Medicaid claims for Compound Drugs

The Office of  Inspector General of the United States Department of Health and Human Services issued the following statement regarding Medicaid claims for compound drugs:

Compound Drug Claims
We will review a State agency’s Medicaid claims for compound drugs to determine whether the drugs’ components complied with Federal requirements for reimbursement and collection of rebates. We will identify claimed drug components that are not eligible for Medicaid coverage and determine whether accountability and controls were established for collecting eligible drug component rebates. Compound drugs are custom blended by pharmacists from bulk ingredients based on doctors’ prescriptions. For payments to be available under Medicaid or Part B of Medicare, Federal law requires manufacturers to enter into and have in effect rebate agreements with the Secretary of Health & Human Services (HHS) (except that the Secretary may authorize a State to enter directly into agreements with a manufacturer) and meet certain other requirements. (Social Security Act, § 1927.) States may then claim Federal financial participation (FFP) and report drug utilization to the manufacturers for rebates. CMS requires States to use a drug tape that lists all drugs covered by rebate agreements to determine whether the drugs they purchase are eligible for Medicaid coverage. (CMS’s Medicaid Drug Rebate Program State Release No. 130.) CMS outlined States’ responsibility for preventing claims for terminated drugs in its Medicaid Drug Rebate Program State Release No. 19. (OAS; W-00-12-31317; various reviews; expected issue FY 2012; work in progress.

Report is found here.