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Feds say Md. owes millions for not billing drug companies for rebates

WASHINGTON — Maryland may have to refund the federal government up to $5.8 million it received as reimbursement for prescription medication through Medicaid and Medicare, after it failed to properly bill pharmaceutical companies for rebates.

A recent audit of Maryland’s Department of Health and Mental Hygiene by the U.S. Department of Health and Human Services’ Office of Inspector General revealed the state was not eligible to receive some of the federal reimbursement it claimed for medication administered by doctors.

As a result, Maryland is obligated to refund more than $3.5 million to the federal government. State officials and representatives from the Centers for Medicare and Medicaid Services will also need to review an additional $2.3 million that Maryland received to determine whether the state is eligible to keep the money.

Auditors could not determine if the prescription drugs on the claims totaling $2.3 million were eligible for rebates from pharmaceutical companies due to insufficient data collected by Maryland’s Medicaid Management Information System.

“We agreed that during the period of the audit we didn’t have the right rebate process in place,” said Chuck Milligan, deputy secretary for health care financing. “We will be able to repay without any new funds being required this fiscal year.”

States can bill pharmaceutical companies for rebates on some drugs by collecting and submitting national drug codes for medication prescribed to Medicaid or Medicare patients. The codes are set by the federal government and are used to identify the drugs.

Federal reimbursement may only be claimed after billing rebates to pharmaceutical companies.

Medicaid is a health program for low-income families and individuals, and Medicare provides health insurance to people who are 65 or older.

“There is a lot of federal money here and a lot of it should go back to the federal government, and to the taxpayers of other states,” said Donald White, a spokesman for the Office of Inspector General.

According to the OIG report, “because the State agency did not submit to its contractors drug utilization data, including national drug codes, and did not bill for rebates on these physician-administered drugs, the claims are not eligible for federal reimbursement.”

Milligan said Maryland’s Medicaid Management Information System did not collect the national drug codes correctly because it was being updated to work with other programs, such as the Affordable Care Act.

Milligan said the work on the payment system was completed prior to the start of this fiscal year, and the Department of Health and Mental Hygiene will refund the federal government the $3.5 million it owes by the end of the month.

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