Department of Health and Human Services 
OFFICE OF 
INSPECTOR GENERAL 
M R
EDICAID  EBATES FOR 
P -A
HYSICIAN DMINISTERED 
D
RUGS 
Inspector General 
April 2004 
OEI-03-02-00660  Office of Inspector General

http://oig.hhs.gov 
The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, 
as amended, is to protect the integrity of the Department of Health and Human Services 
(HHS) programs, as well as the health and welfare of beneficiaries served by those 
programs. This statutory mission is carried out through a nationwide network of audits, 
investigations, and inspections conducted by the following operating components: 
Office of Audit Services 
The OIG's Office of Audit Services (OAS) provides all auditing services for HHS, either by 
conducting audits with its own audit resources or by overseeing audit work done by others. 
Audits examine the performance of HHS programs and/or its grantees and contractors 
in carrying out their respective responsibilities and are intended to provide independent 
assessments of HHS programs and operations in order to reduce waste, abuse, and 
mismanagement and to promote economy and efficiency throughout the department. 
Office of Evaluation and Inspections 
The OIG's Office of Evaluation and Inspections (OEI) conducts short-term management 
and program evaluations (called inspections) that focus on issues of concern to the 
department, the Congress, and the public. The findings and recommendations contained 
in the inspections reports generate rapid, accurate, and up-to-date information on the 
efficiency, vulnerability, and effectiveness of departmental programs. 
Office of Investigations 
The OIG's Office of Investigations (OI) conducts criminal, civil, and administrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries 
and of unjust enrichment by providers. The investigative efforts of OI lead to criminal 
convictions, administrative sanctions, or civil monetary penalties. The OI also oversees 
State Medicaid fraud control units, which investigate and prosecute fraud and patient 
abuse in the Medicaid program. 
Office of Counsel to the Inspector General 
The Office of Counsel to the Inspector General (OCIG) provides general legal services to 
OIG, rendering advice and opinions on HHS programs and operations and providing all 
legal support in OIG's internal operations. The OCIG imposes program exclusions and 
civil monetary penalties on health care providers and litigates those actions within the 
department. The OCIG also represents OIG in the global settlement of cases arising 
under the Civil False Claims Act, develops and monitors corporate integrity agreements, 
develops model compliance plans, renders advisory opinions on OIG sanctions to the 
health care community, and issues fraud alerts and other industry guidance.    A B S T R A C T

Under the Medicaid Drug Rebate Program, manufacturers are 
required to provide rebates on drugs paid for by a State. To receive 
rebates, States must identify the drugs by their national drug code. 
Most States, however, use procedure codes to identify physician-
administered drugs. The States that match procedure codes to 
national drug codes do collect rebates on these drugs. We found that 
in 2001, Medicaid could have saved millions of additional rebate 
dollars if every State had collected rebates for all single-source 
physician-administered drugs and 40 multiple-source physician-
administered drugs. As of March 2003, 24 States did not collect 
rebates on any physician-administered drugs. Our study indicates a 
States savings in a single year could exceed the one-time cost of 
implementing system changes needed to collect rebates for these 
drugs. We recommend that the Centers for Medicare & Medicaid 
Services (CMS) continue to encourage all States to collect rebates on 
physician-administered drugs, especially single-source drugs. As part 
of this effort, CMS should encourage cooperation and the sharing of 
information between States that collect rebates for these drugs, and 
States that do not, in order to facilitate rebate collection.  CMS 
concurred with our recommendation and is currently facilitating 
information sharing. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  i    E X E C U T I V E   S U M M A R Y

