DEPARTMENT OF HEALTH AND HUMAN SERVICES 
OFFICE OF INSPECTOR GENERAL 
WASHINGTON, DC  202 01 
SEP  \ .6 2015 

TO:  Andrew M. Slavitt 
Acting Administrator 

Centers for Medicare & Medicaid Services 

FROM:  Suzanne M.w.:rin 
Deputy Inspec~ G-enet:al 
for Ev..,a.J...tmtion ancl' Inspections 
SUBJECT: 	 Recommendation Followup Memorandum Report:  States' Collection of 
Rebates for Drugs Paid Through Medicaid Managed Care Organizations 
Has Improved, OEI-05-14-00431 
This memorandum report provides information about States' collection of rebates for 
drugs paid through Medicaid managed care organizations (MCOs).  A 2012 Office of 
Inspector General (OIG) report found that 10 States were not collecting rebates for drugs 
paid through MCOs (hereinafter referred to as MCO rebates), despite new requirements 
in the Affordable Care Act (ACA) to do so.  If States do not collect all eligible MCO 
rebates, then States and the Federal Government both fail to realize all of the savings they 
are owed under the Medicaid Drug Rebate Program.  This memorandum report provides 
an update on the status of States' collection ofMCO rebates. 
SUMMARY 
OIG found that nearly all (35 of37) States that pay for drugs through MCOs collected 
rebates for these drugs between July 1, 2013, and June 30,2014, as required by ACA. 1 
These 35 States collected $7.5 billion in MCO rebates during that time. 
This represents a significant improvement compared to OIG's previous finding that only 
12 of 22 States paying for drugs through MCOs were collecting rebates for those drugs in 
2011.2  Although the 10 States that were not collecting rebates in 2011 are now doing so , 
we found additional States that are not collecting the rebates.  Moreover, we found that 
nine States collected some eligible MCO rebates, but not all of them.  States that are not 
collecting all eligible MCO rebates fail to realize all of the savings they are owed under 
1 ACA , P.L. No . 111-148  250l(c); 42 U.S .C.  1396b(m)(2) and 42 U.S .C.  1396r-8(b)(l). 
2 OIG, States ' Collection ofRebates for Drugs Paid Through Medicaid Managed Care Organizations, 
OEI-03-11-00480, September 2012.  Page 2  Andrew M. Slavitt 
 
the Medicaid Drug Rebate Program.  This also affects the Federal Government because it 
does not receive its share of these eligible, but uncollected, MCO rebates.   
 
One specific challenge that States reported as hampering their ability to collect all 
eligible MCO rebates was difficulty in collecting rebates for drugs administered by 
physicians (hereinafter referred to as physician-administered drugs).  A drugs National 
Drug Code (NDC) is a necessary component for invoicing a drug rebate, and States 
reported that they could not reliably obtain the NDCs from claims for 
physician-administered drugs.3  
 
BACKGROUND 
 
Medicaid Prescription Drug Coverage  
All 50 States and the District of Columbia (hereinafter referred to as States) offer 
outpatient prescription drug coverage as part of their Medicaid benefit packages.  
In 2013, Medicaid reimbursement for covered outpatient drugs totaled approximately 
$35 billion.4, 5   Covered outpatient drugs include drugs dispensed directly to patients at 
pharmacies (hereinafter referred to as pharmacy drugs) and physician-administered drugs.   
 
States use two primary payment models to pay for drugs:  fee-for-service (hereinafter 
referred to as Medicaid FFS) and MCOs.  Under the Medicaid FFS model, States pay 
pharmacies and providers directly for each service.  Under the MCO model, States 
prospectively pay MCOs a fixed monthly amount for each Medicaid beneficiary, 
regardless of whether a beneficiary gets services during the month.  States may choose to 
use one payment model or both.   
 
