject these claims on the basis of the drug’s termination date (defined as either the expiration date of the final batch produced or the date the drug was recalled for health and safety reasons). Pursuant to CMS guidelines, the Department maintains drug termination dates in eMedNY, its claims processing and payment system.

We issued our initial audit report on September 17, 2020. The audit objective was to determine whether the Medicaid program made improper payments for drugs dispensed after their drug termination date. The audit covered the period July 1, 2014 through June 30, 2019. The audit concluded the State’s Medicaid program improperly paid $29 million for drugs dispensed after their termination date.

Key Finding

Department officials made minor progress in addressing the problems identified in the initial audit report, and significant action is still required to prevent future Medicaid overpayments. Specifically, the Department does not monitor pharmacy claims to identify payments made for terminated drugs, and the Office of the Medicaid Inspector General has not attempted to recover any of the improper payments we identified. Since the initial audit, Medicaid improperly paid another $11 million for drugs dispensed after their termination date, some of which were recalled for safety reasons. Of the initial report’s five audit recommendations, two were implemented and three were not 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.