ANNAPOLIS, Md. — The Maryland Department of Health failed to routinely audit pharmacy claims across three state programs responsible for approximately $674.5 million in payments during fiscal year 2025, leaving potential billing violations, fraud, waste and abuse harder to detect, according to a new state audit.
The Office of Legislative Audits issued the report July 13, 2026, following a review of Maryland’s pharmacy services from Jan. 1, 2023, through Oct. 15, 2025.
Auditors found the department did not audit pharmacy activity for the Maryland Medicaid Pharmacy Program, the Breast and Cervical Cancer Diagnosis and Treatment Program, and the Kidney Disease Program.
Together, those programs accounted for about 95% of the $710.2 million in fee-for-service pharmacy claims paid during fiscal year 2025.
The finding was not new. Auditors reported that the same problem had been identified in two previous audits dating back to 2020 but remained unresolved.
Auditors Say Routine Reviews Could Detect Improper Claims
The report states that routine pharmacy audits could uncover policy violations, billing problems and possible fraud, waste or abuse.
Auditors pointed to reviews conducted for the Maryland AIDS Drug Assistance Program, which identified approximately $840,000 in claims from calendar years 2021 through 2023 that needed to be recovered.
The report also noted that audits can verify information unavailable through the state’s automated pharmacy system, including whether patients actually picked up their prescriptions.
Maryland regulations require pharmacies to reverse a claim and reimburse the state when a prescription is not collected within 14 days.
172 Pharmacies Had Unusually Low Reversal Rates
Auditors analyzed approximately $1.8 billion in Medicaid pharmacy claims processed during the audit period and found numerous pharmacies with claim-reversal rates well below the program average of 23%.
A total of 172 pharmacies, representing approximately $161.7 million in paid net claims, reversed less than 5% of their claims.
The audit did not conclude that those payments were improper. However, it cited guidance from the U.S. Government Accountability Office indicating that unusually low or high adjustment rates may warrant additional review.
Auditors recommended that the Department of Health investigate those pharmacies and take appropriate follow-up action.
Previous Audit Plan Was Never Carried Out
After the issue was raised in an earlier audit, the department indicated that the independent Office of the Inspector General for Health would review pharmacy claims and pharmacies with below-average reversal rates.
In October 2025, however, the inspector general’s office notified the department that it could not perform compliance functions on the department’s behalf.
Those audits were never completed.
The Office of Legislative Audits recommended that the health department establish procedures to periodically test pharmacy claims in each program and investigate pharmacies with unusually low reversal rates.
Health Department Plans Outside Audits
The Maryland Department of Health agreed with the findings but emphasized that the $674.5 million in claims reviewed by auditors does not represent a finding that the entire amount was improperly paid.
The department stated that its current pharmacy claims system already uses automated safeguards to identify and reject questionable claims before payment.
Those controls include quantity limits, clinical requirements, reviews for high-cost medications, checks for inactive providers and real-time verification of other available insurance coverage.
The department nevertheless agreed that regular claims audits are an industry best practice.
Rather than issue a new contract, the agency plans to modify its existing pharmacy-vendor contract to add outside auditing services.
Under the department’s proposed timeline, it plans to draft the scope of work by Sept. 1, 2026, seek a vendor cost proposal by Nov. 1 and pursue funding and approval for the contract modification.
The department expects the expanded audit services to begin by July 1, 2027, pending funding availability.
State Paid More Than 5.4 Million Claims
According to the report, Maryland’s four fee-for-service pharmacy programs processed more than 5.4 million claims for approximately 355,000 recipients during fiscal year 2025.
The programs paid roughly $710.2 million in claims and received nearly $386 million in drug-manufacturer rebates, leaving net payments of approximately $324.2 million.
The Medicaid Pharmacy Program represented the overwhelming majority of the activity, with more than 5.3 million claims and approximately $670.9 million in payments.
Read the full audit report below:
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Fraud? Oh my, not our Demoncrat administration, run by Gov. SpendMoore or should that be Gov. GraftMoore? Gov. SpendMoore would probably make a good golfer, because he always gets it in the hole, just like he has done with Md.