(Story updated January 11, 2017 at 11:56 a.m. ET)
The state of Colorado falsely claimed $6.5 million in Medicaid reimbursement over three years after it failed to comply with drug rebate regulations, according to a report from HHS' Office of Inspector General.
The OIG found that the Colorado Department of Health Care Policy and Financing didn't properly follow requirements under the Medicaid drug rebate program from 2010 to 2012.
For outpatient drugs to be eligible for reimbursement, manufacturers must enter into rebate agreements with the CMS. The state is required to invoice manufacturers for the rebates and submit data on drug use.
According to the OIG, Colorado didn't invoice manufacturers for rebates totaling $13 million in eligible physician-administered drugs, $6.5 million of which was federal dollars. The agency also found Colorado didn't submit utilization data necessary to secure rebates for $1.3 million in federal claims. But the OIG was unable to determine if these claims were false and recommended the state work with the CMS to determine if they are.
The OIG also said Colorado should refund the CMS the $6.5 million it did conclude was falsely claimed.
A spokesman for the Colorado Department of Health Care Policy and Financing said the department doesn't agree with the OIG's audit findings. The agency is currently working to invoice all rebate-eligible drugs so no funds will need to be reimbursed to the CMS. They expect to begin the invoice process in February after they have launched a new pharmacy benefits management system, he said. In the event that any eligible drugs can't be invoiced, Colorado will work with the CMS to determine whether the funds should be refunded.
The Colorado health department also said it would update its systems on a quarterly basis to ensure that billing codes are valid.