OBJECTIVES 
(1) To determine whether all State Medicaid agencies collect 
drug manufacturer rebates for all physician-administered drugs. 
(2) To estimate the potential savings that would result if all 
State Medicaid agencies collected drug manufacturer rebates for 
physician-administered drugs. 
BACKGROUND 
The Medicaid program, established under Title XIX of the Social 
Security Act, is administered by States and financed with State 
and Federal funds. Medicaid pays for medical and health-
related assistance for certain vulnerable and needy individuals 
and families. All 50 States and the District of Columbia provide 
coverage for prescription drugs under the Medicaid program. 
The Medicaid Drug Rebate Program was established in 1990 to 
reduce State and Federal Medicaid expenditures for prescription 
drugs. Under the rebate program, manufacturers are required 
to provide a rebate on drugs paid for by a State. Physician-
administered drugs (drugs that a medical professional 
administers to a patient in a physicians office) are covered 
under this program. In order to collect the rebates, States must 
identify the drugs by their national drug codes and provide 
units-paid data to the drug company. Unlike self-administered 
drugs, which are typically billed to the State with national drug 
codes, physician-administered drugs are more often billed with 
procedure codes. States that use procedure codes to bill 
physician-administered drugs need a crosswalk to national drug 
codes in order to collect rebates on these drugs. A crosswalk is 
the identification of national drug codes for drugs represented 
by procedure codes. 
We asked Medicaid directors from 48 States and the District of 
Columbia about their coding and rebate policies concerning 
physician-administered drugs. We also requested financial 
data, such as total payments and units paid for physician-
administered drugs in calendar year 2001. Arizona and 
Tennessee did not participate in the rebate program that year. 
We estimated potential savings on all the single-source and 40 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  ii  E X E C U T I V E   S U M M A R Y  
multiple-source, physician-administered drugs for which States 
made payments but did not receive rebates in 2001. 
FINDINGS 
In 2001, 17 States collected rebates for physician-
administered drugs, and 31 States did not. Of the 17 
States that collected drug manufacturer rebates for physician-
administered drugs in 2001, 3 collected rebates on all physician-
administered drugs. These three States use national drug codes 
for billing. The remaining 14 States use procedure codes. These 
14 States crosswalk procedure codes to national drugs codes for 
single-source drugs and collect rebates on these drugs only. 
Thirty-one States did not collect rebates on any physician-
administered drugs in 2001, and 1 additional State did not 
respond to our question about rebate collection. 
Medicaid could have saved millions of additional rebate 
dollars on physician-administered drugs in 2001. If all 
States had collected rebates for all single-source and 40 
multiple-source, physician-administered drugs, Medicaid could 
have added $37 million to its rebate savings for 2001. The 
majority of additional savings ($30 million) would have been on 
rebates for single-source drugs alone, and the remainder 
($7 million) would have been on 40 multiple-source drugs. 
After 2001, 7 of 31 States that had not collected rebates on 
physician-administered drugs began to do so. Of the 7 States 
that began collecting rebates after 2001, 6 States collect rebates on 
single-source, physician-administered drugs, and 1 State collects 
rebates on all physician-administered drugs billed by a targeted 
group of providers. (We estimated that the 2001 potential savings for 
these seven States was $14 million on all single-source and 40 
multiple-source physician administered drugs.) As of March 2003, 24 
States still did not collect rebates on any physician-administered 
drugs. These 24 States spent a total of $125 million on physician-
administered drugs. Five of these 24 States said they have no plans 
to collect rebates for physician-administered drugs. While 19 of 
these 24 States said they plan to collect rebates for these drugs, 13 of 
the 19 States did not have specific plans to collect rebates. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  iii  EE XX EE CC UU TT II VV EE    SS UU MM MM AA RR YY  
For States that had data available, rebates either 
requested or collected in 2001 exceeded the system 
implementation cost of collecting rebates for physician-
administered drugs. Four States provided us with their 
estimated costs for implementing system changes to collect 
rebates for physician-administered drugs. For each of these 
States, rebates in 2001 alone exceeded their one-time 
implementation costs. The State that spent the most ($642,000) 
collected $3 million in rebates for all physician-administered 
drugs in 2001. The State that spent the least ($56,100) collected 
$3 million in rebates on single-source, physician-administered 
drugs in 2001. 
RECOMMENDATION 
Rebates for physician-administered drugs help States reduce 
prescription drug expenditures, which are rising at a time when 
State budgets are severely stressed. Federal and State Medicaid 
expenditures on physician-administered drugs could have been 
reduced by an estimated $37 million in 2001 if all States 
collected rebates on those drugs. 
Based on cost estimates provided to us from States that have 
implemented changes in order to collect rebates for physician-
administered drugs, the savings from rebates in 1 year can 
exceed the one-time costs of implementing system changes. 
We recommend that CMS continue to encourage all States to 
collect rebates on physician-administered drugs, especially 
single-source drugs. As part of this effort, CMS should 
encourage cooperation and the sharing of information between 
States that collect rebates for these drugs, and States that do 
not, in order to facilitate rebate collection. It would be valuable 
for States that do not collect rebates for physician-administered 
drugs to know the details of implementing system changes, such 
as the what, where, when, and why of resources needed, and 
how the process unfolded for States that have been down this 
road. CMS could also issue a letter to State Medicaid Directors 
informing them about the availability and usefulness of the 
Medicare crosswalk. States could use this crosswalk, which is 
on the Internet, to reduce the administrative costs of creating 
and/or updating their own crosswalk. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  iv  E X E C U T I V E   S U M M A R Y  
AGENCY COMMENTS 
CMS concurred with our recommendation and is currently 
facilitating information sharing. The agency is passing on 
information to States seeking help to collect rebates on 
physician-administered drugs and providing contact names in 
States that have experience in this area. In addition, CMS has 
asked its Pharmacy Technical Advisory Group to serve as a 
resource to share this information with States in their consortia. 
CMS disagreed with our $37 million estimate of potential 
savings. As we reported, States provided us their payment and 
rebate information for physician-administered drugs for 
calendar year 2001 and told us whether they collected rebates 
on physician-administered drugs that year. We used the 
information provided by the States to calculate additional 
potential savings for each State in 2001. We acknowledge that 
the savings in future years will depend on rebate amounts and 
utilization and would likely be different from 2001. 
CMS also commented that our report did not break out the 
States that did not collect rebates in 2001 and that our report 
did not estimate their potential savings. We wish to point out 
that in Table 1 in Appendix A, we showed which States did not 
collect rebates in 2001 and which States told us they began 
collecting rebates after 2001. We also showed the 2001 potential 
savings for each State in Table 3 of Appendix A. We have added 
two sentences to page 10, citing the 2001 potential savings for 
seven States that began collecting rebates after 2001. 
CMS noted that of the 24 States not collecting rebates as of 
March 2003, 13 States had specific plans to collect rebates for 
these drugs and 6 States, while not having plans in place, 
indicated they will collect these rebates in the future. Our 
study, however, found the opposite for this subset of States. 
Thirteen States did not have specific plans, and six States did 
have specific plans (pages 10-11). In Appendix A, Table 1, we 
have added footnotes 12, 13, and 14 to identify the States that 
said they do not have specific plans, do have specific plans, and 
do not plan to collect rebates for these drugs. The full text of 
CMS comments is in Appendix B. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  v  T A B L E   O F   C O N T E N T S

A B S T R A C T  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . .   i

E X E C U T I V E   S U M M A R Y  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .   ii

I N T R O D U C T I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . .  1

F I N D I N G S  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .   9

States that collected, or did not collect, rebates on physician-

administered drugs in 2001 ................................................................9

Medicaid could have saved millions in 2001.......................................9

States that began collecting rebates after 2001................................ 10

Implementation costs can be recovered quickly  ............................. 11

R E C O M M E N D A T I O N  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .   13

A P P E N D I X ~ A  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .   15

Table 1. Summary of 2001 State Medicaid Data for

Physician-Administered Drugs......................................................... 15

Table 2. Selected Physician-Administered Multiple-Source 

Drugs (n=40) ..................................................................................... 17

Table 3. Potential Medicaid Savings on Rebates for 

Physician-Administered Drugs in 2001............................................ 18

A P P E N D I X ~ B  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .   19

Agency Comments............................................................................. 19

A C K N O W L E D G M E N T S  ........................................................................  21

OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  vi
 I N T R O D U C T I O N

