Objective

To determine whether Medicaid made improper payments on pharmacy claims for early refills of prescription drugs and supplies. The audit covered the period from April 2023 through October 2024.

About the Program

The Department of Health (DOH) administers New York’s Medicaid program. Beginning April 1, 2023, enrollees in mainstream Medicaid managed care plans, Health and Recovery Plans, and HIV-Special Needs Plans receive pharmacy benefits through NYRx, New York State Medicaid’s Pharmacy program. Through NYRx, DOH pays pharmacies directly for medically necessary prescription drugs and supplies provided to Medicaid members. Early refills are refills on prescriptions before the previous supply has been fully used. States set early refill thresholds to prevent misuse, overuse, and diversion, while also ensuring medications are dispensed safely and appropriately. According to the New York Medicaid Pharmacy Manual, a pharmacy claim will be paid when more than 75% of the previously dispensed amount has been used, or up to a 10-day supply of medication is remaining of the cumulative amount that has been dispensed over the previous 90 days (the more stringent rule will apply). To prevent stockpiling and potential misuse of medication, DOH uses system controls known as edits to deny claims for early refills that violate DOH policy.

Key Findings

For the period from April 2023 through October 2024, we identified over 3.6 million claims totaling approximately $585.2 million for drugs and supplies refilled too early. While many claims were filled just a few days earlier than allowed by policy, nearly 43% of our findings had 20 or more excess supply days. For example, we identified one member who received 36 fills (20-day supply each) of the same drug from April 2023 through June 2024, resulting in 280 days’ supply on hand at the time of the last fill. These include 31 claims, totaling $622,384, filled earlier than allowed per the New York Medicaid Pharmacy Manual. This example shows that when early refills are continually allowed to bypass edits, the supply on hand can grow excessively high. In response to our findings, DOH officials stated that, in the long run, excess supply from early refills will generally balance out with fewer fills later. However, relying on this overlooks the risks of excessively early refills, such as misuse or diversion, and assumes that future behavior will correct current issues of excessive supply.

We identified multiple weaknesses in DOH’s edit logic that allowed these claims to be paid despite meeting DOH’s criteria for denial. These included situations where controls incorrectly calculated the member’s supply on hand due to historical dispensing patterns or the timing of claim processing. We also identified issues that, without mitigating controls, could allow for additional improper payments. According to DOH officials, DOH does not specifically monitor claims that violate early refill policies, nor has it performed recent risk assessments targeting this area. Due to the sensitive nature of the issues we identified, we disclosed these matters to DOH officials in a preliminary report and, consequently, do not address them in detail in this report.

Key Recommendations

• Conduct a risk-based review of the approximately $585.2 million in payments for drugs and supplies refilled too early and take action, including recoveries, as appropriate.
• Enhance monitoring to identify improper early refill claims, and strengthen eMedNY system controls to address issues related to early refills.