HHS OIG: West Virginia Failed to Collect $6.1M in Medicaid Drug Rebates

HHS OIG Reports & Publications

Filed February 10th, 2026

Detected February 12th, 2026

Summary

The HHS Office of Inspector General found that West Virginia failed to collect an estimated $6.1 million in federal rebates for physician-administered drugs dispensed to Medicaid managed-care enrollees. The audit identified failures in internal controls that prevented the state from invoicing manufacturers for these rebates.

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What changed

The HHS Office of Inspector General (OIG) has issued a report detailing that West Virginia failed to obtain an estimated $6.1 million in federal rebates from manufacturers for physician-administered drugs dispensed to Medicaid managed-care enrollees. The audit, conducted by the OIG, found that while West Virginia had policies in place to collect the necessary drug utilization data, its internal controls were insufficient to ensure this data was used to invoice manufacturers and collect the owed rebates.

This finding necessitates that West Virginia refund the $6.1 million federal share to the U.S. government. Although West Virginia did not concur with the OIG's recommendations, it has described corrective actions taken and planned. Compliance officers should review their state's Medicaid drug rebate invoicing processes, particularly for physician-administered drugs within managed care, to ensure robust internal controls are in place to prevent similar financial losses and potential future liabilities.

What to do next

Review state Medicaid drug rebate invoicing processes for physician-administered drugs within managed care.
Ensure internal controls are sufficient to utilize drug utilization data for manufacturer rebate invoicing.
Assess potential financial liabilities related to uncollected rebates.

Penalties

West Virginia must refund $6.1 million (Federal share) to the Federal Government.

Source document (simplified)

West Virginia Did Not Obtain Rebates Associated With Millions of Dollars in Medicaid Physician-Administered Drugs Dispensed to Enrollees of Medicaid Managed-Care Organizations

Issued on

02/10/2026

| Posted on

02/12/2026

| Report number: A-07-24-06116

Report Materials

Why OIG Did This Audit

For a covered outpatient drug to be eligible for Federal reimbursement under the Medicaid program’s drug rebate requirements, manufacturers must pay rebates to the States for the drugs.
States invoice the manufacturers for rebates to reduce the cost of drugs to the program.
This audit, one of a series of OIG audits of the Medicaid drug rebate program, sought to determine whether West Virginia complied with Federal Medicaid requirements for invoicing manufacturers for rebates for physician-administered drugs dispensed to Medicaid managed-care organization (MCO) enrollees.

What OIG Found

West Virginia did not invoice for, and collect from manufacturers, estimated rebates totaling $6.1 million (Federal share) for physician-administered drugs dispensed to MCO enrollees.
Although West Virginia’s policies required the collection of drug utilization data necessary to invoice for rebates on all physician-administered drug claims, West Virginia’s internal controls did not always ensure that the collected data were used to invoice manufacturers and collect rebates for physician-administered drugs dispensed to MCO enrollees.

What OIG Recommends

We recommend that West Virginia refund to the Federal Government the $6.1 million (Federal share) (broken out into two recommendations) for physician-administered drugs. The full recommendations are in the report.

West Virginia did not concur with our recommendations but described corrective actions that it had taken and planned to take.

Report Type Audit HHS Agencies Centers for Medicare and Medicaid Services Issue Areas Managed Care Prescription Drug Target Groups – Financial Groups Medicaid