Medicaid Drug Rebate Program 
The Omnibus Budget Reconciliation Act of 1990 established the Medicaid Drug Rebate 
Program.6  The program requires that, for covered outpatient drugs (hereinafter referred 
to as drugs) to be eligible for Federal financial participation through Medicaid, 
manufacturers must pay rebates to States on these drugs when the drugs are dispensed to 
Medicaid beneficiaries and paid for by Medicaid.7 States essentially share a portion of  
these rebates with the Federal government.8    
 
In 2010, ACA expanded the Medicaid Drug Rebate Program to require payment of 
rebates for drugs paid through MCOs if a MCO is responsible for coverage of such 
                                                 
3 The NDC is a  unique three-segment number that the Food and Drug  Administration assigns to a drug 
 
product.  NDCs serve as universal product identifiers for drugs.  

4 The term covered outpatient drug is defined at 42 U.S.C.   1396r-8(k)(2). 

5 OIG analysis  of data  from the Centers for  Medicare & Medicaid Services (CMS) Medicaid Budget and 

Expenditure System (MBES) and analysis of Medicaid State utilization data, June  2015.  We combined 

Medicaid FFS expenditures (from MBES) and MCO expenditures (from Medicaid State utilization  data).  

This estimate does not reflect Medicaid rebates. 

6  The Omnibus Budget Reconciliation  Act of 1990, P.L. No. 101-508,  4401; 42 U.S.C.  1396r-8. 

7  42 U.S.C.  1396r-8(a)(1)  and 1396r-8(b)(1). 

8  42 U.S.C.  1396r-8(b)(1).  

States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 3  Andrew M. Slavitt 
 
drugs.9  Prior to the ACA, only drugs paid through Medicaid FFS were subject to rebates 
under the Medicaid Drug Rebate Program.   
 
MCO Rebates 
To collect MCO rebates, States determine the amount of MCO rebates owed for each 
quarter and send invoices to manufacturers.  This process begins when MCOs send States 
data containing the number of units of each drug (by NDC) dispensed to their 
beneficiaries in the quarter.10  Using these data, States determine the total number of units 
reimbursed by MCOs for each NDC.11  States then multiply the total number of units by 
the NDCs unit rebate amount (URA) to determine the total quarterly amount of MCO 
rebates owed for each NDC. Finally, States send invoices to manufacturers reflecting the 
total quarterly amount of MCO rebates owed for the manufacturers respective NDCs. 
 
To calculate and invoice MCO rebates, States need to know which specific NDCs were 
dispensed or administered to MCO beneficiaries.  This information is readily available in 
MCO data on pharmacy drugs because providers use NDCs to bill for pharmacy drugs.  
To bill for physician-administered drugs, however, providers use Healthcare Common 
Procedure Coding System (HCPCS) codes.  Because a single HCPCS code may be 
associated with more than one NDC for a given physician-administered drug, States 
cannot always determine from the MCO data which specific drugs were actually 
administered unless providers have also included NDCs on claims when billing.  
Accordingly, the Deficit Reduction Act of 2005 essentially required that States require 
providers to submit NDCs on physician-administered drug claims to secure rebates.12  
 
Related Office of Inspector General Work 
In September 2012, OIG published a review of States collection of rebates for drugs paid 
through MCOs.13  OIG found that, of 22 States paying for drugs through MCOs, 10 had 
not invoiced manufacturers for MCO rebates in 2011.  OIG recommended that CMS 
follow up with these 10 States and take action to enforce rebate collection if necessary.  
CMS concurred with this recommendation and noted steps it had taken to address the 
issue. 
 
In August 2014, OIG published a review of the Medicaid Drug Rebate dispute resolution 
process.14  OIG found that although drug rebate disputes only involve a small percentage 
of rebate dollars, certain types of disputes occur frequently within this small percentage.   
States reported that poor-quality claims data lead to disputes regarding 
physician-administered drugs.  To address this finding, OIG recommended that CMS 
work with States to improve the quality of claims data submitted by providers and 
pharmacies.  
                                                 
9 ACA, P.L. No. 111-148  2501(c); 42  U.S.C.  1396b(m)(2) and 42  U.S.C.  1396r-8(b)(1). 

10 CMS, State Medicaid Director Letter #10-006, April 22, 2010.   

11 Each drug has an NDC.  NDCs contain information that States need to calculate and invoice MCO 

rebates, including a drugs manufacturer and dosage form and strength. 
 
