Federal Reports

The Colorado Department of Health Care Policy and Financing (State agency) did not always comply with Federal Medicaid requirements for invoicing manufacturers for rebates for physician-administered drugs. The State agency did not invoice manufacturers for rebates associated with $13 million ($6.5 million Federal share) in physician-administered drugs. Of this amount, $10.5 million ($5.2 million Federal share) was for single-source drugs, and $2.6 million ($1.3 million Federal share) was for top-20 multiple-source drugs. Because the State agency's internal controls did not always ensure that it invoiced manufacturers to secure rebates, the State agency improperly claimed Federal reimbursement for these single-source drugs and top-20 multiple-source drugs.

Members of Congress and others have raised concerns about the high prices of certain drugs and the impact these high prices have on Medicare beneficiaries and the health care system. An important part of the Medicare Part D benefit is catastrophic coverage, which beneficiaries enter when their out-of-pocket costs exceed a certain threshold. In catastrophic coverage, most beneficiaries pay a 5-percent coinsurance for drugs, while the Federal Government pays the vast majority of the remaining costs. Understanding the effect that high drug prices have on spending in catastrophic coverage is crucial. In catastrophic coverage, beneficiaries' out-of-pocket costs are not capped, and the Federal Government's share of drug spending is the highest.