Find Out More!Information About The Medicaid Drug Rebate Program
Medicaid is a government program that pays health-related bills, including prescription drugs, for people with low income. Each state runs its own Medicaid program and each is subsidized by the federal government.
Drug manufacturers agree to give Medicaid a discount on their drugs because they purchase in huge quantities. This is done through an after-payment rebate process, called The Medicaid Drug Rebate Program.
Here’s an example of how it works. Patient Joe Smith, who lives in Connecticut, takes medication for his high blood pressure. Joe has a very limited income, so he qualifies for Medicaid, which means he gets the prescription filled for free. He goes to his local pharmacy every month and fills his prescription for 30 tablets. The pharmacy has purchased Joe’s drugs—and many others—directly from drug manufacturers. To make the math easy, let’s say each tablet costs the pharmacy $1.
The pharmacy wants reimbursement from Medicaid for Joe’s pills, so it submits a claim to the Connecticut Medicaid program for:
$ 1 x 30 tablets = $30
$ 5 “dispensing” fee for their service to Joe
$35 the total submitted amount
Connecticut Medicaid then analyzes the claim from the pharmacy to determine how much they are “allowed” to reimburse. Each state has its own allowed amount calculation. Let’s say Connecticut is allowed to reimburse $0.80 for each tablet and the $5 dispensing fee, for a total of $29 for Joe’s prescription. It’s very common for pharmacies to be reimbursed less than the total of their claim.
Each drug is uniquely identified using the standardized National Drug Code, or NDC. Among the 350 drug manufacturers in this country, there are about 100,000 active NDCs.
At the end of each quarter, all state Medicaid programs tally up their drug utilization for each NDC, apply a per unit rebate amount (URA) reported by the federal government (the Centers for Medicare & Medicaid Services, or CMS), and invoices the drug manufacturers for resulting rebates.
Between Medicaid and other state health programs, drug manufacturers can receive over 100 rebate invoices each quarter, some listing thousands of NDCs. Many of the invoices contain errors, most often do to confusion over the drug’s unit of measure or requests for rebate on previously discounted purchases.
But because it’s expensive to challenge the accuracy of invoices and some drugs are more prone to error, manufacturers’ validation methods vary. Some companies do very basic invoice testing and dispute only the most obvious errors. Others employ a staff of people to test, dispute and resolve errors. Many purchase prescription claims level data from a third party—the detail behind the invoice—and test each claim for errors. All of these methods cost a company a great deal in time, money, and associated employee expenses.
The Post Payment Recovery Audit provided by The Rodenhizer Group is an elegant solution. TRG will:
- Audit the manufacturer’s past rebate invoice payments
- Identify potential overpayments
- Obtain suspect prescription data directly from the State agency
- Verify the errors and recover the money
The beauty of this arrangement is that TRG performs this service for a contingency fee. That means the drug manufacturer doesn’t have to budget for his services or pay expensive employee benefits, and there is no need to change their current system.
TRG performs the audits in cooperation with their manufacturing clients, then negotiates directly with state drug rebate programs on their behalf about potential over-billings. TRG assures accurate resolutions of over-payments, duplicate payments, and erroneous invoices.
Read about another major rebate issue: The Public Health Service (PHS) double-dip.
The Rodenhizer Group, LLC.
Call (615) 812-3166 or
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