12  42 U.S.C.  1396r-8(a)(7); 42  CFR  447.520. 

13 OIG,  States  Collection of Rebates for Drugs Paid Through Medicaid Managed Care  Organizations, 
 
OEI-03-11-00480, September  2012. 

14 OIG,  Medicaid  Drug  Rebate  Dispute Resolution Could Be Improved, OEI-05-11-00580, August 2014. 

States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 4  Andrew M. Slavitt 
 
 
In March 2015, OIG published an audit reviewing Oregons compliance with the 
requirement to collect MCO rebatesspecifically, examining Oregons collection of  
MCO rebates for physician-administered drugs.15 The audit found that the State did not 
invoice manufacturers for rebates because during the period the audit reviewed, the 
States Medicaid Management Information System did not have an edit to ensure that 
NDCs were present and valid in the MCO drug utilization data for 
physician-administered drugs. 
 
METHODOLOGY 
 
Scope 
This report examines the status of States collection of MCO rebates between July 1, 
2013, and June 30, 2014. This report does not cover States collection of rebates for 
drugs paid through Medicaid FFS.  We did not attempt to quantify the amount of 
rebate-eligible drugs for which States were unable to invoice and collect.  This report also 
does not break down rebate amounts by pharmacy drugs and physician-administered 
drugs. 
 
Data Collection and Analysis  
To address our objective, we conducted electronic surveys and structured interviews with 
State Medicaid agencies in November and December 2014. 
 
State surveys. In November 2014, we surveyed 51 States.  We sent the surveys to State 
Medicaid pharmacy directors with instructions to delegate to other State staff and rebate 
vendors as appropriate. We asked whether States paid for either pharmacy drugs or 
physician-administered drugs through MCOs, and whether States had invoiced and 
collected rebates for those drugs between July 1, 2013 and June 30, 2014.  We also asked 
States to provide the amount of MCO rebates that were invoiced and collected for each of 
the four quarters between July 1, 2013 and June 30, 2014.  We received responses from  
all 51 States, a 100-percent response rate.   
 
Of the 51 States, 42 reported that they paid for all or some drugs through MCOs between 
July 1, 2013, and June 30, 2014, whereas 9 States reported that they did not pay for drugs 
through MCOs.  Table 1, on the next page, shows the breakdown of all 51 States. 
 
 
 
 
 
 
 
 
 
                                                 
15 OIG,  Oregon  Did Not Bill Manufacturers for Rebates for Physician-Administered  Drugs Dispensed to  
Enrollees of Medicaid Managed-Care Organizations,  A-09-13-02037, March  2015. 
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 5  Andrew M. Slavitt 
 
 
 
Table 1: States Paying for Prescription Drugs through Medicaid MCOs  
Use of MCOs for Prescription Drugs   Number of States 
Paid for drugs through MCOs (i.e., pharmacy   37 
drugs and/or physician-administered drugs)  
Paid for only a small volume of drugs through  4 
Paid for all or some drugs through 
MCOs  
MCOs 
Paid for drugs through an MCO that is not  1 
eligible for rebates  
Did not pay  for any drugs through MCOs   9 
Total   51 
Source:  OIG survey of States, 2014.     
 
We excluded 5 of the 42 States that paid for drugs through MCOs, leaving 37 States in 
our analysis.  Of the five States we excluded, four were excluded because they paid for 
only a small volume of drugs through MCOs (e.g., for a small number of beneficiaries 
enrolled in Program of All-Inclusive Care for the Elderly (PACE) plans).16 These States  
reported that they are not collecting MCO rebates because it is not cost-effective to do so 
for such a small volume of drugs; the States said that the administrative cost to calculate, 
track, and receive rebates would exceed the benefit of collecting MCO rebates. We  
excluded the remaining State because it paid for drugs through an MCO that was not 
eligible for rebates.  In this case, the MCO purchased drugs at discounted prices through 
the 340B Drug Pricing Program and such drugs are not subject to rebates under the 
Medicaid Drug Rebate Program.17  
 
