Utah Medicaid fails to collect nearly $50M in drug rebates, state auditor reports

SALT LAKE CITY — The state of Utah may have failed to collect nearly $50 million, all from drug manufacturing companies. An audit released Thursday found a Medicaid software upgrade three years ago has been failing to apply for drug rebates.

The state auditor, Tina Cannon, told KSL it's possible that money is gone for good. She says her biggest concern with this report is that the issue was flagged years ago, and it's just now being addressed.

Every year, the State Auditor's Office takes a deep dive into all federal funding coming into the state, including Medicaid run by the Department of Health and Human Services. In response to budget cuts, HHS transitioned some of its computer systems to an outside vendor back in 2023. Almost immediately, auditors flagged the rebate system.

Cannon said, "This is the third time we have had this same finding."

Now, HHS says it is working on submitting those missed claims.

"Our concern is, there is an expiration date on these reimbursements. And, typically, it's the end of the next quarter," explained Cannon.

HHS says that at this point, it has worked with the vendor to fix the rebate invoice system and has a plan to submit all claims moving forward. It says it feels "confident these actions will ensure the rebates, which the state is entitled, will be recouped."

Auditor Cannon says, HHS isn't the only department dealing with a similar issue, "This is becoming a constant finding across computer systems at state agencies across the state."

She encourages agencies facing budget cuts to emphasize talent retention, especially during large transitions.

"Sometimes you can only cut so far and still provide the type of services that are necessary for government to provide and to have the expertise to make sure government is functioning properly," said Cannon.

Related topics