Audit of the Medicaid Drug Rebate Program in North Dakota, A-07-03-04019

Office of Inspector General Offlces of Audit Services Region VII 601 East 12th Street Room 284A October 8,2003 Kansas City, Missouri 64106 AReport Number A-07-03-040 1 9 I ' Mr. Dave Zetner, Director, Medical Services North Dakota Department of Human Services 600 E. Boulevard Ave. Bismarck, ND 58505-0250 Dear Mr. Zetner: Enclosed are two copies of the U.S. Department of Health and Human Services (HHS), Office of Inspector General, Office of Audit Service's (OAS) report entitled "Audit of the Medicaid Drug Rebate Program in North Dakota. " The audit objective was to evaluate whether the North Dakota Department of ~uman Services (DHS) had established adequate accountability and internal controls over the Medicaid drug rebate program. We determined the DHS had adequate controls over the drug rebate program as required by Federal regulations except for billing and tracking $0 unit arnount(s) (URA's). Specifically, Federal regulations require effective control over and accountability for all funds, property and other assets. This issue occurred because the DHS did not develop or follow adequate policies and procedures with regard to $0 URAs. As a result of the $0 URA issue, drug rebate receivables were perpetually understated and the DHS may not have received all possible drug rebates due from manufacturers. We recommend that at a minimum, the DHS should develop and follow policies and procedures that include controls designed to track $0 URA line ...