(The following was excerpted from an article in the Single Audit Information Service.) The New York Department of Health is calling for managed care organizations (MCOs) to correct and resubmit Medicaid drug claims that were previously unprocessed due to errors to enable the state to collect potential rebates of more than $119.3 million, according to a recent audit by the New York Office of the State Comptroller (OSC).

New York’s Medicaid program pays medical providers either directly through fee-for-service arrangements or through monthly premiums to MCOs. MCOs receive a monthly payment for each Medicaid recipient enrolled in their plans and are responsible for ensuring enrollees have access to medical services and pharmacy benefits.

The Medicaid drug rebate program was established in 1990 to enable states to recover a portion of the costs of Medicaid prescription drugs by requesting rebates from drug manufacturers. The Affordable Care Act of 2010 extended the prescription drug rebates to cover medications dispensed to Medicaid recipients in MCO plans, including those from a pharmacy and those administered by a physician in an office setting. The state Department of Health monitors drugs dispensed through MCOs based on the information contained in their service claims (referred to as “encounter claims”) that are submitted to the department’s Medicaid claims processing system (eMedNY). The information provided includes the Medicaid identification number of the provider who prescribed the drug, as well as the drug’s National Drug Code, which is a unique identifier for each medication.

eMedNY will reject MCO encounter claims that have incomplete information, such as a missing drug code, and the MCO is expected to correct any errors and resubmit the encounter claim for processing. The department uses information from eMedNY to identify drugs that are eligible for rebates based on the drug code, calculates the rebate and submits a rebate invoice to the drug manufacturers. From October 2011 to June 2014, the department had collected about $3.6 billion in rebates from MCO drug encounter claims.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site).