Ten states are failing to collect drug company rebates under Medicaid, costing taxpayers hundreds of millions a year.

At least 10 states are failing to collect rebates from drug manufacturers required by a new provision in President Barack Obama’s health care law, an oversight that is costing taxpayers hundreds of millions of dollars a year in the already burdened Medicaid program.
Since 1990, state Medicaid programs have been allowed to collect rebates from drug makers for treating poor patients with their products, and more than 600 companies are participating in the program that leverages the government's bulk buying power. However, the rebate program did not extend to managed care organizations that increasingly provide medical care and prescriptions under Medicaid.
The 2010 health care law championed by Obama extended the rebate program to the managed care providers (MCOs), which have become an increasingly important middle man in the health care system for the poor and disabled.
The Health and Human Services Department inspector general reported Monday it looked at 22 states using the managed care outlets and eligible for the drug rebates. It found while most of the states were collecting information about drug prescriptions by MCOs needed to invoice for the rebates, only 12 were actually collecting the rebates.

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