OBJECTIVES 
(1) To determine whether all State Medicaid agencies collect 
drug manufacturer rebates for all physician-administered drugs. 
(2) To estimate the potential savings that would result if all 
State Medicaid agencies collected drug manufacturer rebates for 
physician-administered drugs. 
BACKGROUND 
The Medicaid program, established under Title XIX of the Social 
Security Act, is administered by States and financed with State 
and Federal funds. Medicaid pays for medical and health-
related assistance for certain vulnerable and needy individuals 
and families. All 50 States and the District of Columbia provide 
coverage for prescription drugs under the Medicaid program. 
From 1997 to 2000, Medicaid spending for outpatient 
prescription drugs grew twice as fast as total Medicaid 
spending. The total payments for outpatient prescription drugs 
in fiscal year 2000 were $21 billion. 
Drug Manufacturer Rebates 
In fiscal year 2000, drug manufacturers paid the Medicaid 
program $4 billion in rebates. This reduced Medicaid drug 
expenditures by 19 percent (total payments before rebates, 
$21 billion; after rebates, $17 billion). 
State Medicaid agencies receive manufacturer rebates for drugs 
under the Medicaid Drug Rebate Program. This program was 
established by Federal law in 1990 (see section 1927 of the 
Social Security Act). States cover all prescription drugs 
produced by manufacturers who have entered into rebate 
agreements under this program. Physician-administered drugs 
(drugs that a medical professional administers to a patient in a 
physicians office) are among the drugs covered by the rebate 
program. Only two States, Arizona and Tennessee, did not 
participate in the rebate program at the time of our review. 
Under the rebate program, manufacturers are required to 
provide a rebate on drugs paid for by a State Medicaid agency. 
In order to collect a rebate, the State is required to identify the 
drugs by their national drug codes and provide quarterly units-
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  1  I N T R O D U C T I O N  
paid data to the manufacturer. The manufacturer then pays the 
State a rebate, based on the unit rebate amount per drug 
multiplied by the number of drug units for which the State made 
payments. 
Codes Used to Bill Physician-Administered Drugs 
Self-administered drugs are typically billed by pharmacies in 
pharmacy claim formats using national drug codes to identify 
specific drug products. Physician-administered drugs, on the 
other hand, are more often billed by medical providers on 
professional service claims. (An example of a physician-
administered drug is a prescription drug given by injection in a 
doctors office.) Professional service claims identify services, 
medical equipment, and physician-administered drugs by 
procedure codes (i.e., the Healthcare Common Procedure Codes). 
While it is possible to use either a national drug code or a 
procedure code to bill for a physician-administered drug, these 
codes identify different things. The national drug code is an 
11-digit numeric code, which is divided into 3 segments 
identifying (1) the firm that manufactures, distributes, or 
repacks the drug product; (2) the specific strength, dosage form, 
and formulation of the product for a particular firm; and (3) the 
products package size. The procedure code is a 5-digit alpha-
numeric code that identifies a drug by its generic name; route of 
administration (e.g., oral or injection); and identifies the number 
of drug units allowed per reimbursement amount for that code. 
As mentioned above, States must identify drugs by their 
national drug code in order to collect rebates. Therefore, if a 
State requires the use of national drug codes for physician-
administered drugs, identifying the drug by its national drug 
code for rebate collection is not a problem. If a State requires 
the use of procedure codes for physician-administered drugs, 
identifying the drug by its drug code can be difficult. For 
example, if the drug reimbursed by Medicaid has more than one 
manufacturer, the drug would have more than one national drug 
code. Therefore, the State would not be able to determine which 
national drug code matched the procedure code. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  2  I N T R O D U C T I O N  
Past OIG Work Found that Few States Collected Rebates for 
Physician-Administered Drugs 
In 1996, the Office of Inspector General (OIG) conducted the 
study, Appropriateness of Medicare Prescription Drug 
Allowances, (OEI-03-95-00420). It examined Medicare 
allowances for prescription drugs through a comparison with 
Medicaid reimbursement mechanisms and Medicaid drug 
rebates. During the study, OIG found that while most State 
Medicaid agencies participated in the rebate program, only six 
were collecting rebates on physician-administered drugs. 
States ability to collect rebates for physician-administered 
drugs was contingent upon their ability to identify the drugs by 
their national drug codes. 
Federal Effort to Encourage States to Collect Rebates for Physician-
Administered Drugs 
In 2002, the Centers for Medicare & Medicaid Services (CMS) 
informally gathered information regarding State collection of 
rebates for physician-administered drugs. This was done 
through the Pharmacy Technical Advisory Group ?  a group 
composed of CMS and State representatives. From this data 
collection, it appeared to CMS that States could gain 
considerable savings if they collected rebates on these drugs. 
CMS wrote to State Medicaid Directors in March 2003, 
encouraging them to look into system conversions that would 
facilitate a crosswalk of procedure codes to national drug codes 
and make rebate collection possible for these drugs. A crosswalk 
is the identification of national drug codes for drugs represented 
by procedure codes. 
Availability of Medicare Crosswalk 
States that use procedure codes for physician-administered 
drugs need a crosswalk to national drug codes in order to collect 
rebates on these drugs. A Medicare crosswalk is available on 
the Internet. It contains drugs paid by Medicare in a particular 
quarter and it is updated quarterly. The Internet address is: 
http://www.cms.hhs.gov/providers/drugs/backgroundsdp.asp. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  3  III NNN TTT RRR OOO DDD UUU CCC TTT III OOO NNN  
METHODOLOGY 
Preliminary Research 
We conducted background research on the Medicaid Drug 
Rebate Program and code requirements for drug claims, 
including a review of Federal laws, regulations, manuals, and 
program memoranda. We reviewed Medicaid expenditures for 
prescription drugs, and we also reviewed public and private 
studies addressing the Medicaid prescription drug program and 
cost controls. 
State Medicaid Data 
In January 2003, we began collecting a formal set of data from 
the 49 States (i.e., 48 States and the District of Columbia) that 
participate in the Medicaid Drug Rebate Program. For the sake 
of brevity, we use the word State in this report as a synonym 
for both State Medicaid agency and State Medicaid agency 
representative.  We refer to the District of Columbia as a State 
for the same reason. We sent our data request to State 
Medicaid directors. 
We asked each State whether they collect rebates for physician-
administered drugs, the year they began collecting rebates and 
for what types of drugs, the type of code they use to bill 
physician-administered drugs, the types of changes they made 
to their systems in order to collect rebates for physician-
administered drugs, and the estimated costs of changing 
systems for this purpose. We also asked each State to provide 
us a set of financial data for physician-administered drugs in 
calendar year 2001, namely, total payments per code, total units 
paid per code, rebate dollars requested of manufacturers per 
code, and rebate dollars received from manufacturers per code. 
Forty-eight States answered the questions we sent them, and 
most States provided all or some of the financial data we 
requested. The State of Nevada provided financial data but did 
not respond to the questions. We did not verify the data States 
sent us. Table 1 in the Appendix includes the State financial 
data. 
CMS Data 
We used CMSs 2001 list of national Healthcare Common 
Procedure Codes with complete definitions to identify the 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  4  I N T R O D U C T I O N  
universe of codes that represented physician-administered 
drugs. 