For the nine States that reported that they did not pay for drugs through MCOs, we 
confirmed that this was the case by checking three CMS data sources for any evidence 
suggesting that the States had paid for drugs through MCOs.  These three sources were 
CMSs National Summary of State Medicaid Managed Care Programs for 2012, 
the CMS-64 expenditure data for each State, and the Medicaid drug utilization for each 
State.18  We checked the 2012 summary for any listed plans with outpatient drug 
coverage.19  We also checked CMS-64 expenditure data and Medicaid drug utilization 
databoth of which States submit to CMSfor any dollar amounts associated with 
                                                 
16 According to  CMSs PACE Fact Sheet, a PACE organization is a not-for-profit private or public entity 
that is engaged primarily in providing comprehensive medical and social services.  PACE services use an  
interdisciplinary team approach in an adult day health center.  Available online at 
https://www.cms.gov/Medicare/Health-Plans/pace/downloads/PACEFactSheet.pdf. 
17 Covered outpatient drugs are not  subject to  rebates under the Medicaid Drug Rebate  Program if they are 
dispensed by MCOs and subject  to discounts under the Health  Resource and  Services Administrations  
340B Drug  Pricing Program.   See 42  U.S.C.  1396r-8(j)(1).  
18 States use Form CMS-64 to report their expenditures for Medicaid and  the Childrens Health Insurance 
Program. 
19 This was the most current available version  of the report. 
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 6  Andrew M. Slavitt 
 
drugs paid through MCOs. If we found any such evidence, we contacted the State to 
resolve the discrepancy and confirm that it was not paying for drugs through MCOs.20  
 
State interviews.  In December 2014, we conducted structured interviews with staff from  
the 37 States that paid for drugs using MCOs and were not among the States we 
excluded. 
 
Limitations  
The findings are based on survey and interview responses provided by States.  We did not 
verify the accuracy of the rebate amounts reported by States.  The rebate amounts in this 
report were current as of December 2014, when we completed our data collection.  
 
Standards 
This report was  conducted in accordance with the Quality Standards for Inspection and 
Evaluation issued by the Council of the Inspectors General on Integrity and Efficiency. 
 
RESULTS 
  
Nearly all 37 States in this analysis collected MCO rebates, which represents an 
increase from the number of States collecting rebates in 2011 
Thirty-five of the thirty-seven States in this analysis collected MCO rebates, representing 
a higher proportion of States collecting rebates than in OIGs 2012 report.  That report 
found that only 12 of 22 States paying for drugs through MCOs collected MCO rebates in 
2011.21  All 10 of the States that were not collecting MCO rebates in 2011 reported that 
they are now doing so.22  OIG previously recommended that CMS follow up with those 
10 States to ensure that they collect MCO rebates as required.23 CMS concurred with this 
recommendation and noted steps it had taken to address the issue. 
 
However, 9 of the 35 States that collected MCO rebates reported to us that they were 
unable to do so for all rebate-eligible drugs paid through MCOs.  Although these States 
invoiced and collected some MCO rebates, they reported that they could not invoice all 
eligible MCO rebates.  Five of these nine States did not invoice or collect MCO rebates 
for any physician-administered drugs. 
 
Two of the thirty-seven States in this analysis did not invoice or collect any MCO 
rebates. One of the two States was not able to load drug claim data sent by MCOs into its 
claims processing system because its system required updates to accommodate the 
MCO data. The other State received inaccurate and incomplete information from its 
                                                 
20 In some cases, we found plans with outpatient drug coverage listed in CMSs National Summary report 

for States that reported that they did  not pay for  drugs through MCOs.  When  we contacted them, however, 
 
these States reported that the  listed plans either did not cover outpatient drugs or  had been  discontinued.
  
21 OIG,  States  Collection of Rebates for Drugs Paid Through Medicaid Managed Care  Organizations, 
 
OEI-03-11-00480, September  2012. 

