Like most Americans, Brockport and Sweden residents complain that their local governments waste money, which results in higher taxes. But maybe it’s time to put things in perspective. The town and village governments may waste the taxpayer’s money, but they can’t hold a candle to the money wasted in Albany.
In his regular press release this week, New York State Comptroller Thomas DiNapoli revealed that his department’s audit of the State Department of Health (DOH) found that state Department of Health did not collect $95.1 million that it was due in rebates from drug makers last year.
According to the Comptroller’s audit, Medicaid Claims Processing Activity October 1, 2014 Through March 31, 2015, “The Department of Health administers the State’s Medicaid program. The Department’s eMedNY computer system processes Medicaid claims submitted by providers for services rendered to Medicaid-eligible recipients, and it generates payments to reimburse the providers for their claims.”
The missed payments are part of the Medicaid Drug Rebate Program, which was created by Congress in 1990 as a way to reduce state and federal expenditures for Medicaid prescriptions. Since the inception of that law, New York State has been able to recover a portion of its Medicaid prescription drug costs by requesting rebates from drug manufacturers. Then in 2010, the Affordable Care Act extended the coverage to medications dispensed to enrollees of Medicaid managed care organizations (MCOs).
All the State Department of Health has to do is apply for the rebates and the drug manufacturers will pay the rebate. The Department of Health uses information from its Medicaid claims processing system (eMedNY) to identify which prescription drugs purchased by the State are eligible for rebates. Then the DOH calculates the quarterly rebates for each drug and submits invoices to each of the drug manufacturers. However, Comptroller DiNapoli’s auditors determined that the Department of Health did not take the steps needed to maximize rebate collections.
For example, the Department of Health did not apply for rebates worth $35 million on physician-administered drug claims. The auditors found that Department of Health managers had made internal decisions to exclude certain procedure codes from the rebate process, and that the Department of Health failed to include information during processing that would have led to bigger rebates. Among the auditors’ findings were:
- $14.3 million in uncollected rebates for drugs provided by emergency departments, hospital outpatient departments, and providers in clinical settings.
- $13.7 million in rebates that were missed because of inaccurate claim information.
- $8.7 million in uncollected rebates due to errors in the invoicing process that prevented the Department of Health from properly identifying rebate-eligible claims.
The findings in the Comptroller’s audit published Thursday mirror those of a similar report released in February 2015 that found the Department of Health did not collect nearly $120 million in available rebates over a 33-month period because of ineffective policies and processes.
According to the Comptroller’s last two audits of the State Department of Health, that’s $215 million in wasted taxpayer’s money. Keep that in mind when you join the many Americans who complain that their local governments waste the taxpayer’s money.