We used calendar year 2001 data from CMSs Medicaid 
Statistical Information System (MSIS) to identify payments and 
units paid per code for physician-administered drugs for States 
that did not send us this information (see Table 1 in Appendix 
A). Five States did not provide payment and unit data, and an 
additional two States did not provide unit data. We aggregated 
the State payment data received directly from States with data 
retrieved from MSIS to determine total Medicaid payments and 
utilization for physician-administered drugs. 
CMSs Medicaid Drug Rebate Initiative database (hereinafter 
called rebate database) was used to identify drug unit rebate 
amounts in calendar year 2001. Since unit rebate amounts are 
established quarterly, we took the unit rebate amount for each 
quarter and calculated the average. The average unit rebate 
amount was then used in our calculation to determine potential 
savings. 
We used the January 1, 2002 update of the Part B Drug 
Calculation File from CMSs Single Drug Price contractor. The 
CMS contractor uses this file to establish a national Medicare 
payment allowance for procedure codes. The file is organized by 
procedure code. Data in this file for each of the 485 procedure 
codes for physician-administered drugs included the procedure 
code description and a list of associated drug products with their 
national drug codes. The CMS contractor used the 2001 Red 
Book, a national drug-pricing reference, to identify average 
wholesale prices for drugs in this file. 
We used the Part B Drug Calculation File to determine which 
procedure codes represented single-source drugs and which 
represented multiple-source drugs on the market in 2001.  A 
single-source drug is a brand name drug that is manufactured 
under a patent and has no competing products. A multiple-
source drug is a drug whose patent has expired and is 
manufactured by a number of different drug companies under 
different names. Multiple-source drugs may include generic 
drugs and brand name drugs. 
Single-source drugs are more likely to have only one national 
drug code and are more easily matched to a procedure code than 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  5  II NN TT RR OO DD UU CC TT II OO NN  
multiple-source drugs. If the Part B Drug Calculation File 
showed only one drug manufacturer for a procedure code, we 
took that to be an indication the procedure code represented a 
single-source drug. We then looked up that drug in the October 
2001 issue of Red Book TM for Windows to confirm whether it 
was indeed a single-source drug. Drugs in the Part B Drug 
Calculation File that had multiple manufacturers or were not 
confirmed as single-source drugs in Red Book were put in the 
multiple-source drug category. 
We also used the Part B Drug Calculation File to identify the 
national drug codes for single-source and multiple-source drugs 
that corresponded to each procedure code. 
Analysis of Payments for Physician-Administered Drugs 
Using State financial data, we identified payments for single-
source and multiple-source, physician-administered drugs per 
State. Single-source drug payments for 46 States ranged from 
$43,000 to $20 million, for a national total of $148 million. 
Multiple-source drug payments for 46 States ranged from 
$12,000 to $18 million, for a national total of $152 million. 
Because California and Nevada use local codes (codes used by 
the individual States), and Massachusetts uses non-specific 
codes for physician-administered drugs, we did not identify 
payments for single-source and multiple-source drugs for these 
three States. We did, however, aggregate total payments for 
these three States with total payments for other States. Total 
national payments for physician-administered drugs in 2001 
were $364 million. A summary of payments is provided in 
Table 1 of Appendix A. 
Potential Savings Analysis 
Drugs Used to Calculate Savings.  We reviewed all physician-
administered, single-source drugs and 40 multiple-source drugs 
for which States made payments in 2001 but did not request a 
rebate, and for which a unit rebate amount was available in the 
rebate database. The number of single-source drugs reimbursed 
by each State ranged from 17 to 149. Of the 40 multiple-source 
drugs reviewed, the number reimbursed by each State ranged 
from 5 to 39. We reviewed drugs billed with national procedure 
codes only. We did not review any drugs billed with local codes. 
Nor did we review vaccines or immunizations because these 
products are not covered under the rebate program. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  6  I N T R O D U C T I O N  
We selected the 40 multiple-source drugs in the following way. 
We took the State-reported payment data for physician-
administered drugs billed with procedure codes and removed 
payments for codes that received rebates in 2001. We then 
aggregated the payments nationally by code. We arrayed the 
aggregated payments from high to low and selected 40 codes for 
multiple-source drugs having the highest payments. These 40 
drugs represented $71 million in total Medicaid payments. 
Table 2 in Appendix A lists the 40 drugs. 
In order to separate single-source drugs from multiple-source 
drugs, we matched the States procedure codes with procedure 
codes in our crosswalk of single-source drugs. If the procedure 
code paid by the State did not match a procedure code in the 
single-source crosswalk, we included it in the multiple-source 
category. 
For States that collected rebates on single-source, physician-
administered drugs, we removed those codes from our analysis 
of the States potential savings. 
Identifying Unit Rebate Amounts.  Unit rebate amounts for drugs 
are stored in the rebate database under the national drug code. 
Having completed a crosswalk for single-source drugs and 
selected multiple-source drugs, we compiled a list of national 
drug codes for the drugs under review in the single-source and 
multiple-source categories. We then obtained the unit rebate 
amount from the rebate database for each national drug code 
and calculated the average of the unit rebate amount for all 
quarters in 2001 for each national drug code. When more than 
one drug product was on the market for a particular procedure 
code, and therefore, had more than one national drug code and 
unit rebate amount in the rebate database, we identified the 
median unit rebate amount. 
In instances where the strength of the national drug code did 
not exactly match the strength of the procedure code, we applied 
a conversion factor to calculate the correct unit rebate amount 
for the procedure code. The unit rebate amount per procedure 
code was then used to calculate potential savings for each 
procedure code in each State. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  7  I N T R O D U C T I O N  
Potential Savings Calculation. We used the following steps to 
determine potential savings: 
Step 1. For each procedure code, we multiplied the total 
number of drug units paid for the procedure code in 2001 
by the unit rebate amount per procedure code. The 
product of this calculation was the potential savings for 
the procedure code. 
Step 2. We calculated each States total potential 
savings by adding the potential savings for each 
procedure code. 
Step 3. In order to determine total Medicaid potential 
savings, we summed the potential savings from each of 
the States. 
We noticed that in Step 1, savings for some procedure codes 
exceeded payments. This might have been the result of a States 
units-paid data not accurately representing paid claim units. In 
any State where potential savings for a procedure code exceeded 
the payments for that code, we removed the code from our 
savings calculations. 
Reporting the Potential Savings.  Table 3 in Appendix A contains 
potential Federal and State savings per State. These savings 
were calculated on physician-administered drug payments of 
$169 million. This was the subset of payments for single-source 
and 40 multiple-source drugs for which the States did not 
request rebates in 2001. In addition, these payments do not 
include vaccines or immunizations, drugs billed with local codes 
or non-specific codes, and codes deleted because savings 
calculations exceeded payments. 
____________________________ 
This study was conducted in accordance with the Quality 
Standards for Inspections issued by the Presidents Council on 
Integrity and Efficiency. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  8    F I N D I N G S