22 See Appendix  C in  OEI-03-11-00480.  These 10 States are California, the District of Columbia, Florida, 
 
Hawaii, Kansas, Mississippi, New Mexico, Virginia, Washington, and West Virginia. 

23 OIG,  States  Collection of Rebates for Drugs Paid Through Medicaid Managed Care  Organizations, 
 
OEI-03-11-00480, September  2012. 

States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 7  Andrew M. Slavitt 
 
MCO. Both States were in the process of resolving these issues and planned to invoice 
for MCO rebates as soon as possible. 
 
See Appendix A for details about which States collected MCO rebates for pharmacy 
drugs and physician-administered drugs. 
 
States collected approximately $7.51 billion of $8.77 billion invoiced in MCO rebates  
The thirty-five States that reported collecting MCO rebates collected approximately 
$7.51 billion of the $8.77 billion they invoiced.  Figure 1 shows the total amount of 
MCO rebates invoiced and collected between July 1, 2013, and June 30, 2014, by quarter.  
The amounts reported represent MCO rebates for pharmacy drugs and 
physician-administered drugs reported by States.    
 
Figure 1: MCO Rebates Invoiced and Collected between July  1, 2013, and June 30, 2014  
(in billions) 
 
 $3.0 
64% 
collected* 
 $2.5 94% 
94%  collected 
97% 
collected 
collected 
s   $2.0
r
a
oll
d
of   $1.5
s 
n
o
Billi  $1.0
 $0.5
 $-
Q3, 2013  Q4, 2013  Q1, 2014  Q2, 2014 
Invoiced  $1.91  $2.04  $2.23  $2.60 
Collected  $1.85  $1.91  $2.09  $1.67
 
 
Source:  OIG survey of States, 2014. 

Note: These quarters represent the four quarters  between July 1, 2013, and  June 30, 2014. 

*  The percentage collected in the second quarter of 2014 is lower than for other quarters  because States were still waiting for manufacturer  
 
payments for that quarter at  the time we collected our data. 
 
Individual States collection rates for the same period ranged from 49 percent to 
100 percent, with an average of 84 percent.  See Appendix B for State-specific details.  
These percentages will likely change over time; States told us that invoice amounts and 
collection amounts are constantly in flux because of continual adjustments and 
recalculations (e.g., URA adjustments).  States also reported that because of manufacturer 
disputes, they did not routinely collect 100 percent of the amounts they had invoiced.  
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 8  Andrew M. Slavitt 
 
Prior OIG work has highlighted the role that manufacturer disputes play in uncollected 
Medicaid drug rebates.24, 25     
 
Although most States are now collecting MCO rebates, problems persist in 
collecting MCO rebates for physician-administered drugs  
Nine States reported that they had problems collecting MCO rebates for 
physician-administered drugs.  The primary problem that States reported was that they 
could not reliably obtain NDCs from physician-administered drug claims.  States need to 
know which specific NDCs were associated with drugs administered to MCO 
beneficiaries to calculate and invoice MCO rebates for such drugs.  See Appendix A for 
details about which States were able to collect MCO rebates for physician-administered 
drugs. 
 
Some States could not reliably obtain NDCs from claims  for physician-administered 
drugs because their MCOs sent NDC data in file formats that were incompatible with 
States systems for processing MCO claims.  States reported that to resolve these 
technical issues, they were working to modify their systems to accept the files from  
MCOs. 
 
One State could not reliably obtain NDCs from claims for physician-administered drugs 
because hospitals were not always reporting them to MCOs.  The State noted that a 
claims-processing edit for MCO claims did not always force hospitals to enter the NDC, 
so many claims were submitted without NDCs.  This State reported that it plans to 
implement a claims processing edit that will be more effective in forcing hospitals to 
report NDCs. 
 
Previous OIG work found similar issues related to rebates for physician-administered 
drugs. A 2015 OIG audit in one State found that the State was unable to collect such 
rebates because it was not consistently receiving NDCs from MCOs.26, 27   Further, in a 
2014 OIG report, States reported that even when providers submitted NDCs for 
physician-administered drugs, those NDCs were not always correct.28 States need correct 
NDCs to create accurate rebate invoices, but they reported that they had limited ability to 
determine whether the NDCs submitted by providers were correct.  
 
