OIG faults OptionCare over rebate

September 14, 2007

OIG examines OptionCare's vendor rebates

In a review of a $173,805 rebate on OptionCare's 2003 Medicare cost report, the Office of Inspector General (OIG) found that the home infusion provider properly reduced its cost of goods sold by 75% of the rebate ($130,354), but recorded the remaining 25% ($43,451) as revenue, rather than a credit to reduce its healthcare costs. OIG said this is contrary to federal regulations and CMS guidance. OIG recommended that OptionCare revise and resubmit its 2003 Medicare cost report, if not already settled, to properly reflect the $43,451 portion of the rebate as a credit and consider performing a self-assessment of its internal controls to ensure that future vendor rebates are properly credited in its Medicare cost reports. OptionCare disagreed with OIG's findings and recommendations, explaining that the 25% is based on the estimated purchasing volume for its independently owned franchised pharmacies, which are separate from company-owned pharmacies. Asked for a response, Walgreens, which just acquired OptionCare, declined to comment.

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