Of the 17 States that collected
In 2001, 17 States collected rebates on 
drug manufacturer rebates on
physician-administered drugs, and 31 States 
physician-administered drugs in 
did not. 
2001, 3 States collected rebates 
on all such drugs, and 14 collected rebates on single-source 
drugs only. 
Three States that use national drug codes for billing were able to 
collect rebates on all physician-administered drugs. 
Only three States use national drug codes to bill physician-
administered drugs (Hawaii, Missouri, and Pennsylvania). They 
were able to collect rebates for physician-administered drugs 
regardless of whether the drugs were single-source or multiple-
source. Two of the three States sent us their data on total 
rebates collected in 2001. These two States collected $3 million 
in rebates or 30 percent of their total payments ($10 million) for 
physician-administered drugs. 
Fourteen States were only able to collect rebates on single-source, 
physician-administered drugs. 
Fourteen States that use procedure codes instead of national 
drug codes to bill physician-administered drugs were able to 
collect rebates for single-source drugs only. The four States that 
provided data collected $14 million in rebates on these drugs. 
In order to collect rebates for single-source drugs, these 
14 States developed a crosswalk to link procedure codes to 
national drug codes; developed conversion factors for codes 
where the description of procedure code units differed from 
rebate units; performed regularly scheduled system 
maintenance (e.g., to verify that the drug code is still active); 
identified claims with procedure codes that were, or could be, 
crosswalked; and changed the rebate invoicing procedure to 
merge physician services and pharmacy claims. 
Medicaid could have added an 
Medicaid could have saved millions of additional 
estimated $37 million to its 
rebate dollars on physician-administered drugs 
rebate savings in 2001 if all 
in 2001. 
States had collected rebates on 
single-source and 40 multiple-source, physician-administered 
drugs.  Individual State payments and potential savings are in 
Tables 1 and 3 of Appendix A. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  9  FF II NN DD II NN GG SS  
Medicaid would have obtained the majority of these rebate savings 
from single-source drugs. 
States that did not collect rebates for single-source, physician-
administered drugs had payments totaling $99 million for this 
subset of drugs. These States could have reduced 2001 
expenditures on these drugs by an estimated 30 percent or 
$30 million if rebates had been collected. 
Medicaid could have obtained further savings in rebates for 40 
multiple-source drugs. 
The States that did not collect rebates for 40 multiple-source, 
physician-administered drugs paid $70 million for these drugs 
in 2001. These States could have lowered payments by an 
estimated $7 million or 10 percent by collecting the rebates. 
After 2001, 7 of 31 States that 
After 2001, 7 of 31 States that had not collected 
had not collected rebates on any 
rebates on physician-administered drugs began  physician-administered drugs 
to do so.	 began collecting rebates for some 
of these drugs. Six of these seven 
States implemented changes (e.g., developed a crosswalk) to 
collect rebates for single-source, physician-administered drugs. 
The remaining State reported that it targets the eight highest 
paid providers who bill physician-administered drugs and asks 
them to provide the national drug code from the product 
dispensed for the paid claim. Once the State has the drug code, 
rebate invoices can be sent to manufacturers. 
The 2001 potential savings for these 7 States was $14 million on 
all single-source and 40 multiple-source, physician-administered 
drugs. This $14 million represents 38 percent of the total $37 
million in potential savings for 2001. 
As of March 2003, 24 States still did not collect rebates on any 
physician-administered drugs. 
The 24 States that did not collect rebates on physician-
administered drugs as of March 2003, reported spending $125 
million for these drugs in 2001. Nineteen of these 24 States said 
they plan to collect rebates for physician-administered drugs. 
However, 13 of 19 have no specific plans to change their 
systems. Some of these 13 States said that they were aware of 
changes that are needed, and others said they did not know 
what changes are needed. Four of the 19 States indicated they 
have begun the process of making changes to their systems, 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  10  F I N D I N G S  
such as ordering a change to their Medicaid Management 
Information System, developing a crosswalk, building a new 
claims management system to accommodate national drug codes 
on professional service claims, and changing policies and billing 
instructions to require national drug codes. The remaining 2 of 
19 States responded that they have created crosswalks for 
single-source drugs. 
Five of 24 States that currently do not collect rebates on 
physician-administered drugs said they do not have plans to 
collect rebates for these drugs. These 5 States had $25 million 
in expenditures for physician-administered drugs. 
Of the States currently 
For States that had data available, rebates 
collecting rebates on 
requested or collected in 2001 exceeded the 
physician-administered
system implementation cost of collecting rebates 
drugs, four were able to
for physician-administered drugs. 
provide system 
implementation costs for collecting rebates for these drugs. 
Costs ranged from a high of $642,000 to a low of $56,100. 
	 The State that reported the highest implementation cost 
estimate ($642,000) is a State that now collects rebates 
for all physician-administered drugs. This State 
implemented a policy change in 1992 that required 
physician-administered drugs be billed on pharmacy 
claims forms. Then, in 1994, they spent an estimated 
$642,000 to integrate the pharmacy rebate system into 
their Medicaid Management Information System. In 
2001, they collected $3 million in rebates for physician-
administered drugs. 
	 A State that began collecting rebates in 2001 for single-
source, physician-administered drugs spent an estimated 
$220,000. They made modifications to their Medicaid 
Management Information System, including creating a 
crosswalk and tables to store physician-administered 
drug claims, and merging physician services and 
pharmacy claims for rebate invoicing. In 2001, this 
State requested $2 million in rebates from drug 
manufacturers for single-source, physician-administered 
drugs. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  11  F I N D I N G S  
	 Another State estimated spending $110,000 for 
personnel needed to make system changes to collect 
rebates for single-source, physician-administered drugs. 
This State began collecting rebates for these drugs after 
2001, but in 2001 the State invoiced manufacturers 
$1 million for rebates on these drugs. 
	 The State that had the lowest implementation costs 
($56,100) collected $3 million for single-source, 
physician-administered drugs in 2001. This State began 
collecting the rebates in 1998. This States 
implementation costs were for a system engineer to 
create a link between procedure codes and national drug 
codes, add programming that automatically relates 
procedure-code billing to drug-code billing, merge 
physician and pharmacy claims for invoicing, and test 
the system. 
Three additional States said they plan to collect rebates for 
single-source, physician-administered drugs. These States 
estimated the costs for system changes would range from 
$10,008 to $150,000. In addition to these one-time 
expenditures, 1 State planning to make changes said it would 
cost approximately $1,500 per year to maintain the new system. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  12  R E C O M M E N D A T I O N

