Medical insurance large Centene Corp. has agreed to pay $165.6 million to Texas to resolve claims that it overcharged the state’s Medicaid program for pharmacy companies.
It’s the largest recognized payout by the nation’s largest Medicaid insurer over its drug pricing practices. The deal was signed July 11 however hadn’t been publicly introduced till Monday after KHN obtained a copy of the settlement by means of a Texas public information request and started asking questions.
The settlement makes Texas not less than the twelfth state to settle pharmacy billing claims with St. Louis-based Centene.
Centene didn’t reply Monday to a number of requests for remark concerning the Texas settlement. Nevertheless it has denied wrongdoing in a number of settlements, and Centene President and Chief Working Officer Brent Layton said last year that settlements in Ohio and Mississippi mirrored the corporate’s “dedication to creating the supply of healthcare native, easy and clear” and permit it to proceed its “relentless concentrate on delivering high-quality outcomes to our members.”
Most states contract with non-public insurance coverage corporations comparable to Centene to cowl individuals who have disabilities or earn low incomes of their state Medicaid applications, that are collectively paid for by state and federal taxpayers. In lots of these states, the insurance coverage firm handles Medicaid prescription drugs by means of what is known as a pharmacy profit supervisor, or PBM, to get decrease costs. Such benefit managers act as middlemen between drugmakers and well being insurers and as intermediaries between well being plans and pharmacies. Centene has supplied each these companies in a number of states.
Medicaid has supplied a giant launching pad for Centene’s progress and income. The corporate is the biggest Medicaid managed-care insurer within the nation, offering medical insurance advantages to 15.4 million enrollees nationwide.
A number of states have pursued allegations towards Centene’s pharmacy supervisor enterprise, alleging that it overbilled their Medicaid applications for pharmaceuticals and pharmacy companies. The overall variety of states will not be publicly recognized. Centene has settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire, New Mexico, Ohio, Texas, and Washington for a complete of $475 million, in line with information releases and settlement paperwork from attorneys normal in these states. Three different states and their settlement quantities haven’t been recognized by Centene or the states themselves.
The corporate’s first settlements got here in 2021 with Ohio and Mississippi. The $88 million that Centene agreed to pay Ohio was its largest public settlement quantity earlier than the cope with Texas.
Precisely how the corporate might have overcharged states, or failed to fulfill the phrases of its contracts, will not be disclosed within the settlements, stated Joey Mattingly, affiliate professor on the College of Maryland College of Pharmacy. “There are quite a lot of methods you could possibly overcharge Medicaid,” Mattingly stated. “It’s fairly wonderful that it’s this variety of states.”
The Texas settlement isn’t anticipated to be Centene’s remaining PBM payout. In a July filing with the U.S. Securities and Alternate Fee, Centene wrote that “it’s in discussions to carry remaining decision” to drug billing issues in “different affected states” however didn’t specify the states. It put aside $1.25 billion in 2021 to resolve the pharmacy profit supervisor settlements.
Among the many different states could also be California, which is investigating Centene’s position in offering pharmacy advantages to its Medicaid enrollees, KHN first reported in April. Florida and South Carolina have signed authorized agreements with a Mississippi-based agency, Liston & Deas, that has represented different states, together with Texas, of their pharmacy profit inquiries into Centene.
Nonetheless, the settlements haven’t precipitated the enterprise relationships to finish. In Ohio and Mississippi, the corporate has renewed key state managed-care contracts after settling the pharmacy profit allegations.
And simply final week, Centene introduced that Texas had renewed the contract of the corporate’s Texas affiliate, Superior HealthPlan, to ship well being care to foster care youngsters and youths — regardless of the July settlement over its prescription drug administration. Centene didn’t disclose the brand new contract’s monetary phrases.
An undisclosed portion of the Texas prescription drug settlement is anticipated to go to the federal authorities due to its position in serving to finance Medicaid. Centene’s settlement with Texas required the corporate to pay half the settlement quantity in August.
Centene in all probability agreed to pay extra to Texas than Ohio due to a bigger variety of prescription drug claims there, stated Antonio Ciaccia, president of 3 Axis Advisors, a consulting agency that has labored with Liston & Deas on drug billing points.
“The outcomes we achieved on this case ship a transparent message to suppliers that Texas expects transparency from its Medicaid companions as required by Texas regulation,” stated Legal professional Common Ken Paxton in a statement. The workplace didn’t make clear why it didn’t disclose the settlement earlier.
Pharmacy profit managers typically have drawn rising scrutiny and criticism. The Federal Commerce Fee announced in June that it was launching an investigation into the pharmacy profit administration business and its influence on shopper entry to pharmaceuticals and drugs prices.
“You’re seeing rising recognition that this is a crucial a part of the drug affordability drawback in our nation,” stated Erin Trish, affiliate professor on the College of Southern California College of Pharmacy. “That is truly a reasonably consolidated and poorly functioning business that’s hidden beneath the veil of opacity and secrecy for a decade or so now.”
Rebecca Grapevine contributed to this text.