Audit says Missouri owes $34M for Medicaid noncompliance

JEFFERSON CITY, Mo. -- An audit released Tuesday shows Missouri owes $34 million to the federal government for not complying with Medicaid regulations, a claim disputed by state officials.

The U.S. Department of Health and Human Services audit found Missouri for at least three years failed to bill drug manufacturers for rebates owed to doctors at state hospitals, according to a report by the St. Louis Post-Dispatch.

States are supposed to collect rebates for medication provided at a hospital by submitting data on the drugs to manufacturers after it's collected by physicians.

But the audit alleges Missouri failed to do that between 2009 and 2011, which meant more money for drug companies and less for the state's Medicaid patients.

Part of the issue was that hospitals faced "significant administrative and financial barriers" to submitting data, namely drug and manufacturer identification numbers known as National Drug Codes, Department of Social Services director Brian Kinkade said in a response to a draft of the audit in November.

That department oversees Medicaid in Missouri.

In the letter, Kinkade said the state denied more than 77,000 claims for physician-administered drugs because hospitals did not submit drug code information. He said that led to access problems for Medicaid recipients.

"At the time, there was no bigger problem facing Missouri's Medicaid program," Kinkade said.

Missouri received a waiver for the reporting requirement in 2008 because of those challenges. It wasn't renewed and expired more than six years ago, "but the Department of Social Services has not taken the steps necessary to ensure that providers submit NDCs with physician-administered drug claims," according to the audit.

The Missouri Hospital Association said it assumed the waiver had not expired, and said there was no formal state requirement to submit the drug codes in claim information.

A social services spokeswoman Monday said the department disagrees with the audit. If Missouri owes the federal government anything, spokeswoman Rebecca Woelfel said in an email, that amount is closer to $7 million -- the amount the state says it should have received in rebates from the drug manufacturers.

She said the state "will not make any repayments based on the Office of Inspector General's analysis."

Kinkade said paying the federal government the full $34 million would be an "enormous hardship" for the state.

The federal government has audited numerous states for compliance with the Medicaid rules in the last few years.

Maryland, Oregon, Idaho and Nebraska have each been asked to refund roughly $3 million for improper drug reimbursements. The audit recommends Missouri pay the largest refund of any state so far, although the state has 30 days to officially respond to the audit.

Information from: St. Louis Post-Dispatch, http://www.stltoday.com