RECOMMENDATION 
Rebates for physician-administered drugs help States reduce 
prescription drug expenditures, which are rising at a time when 
State budgets are severely stressed. Federal and State Medicaid 
expenditures on physician-administered drugs could have been 
reduced by an estimated $37 million in 2001 if all States 
collected rebates on those drugs. 
Based on cost estimates provided to us from States that have 
implemented changes in order to collect rebates for physician-
administered drugs, the savings from rebates in 1 year can 
exceed the one-time costs of implementing system changes. 
We recommend that CMS continue to encourage all States to 
collect rebates on physician-administered drugs, especially 
single-source drugs. As part of this effort, CMS should 
encourage cooperation and the sharing of information between 
States that collect rebates for these drugs and States that do 
not, in order to facilitate rebate collection.  It would be valuable 
for States that do not collect rebates for physician-administered 
drugs to know the details of implementing system changes, such 
as the what, where, when, and why of resources needed, and 
how the process unfolded for States that have been down this 
road. CMS could also issue a letter to State Medicaid Directors 
informing them about the availability and usefulness of the 
Medicare crosswalk. States could use this crosswalk, which is 
on the Internet, to reduce the administrative costs of creating 
and/or updating their own crosswalk. 
AGENCY COMMENTS 
CMS concurred with our recommendation and is currently 
facilitating information sharing. The agency is passing on 
information to States seeking help to collect rebates on 
physician-administered drugs and providing contact names in 
States that have experience in this area. In addition, CMS has 
asked its Pharmacy Technical Advisory Group to serve as a 
resource to share this information with States in their consortia. 
CMS disagreed with our $37 million estimate of potential 
savings. As we reported, States provided us their payment and 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  13  R E C O M M E N D A T I O N  
rebate information for physician-administered drugs for 
calendar year 2001 and told us whether they collected rebates 
on physician-administered drugs that year.  We used the 
information provided by the States to calculate additional 
potential savings for each State in 2001. We acknowledge that 
the savings in future years will depend on rebate amounts and 
utilization and would likely be different from 2001. 
CMS also commented that our report did not break out the 
States that did not collect rebates in 2001 and that our report 
did not estimate their potential savings. We wish to point out 
that in Table 1 in Appendix A, we showed which States did not 
collect rebates in 2001 and which States told us they began 
collecting rebates after 2001. We also showed the 2001 potential 
savings for each State in Table 3 of Appendix A. We have added 
a sentence to page 10, citing the 2001 potential savings for seven 
States that began collecting rebates after 2001. 
CMS noted that of the 24 States not collecting rebates as of 
March 2003, 13 States had specific plans to collect rebates for 
these drugs and 6 States, while not having plans in place, 
indicated they will collect these rebates in the future. Our 
study, however, found the opposite for this subset of States. 
Thirteen States did not have specific plans, and six States did 
have specific plans (pages 10-11). In Appendix A, Table 1, we 
have added footnotes 12, 13, and 14 to identify the States that 
said they do not have specific plans, do have specific plans, and 
do not plan to collect rebates for these drugs. The full text of 
CMS comments is in Appendix B. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  14  A P P E N D I X ~ A

