Michigan Did Not Bill Manufacturers for Some Rebates for Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations

For a covered outpatient drug to be eligible for Federal reimbursement under the Medicaid program’s drug rebate requirements, manufacturers must pay rebates to the States. States bill the manufacturers for rebates to reduce the cost of drugs to the program. However, previous Office of Inspector General (OIG) audits found that States did not always bill and collect all rebates due for drugs administered by physicians to enrollees of Medicaid managed-care organizations (MCOs). For this audit, we reviewed the Michigan Department of Health and Human Services’ (State agency’s) billing of rebates for both pharmacy and physician-administered drugs dispensed to MCO enrollees. Our objective was to determine whether the State agency complied with Federal Medicaid requirements for billing manufacturers for rebates for drugs dispensed to MCO enrollees.