18. Drug Rebates

18.1. Rebate Administration

The Medicaid Drug Rebate Program is a partnership between the Centers for Medicare & Medicaid Services (CMS), state Medicaid agencies, and participating drug manufacturers working together to offset the federal and state costs of outpatient prescription drugs dispensed to Medicaid patients. Approximately 600 manufacturers currently participate in this program.

VDP receives federal funds for prescription claims on drugs made by manufacturers participating in the Medicaid Drug Rebate program. Manufacturers agree to pay rebates according to their state and federal contracts in return for having drugs covered by Texas Medicaid.

18.2. Desk Reviews and Disputes

Each calendar quarter, the VDP rebate administration staff summarize all paid claims by drug and bill the drug companies for their products. The manufacturer pays the invoice but may have questions about the reported utilization. If this occurs, the rebate administrator staff will review the claim level data for the specific drug.

Rebate administration staff will direct questions about managed care claims to the MCO for resolution.

18.2.1. Pharmacy Claims

If a manufacturer disputes a claim, the rebate administration staff will contact either VDP or the dispensing pharmacy for clarification of claims paid by HHSC, or refer the dispute to the MCO. 

If the pharmacy has made an error, and the service date of the claim is within the 90-day filing period, the pharmacy can reverse the original claim and resubmit the corrected data. If the claim is outside the 90 days, the rebate administration staff will instruct VDP or MCO staff how to correct the claim.

Common dispute reasons include:

  • Omission of a decimal point 
  • The quantity claimed does not match the package size (e.g., 14.5-grams claimed and the NDC is for a 17-gram inhaler)
  • Excess quantity, the result of a valid keying error, or the pharmacy billed the claim using the wrong unit of measure (e.g., entered a quantity of 300 and the price is for 30)
  • Low reimbursement, the result of keying errors or billing the wrong unit of measure

Pharmacy staff should ensure the units submitted are accurate for the claim and product.  Any pharmacy eligible for discounts through the Health Resources and Services Administration 340B designation should submit claims with appropriate modifiers.

18.2.2 Clinician-Administered Claims

The manufacturer will dispute a claim in the following situations:

  • Omission of the decimal point
  • The provider rounds the quantity up to the following whole number
  • The provider does not enter the number of units administered based on the Healthcare Common Procedure Coding System (HCPCS) description and conversion factor.

 If a manufacturer disputes a claim, the rebate administrator staff will contact VDP for clarification.

Common dispute reasons include:

  • The quantity administered was not reported correctly. This is most common if the HCPCS description is for more than 1.  For example, the description for HCPCS code J1885 is "Injection, ketorolac tromethamine, per 15 mg", therefore 15 mg equals 1 HCPCS unit. If 15 mg is administered, then the correct number of HCPCS units to claim is 1, not 15. Likewise, if 30 mg is administered, the number of units claimed would be 2. The number of HCPCS must then be converted to reflect the correct units for the NDC used.
  • Low reimbursement is received for the quantity of services provided or the amount claimed.
  • A missing or invalid NDC on the claim