Table 1.  Summary of 2001 State Medicaid Data for Physician-Administered Drugs 
This table incorporates the States responses to our information request. From January 
through March 2003, we collected a formal set of data from the 49 States (i.e., 48 States and 
the District of Columbia) that participate in the Medicaid Drug Rebate Program. We 
specifically asked States to provide us with financial data for physician-administered drugs 
only, and not to include crossover drug claims from Medicare. A number of States included 
vaccines and immunizations in the financial data they sent us. However, these products are 
not covered under the Medicaid Drug Rebate Program. Therefore, we excluded vaccine and 
immunization data from our analysis of payments and potential savings and from this table. 
Rebates Requested  Rebates Collected 
of Drug  from Drug 
Manufacturers for  Manufacturers for 
Physician-Administered  Physician- Physician-
Physician-Administered  Drugs for which States  Administered Drugs in Administered Drugs in 
State  Drug Payments in 2001  Collected Rebates in 2001  2001  2001 
Alabama  $13,196,168 8  None1 
Alaska  $2,229,910  None13 
Arkansas  $4,159,582  None13 
California6  $59,278,322  Single-Source  $6,417,891  $5,445,273 
Colorado  $3,211,272 3  None14 
Connecticut  $3,776,003 8  Single-Source  Not Available  Not Available 
Delaware  $55,008  Single-Source  Not Available  Not Available 
District of Columbia  $995,166  None12 
Florida  $22,037,705  None1 
Georgia  $13,205,614 4  Single-Source  $2,465,042 4  $3,627,956 4 
Hawaii  $479,692  All  $237,295  $135,872 
Idaho  $1,830,202  None12 
Illinois9  $1,612,548  None12 
Indiana  $9,806,848  Single-Source  $2,280,000 3  Not Available 
Iowa  $5,407,563 8  None14 
Kansas  $4,170,742 8  Single-Source  Not Available  Not Available 
Kentucky  $1,995,578  None1 
Louisiana  $3,723,133  None1 
Maine  $1,840,082  None12 
Maryland  $25,235,109  None1 
Massachusetts 6  $190,676  None13 
Michigan  $6,625,762 7  Single-Source  $1,964,919 7  $1,193,894 7 
Minnesota  $5,451,191  None13 
Mississippi  $5,606,025  None12 
Missouri  $9,979,292  All  $2,887,966  $2,875,550 
Montana  $1,896,598 3  None12 
Nebraska9  $3,174,260 5  None12 
Nevada  $4,510,532  Not Available10 
New Hampshire  $621,931  Single-Source  $78,914  Not Available 
New Jersey  $2,274,470  None14 
New Mexico  $563,289  None12 
New York  $23,301,898  None12 
North Carolina  $14,817,041  Single-Source  $3,522,962  $3,285,105 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  15  A P P E N D I X ~ A  
North Dakota  $367,185  None12 
Ohio  $13,344,648  None14 
Oklahoma  $3,880,609  None12 
Oregon  $8,569,989  Single-Source  $1,437,366  Not Available 
Pennsylvania  $772,931  All  Not Available  Not Available 
Rhode Island  $527,412 8  Single-Source  Not Available  Not Available 
South Carolina  $10,277,645  Single-Source  Not Available  Not Available 
South Dakota  $591,771  None13 
Texas  $35,534,137  None13 
Utah  $1,095,075  None12 
Vermont  $1,247,256  None1 
Virginia  $2,597,819  Single-Source  $612,957  Not Available 
Washington  $17,740,284  None2 
West Virginia  $6,529,169 3  None12 
Wisconsin  $3,548,728  Single-Source  $634,259  Not Available 
Wyoming  $269,851  None14 
4911  $364,153,722  $22,539,571  $16,563,651 
Sources: State Medicaid agency data provided to OIG January-March 2003, and CMSs Medicaid Statistical Information System 
1 After 2001, State began to collect rebates on single-source drugs. 
2After 2001, State began collecting rebates for drugs billed by the 8 highest paid providers. 
3Fiscal year data. 
4Eleven months of data. 
5Based on service (not payment) dates. 
6This States data is represented entirely by local codes or non-specific codes. 
7Includes crossover drug claims from Medicare. 
8 State did not provide financial data to us. Therefore, we used data from CMSs Medicaid Statistical Information System. 
9State provided us with payments but not units. Therefore, we used units from CMSs Medicaid Statistical Information System to calculate potential 
savings. Potential savings are in Table 3.