   
                                                 
24 OIG,  States  Collection of Rebates for Drugs Paid Through Medicaid Managed Care  Organizations, 
 
OEI-03-11-00480, September  2012. 

25 OIG,  Medicaid  Drug  Rebate  Dispute Resolution Could Be Improved, OEI-05-11-00580, August 2014. 

26 OIG,  Oregon  Did Not Bill Manufacturers for Rebates for Physician-Administered  Drugs Dispensed to 
 
Enrollees of Medicaid Managed-Care Organizations,  A-09-13-02037, March  2015. 

27 Oregon is  not  one of the nine States that  reported  problems collecting MCO rebates for 

physician-administered drugs.  The OIG audit was performed on data  from 2010, and the audit noted that 
 
Oregon planned to correct its  process.   During  data collection  for this report, Oregon reported it was able to 
 
invoice and collect MCO rebates for physician-administered drugs for the timeframe of July 1, 2013, to
  
June 30, 2014. 

28 OIG,  Medicaid  Drug  Rebate  Dispute Resolution Could Be Improved,  OEI-05-11-00580, August 2014. 

States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 9  Andrew M. Slavitt 
 
CONCLUSION 
 
States have made progress in collecting MCO rebates since 2011, but not all States are 
collecting MCO rebates as required. Although the 10 States that were not collecting 
MCO rebates in 2011 report are now doing so, we found additional States that are not 
collecting MCO rebates. Moreover, we found that nine States collected some, but not all, 
eligible MCO rebates.  States that are not collecting all eligible MCO rebates fail to 
realize all of the savings that they are owed under the Medicaid Drug Rebate Program.  
This also affects the Federal government because it does not receive its share of these 
eligible, but uncollected, MCO rebates. In keeping with OIGs previous 
recommendation, CMS should continue to work to ensure that all States are invoicing and 
collecting MCO rebates.  
 
One specific challenge that States reported as hampering their ability to collect all 
eligible rebates for drugs  paid through MCOs related to collecting rebates for 
physician-administered drugs.  States reported that they could not reliably obtain the 
NDCs from claims for physician-administered drugs, and these NDCs are a necessary 
component for invoicing rebates for these drugs.  A 2014 OIG study on the Medicaid 
Dispute Resolution Program recommended that CMS work with States to improve the 
quality of claims data submitted by providers and pharmacies, specifically noting NDCs 
for physician-administered drugs as an example.  We continue to encourage CMS to 
address that recommendation in light of this reports finding that States still struggle to 
obtain NDCs from claims for physician-administered drugs.    
 
This report is being issued directly in final form because it contains no new 
recommendations.  If you have comments or questions about this report, please provide 
them within 60 days.  Please refer to report number OEI-05-14-00431 in all 
correspondence. 
   
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 10  Andrew M. Slavitt 
 
APPENDIX A   
 
States Coverage of Drugs through MCOs and Related Rebate Collection 
 
State  MCOs  Cover      Collected MCO  MCOs Cover  State Collected MCO  State Collected 
Pharmacy Drugs?  Rebates for  Physician- Rebates for Physician- Eligible MCO 
Pharmacy Drugs?  Administered Drugs?   Administered Drugs?   Rebates?  
 