10 State provided us with financial data but did not respond to the questions.

11 Arizona and Tennessee did not participate in the Medicaid Drug Rebate Program at the time of our study.

12 State said it planned to collect rebates for physician-administered drugs in the future, but the plans were not specific.

13 State said it had specific plans underway to collect rebates for physician-administered drugs.

14 State did not plan to collect rebates for physician-administered drugs.

OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  16  A P P E N D I X ~ A  
Table 2.  Selected Physician-Administered Multiple-Source Drugs (n=40) 
Procedure Code  Description 
J0640  INJECTION, LEUCOVORIN CALCIUM, PER 50 MG 
J1040  INJECTION, METHYLPREDNISOLONE ACETATE, 80 MG 
J1100  INJECTION, DEXAMETHASONE SODIUM PHOSPHATE, 1MG 
J1245  INJECTION, DIPYRIDAMOLE, PER 10 MG 
J1561  INJECTION, IMMUNE GLOBULIN, INTRAVENOUS, 500 MG 
J1562  INJECTION, IMMUNE GLOBULIN, INTRAVENOUS, 5 GMS 
J1563  INJECTION, IMMUNE GLOBULIN, INTRAVENOUS, 1G 
J1631  INJECTION, HALOPERIDOL DECANOATE, PER 50 MG 
J1642  INJECTION, HEPARIN SODIUM, (HEPARIN LOCK FLUSH), PER 10 UNITS 
J1644  INJECTION, HEPARIN SODIUM, PER 1000 UNITS 
J1750  INJECTION, IRON DEXTRAN, 50 MG 
J1885  INJECTION, KETOROLAC TROMETHAMINE, PER 15 MG 
J2000  INJECTION, LIDOCAINE HCL, 50 CC 
J2275  INJECTION, MORPHINE SULFATE (PRESERVATIVE-FREE STERILE SOLUTION), PER 10 MG 
J2550  INJECTION, PROMETHAZINE HCL, UP TO 50 MG 
J2680  INJECTION, FLUPHENAZINE DECANOATE, UP TO 25 MG 
J2912  INJECTION, SODIUM CHLORIDE, 0.9%, PER 2 ML 
J3370  INJECTION, VANCOMYCIN HCL, 500 MG 
J7050  INFUSION, NORMAL SALINE SOLUTION, 250 CC 
J7190  FACTOR VIII (ANTIHEMOPHILIC FACTOR, HUMAN) PER I.U. 
J7192  FACTOR VIII (ANTIHEMOPHILIC FACTOR, RECOMBINANT) PER I.U. 
J7194  FACTOR IX, COMPLEX, PER I.U. 
ALBUTEROL, ALL FORMULATIONS INCLUDING SEPARATED ISOMERS, INHALATION 
J7619  SOLUTION ADMINISTERED THROUGH DME, UNIT DOSE FORM, PER 1 MG 
J9000  DOXORUBICIN HCL, 10 MG 
J9040  BLEOMYCIN SULFATE, 15 UNITS 
J9060  CISPLATIN, POWDER OR SOLUTION, PER 10 MG 
J9062  CISPLATIN, 50 MG 
J9181  ETOPOSIDE, 10 MG 
J9182  ETOPOSIDE, 100 MG 
J9190  FLUOROURACIL, 500 MG 
J9209  MESNA, 200 MG 
J9265  PACLITAXEL, 30 MG 
J9370  VINCRISTINE SULFATE, 1 MG 
Q0136  INJECTION, EPOETIN ALPHA, (FOR NON ESRD USE), PER 1000 UNITS 
Q9930  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 30 
Q9932  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 32 
Q9933  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 33 
Q9934  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 34 
Q9935  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 35 
Q9936  INJECTION OF EPO, PER 1000 UNITS, AT PATIENT HCT OF 36 
Source: CMSs 2001 list of Healthcare Common Procedure Codes 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  17
 A P P E N D I X ~ A  
Table 3.  Potential Medicaid Savings on Rebates for Physician-Administered Drugs in 2001 
Potential Savings for All  Potential Savings for Selected Number of Selected Multiple-
Single-Source Physician- Multiple-Source Physician- Source Drugs With State  Total Potential 
State  Administered Drugs  Administered Drugs (n=40)  Payments in 2001 (n=40)  Savings4 
Florida1  $5,528,662  $1,391,713  27  $6,920,375 
Texas  $5,322,837  $750,305  30  $6,073,142 
Washington1  $2,271,591  $259,842  20  $2,531,432 
Alabama1  $1,341,721  $978,014  38  $2,319,735 
Ohio  $2,007,335  $271,809  28  $2,279,144 
New York  $1,238,323  $347,384  30  $1,585,707 
Mississippi  $1,412,029  $83,198  24  $1,495,227 
West Virginia  $1,296,469  $197,225  29  $1,493,694 
Maryland1  $1,254,053  $140,015  29  $1,394,069 
Minnesota  $936,016  $143,601  32  $1,079,617 
Iowa  $823,714  $223,213  38  $1,046,927 
Arkansas  $999,389  $71,679  23  $1,071,068 
Nebraska  $832,833  $153,363  26  $986,195 
Oklahoma  $797,371  $44,944  25  $842,315 
New Jersey  $455,750  $44,965  30  $500,715 
Montana  $433,828  $44,894  30  $478,722 
Kentucky1  $440,601  $30,568  10  $471,169 
Colorado  $367,984  $45,422  28  $413,406 
Louisiana1  $241,741  $159,806  23  $401,547 
Alaska  $359,894  $41,153  21  $401,047 
Idaho  $243,772  $75,102  36  $318,874 
North Carolina2  $307,865  30  $307,865 
Vermont1  $275,045  $25,902  22  $300,947 
Maine  $247,267  $25,778  27  $273,045 
Utah  $211,677  $13,203  27  $224,880 
Indiana2  $210,665  32  $210,665 
Michigan2  $181,748  28  $181,748 
South Carolina2  $175,382  27  $175,382 
District of Columbia  $127,635  $5,107  25  $132,742 
Connecticut2  $132,157  37  $132,157 
Kansas2  $112,065  31  $112,065 
South Dakota  $102,510  $6,605  25  $109,115 
North Dakota  $74,405  $2,897  15  $77,302 
Illinois  $59,909  $4,954  30  $64,862 
Wyoming  $37,194  $5,008  13  $42,202 
Wisconsin2  $42,289  26  $42,289 
Georgia2  $39,815  16  $39,815 
Rhode Island2  $19,063  22  $19,063 
Oregon2  $18,152  18  $18,152 
New Mexico  $12,055  $1,598  22  $13,653 
Virginia2  $9,938  5  $9,938 
New Hampshire2  $6,042  18  $6,042 
Delaware2  $361  13  $361 
433  $29,753,610  $6,844,810  $36,598,420 
Sources: State Medicaid agency data provided to the OIG January -March 2003, CMSs Medicaid Statistical Information System, Medicaid Drug Rebate 
Initiative database, and Single Drug Price contractors Part B Drug Calculation File 
1These States began collecting rebates on physician-administered drugs after 2001. 
2 These States collected rebates on single-source drugs in 2001.  We did not estimate potential savings on single-source drugs if a State collected rebates on 
these drugs . California collects rebates for single-source drugs but is not in this table because they use local codes. 
3Arizona and Tennessee did not participate in the Medicaid Drug Rebate Program at the time of our study. California and Massachusetts are not in this table 
because they use local and non-specific codes,respectively. Hawaii, Missouri, and Pennsylvania are not in this table because they use national drug codes 
and collect rebates on all physician-administered drugs. Nevada is not in this table because they did not respond to our questions asking if they collect 
rebates for physician-administered drugs. 
4The sum of potential savings for single-source and multiple-source drugs may not exactly equal total potential savings due to rounding. 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  18    A P P E N D I X   ~   B

Agency Comments 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  19
 A P P E N D I X ~ B  
Agency Comments 
OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  20
 A C K N O W L E D G M E N T S

This report was prepared under the direction of Robert A. Vito, 
Regional Inspector General for Evaluation and Inspections in 
the Philadelphia Regional Office, and Linda M. Ragone, Deputy 
Regional Inspector General. Other principal Office of 
Evaluation and Inspections staff who contributed include: 
Isabelle Buonocore, Team Leader

Edward Burley, Program Analyst

Cynthia R. Hansford, Program Assistant

Linda Frisch, Program Specialist

Tricia Davis, Director, Medicare and Medicaid Branch

Technical Assistance 

Linda Moscoe, Program Analyst

OEI-03-02-00660  MEDICAID REBATES FOR PHYSICIAN-ADMINISTERED DRUGS  21