Arizona  Yes   Yes     
California  Yes   ~   Yes   ~   ~ 
D.C.  Yes    Yes     
Delaware  No  N/A  Yes     
Florida  Yes    Yes     
Georgia  Yes    Yes     
Hawaii  Yes    Yes     
Iowa  No  N/A  Yes     
Illinois  Yes    Yes     
Indiana  No  N/A  Yes     
Kansas  Yes    Yes     
Kentucky  Yes    Yes     
Louisiana  Yes    Yes     
Massachusetts  Yes    Yes     ~ 
Maryland  Yes    Yes     
Michigan  Yes    Yes     
Minnesota  Yes    Yes     
Mississippi  Yes    Yes     
North Dakota   Yes    Yes     
Nebraska  No     N/A  Yes   ~   ~ 
New Hampshire   Yes    Yes     
New Jersey   Yes    Yes     ~ 
New Mexico  Yes    Yes     
Nevada  Yes    Yes     
New York   Yes    Yes     
Ohio  Yes    Yes     ~ 
Oregon  Yes    Yes    
Pennsylvania*  Yes   ~   Yes   ~   ~ 
Rhode Island   Yes    Yes     ~ 
South Carolina   Yes   ~   Yes     ~ 
Tennessee  No  N/A  Yes     
Texas  Yes   Yes     
Utah  Yes    Yes     
Virginia  Yes    Yes     
Washington  Yes    Yes     
Wisconsin  Yes    Yes     ~ 
West Virginia   Yes    Yes     
Source:  OIG survey of States, 2014.   
* Pennsylvania collected MCO rebates both for pharmacy drugs and physician-administered drugs, but State staff did not know whether 
the State had collected all eligible MCO rebates for the two categories of drugs.  Accordingly,  we categorized Pennsylvania as having 
invoiced for some (but not all) eligible MCO rebates. 
 
Key:    =   State  did  not  collect  any  MCO  rebates  
         =   State  invoiced  for  all  eligible  MCO  rebates  and  collected  MCO  rebates 
 
         ~  =   State  invoiced  for  some  (but  not  all)  eligible  MCO  rebates  and  collected  MCO  rebates
  
 
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)   Page 11  Andrew M. Slavitt 
 
 
APPENDIX B    
 
MCO Rebates Collected by States between July 1, 2013, and June 30, 2014 
 
State  Amount Invoiced   Amount Collected   Percentage of  
Invoiced Amount 
Collected  
Arizona  $318,181,037   $274,786,225   86%  
California  $454,759,133   $392,871,243   86%  
D.C.  $35,080,120   $26,695,115   76%  
Delaware  $8,223,331   $6,107,223   74%  
Florida  $282,625,487   $274,956,704   97%  
Georgia  $134,029,479   $128,760,597   96%  
Hawaii  $78,788,049   $62,479,766   79%  
Iowa  $0  $0  -
Illinois  $109,895,722   $81,658,417   74%  
Indiana  $3,990,567   $3,357,553   84%  
Kansas  $217,934,623   $204,251,081   94%  
Kentucky  $264,068,108   $217,544,048   82%  
Louisiana  $116,247,767   $116,138,682   100%  
Massachusetts  $198,809,119   $140,726,603   71%  
Maryland  $157,400,842   $154,333,129   98%  
Michigan  $244,735,792   $239,563,273   98%  
Minnesota  $222,807,221   $184,121,166   83%  
Mississippi  $72,044,530   $56,836,455   79%  
North Dakota   $1,271,338   $620,901   49%  
Nebraska  $1,057,212   $759,009   72%  
New Hampshire   $0  $0  -
New Jersey   $361,829,523   $336,149,505   93%  
New Mexico  $24,317,198   $21,138,285   87%  
Nevada  $20,897,677   $19,520,688   93%  
New York   $1,896,706,923   $1,730,274,331   91%  
Ohio  $486,155,452   $419,767,906   86%  
Oregon  $132,408,122   $120,703,594   91%  
Pennsylvania  $1,080,767,357   $853,398,423   79%  
Rhode Island   $47,230,168   $44,775,094   95%  
South Carolina   $138,174,280   $127,844,605   93%  
Tennessee  $16,800,548   $12,521,800   75%  
Texas  $1,155,443,626   $864,772,615   75%  
Utah  $41,306,860   $38,461,080   93%  
Virginia  $226,583,055   $193,319,794   85%  
Washington  $176,412,325   $124,493,625   71%  
Wisconsin  $2,010,590   $1,725,421   86%  
West Virginia   $42,085,197   $32,181,813   76%  
Source:  OIG survey of States, 2014.  
 
 
States Collection of MCO Drug Rebates Has Improved (OEI-05-14-00431)