Ohio AG sues Centene, alleging misrepresented pharmacy expenses cost Medicaid millions
Centene called the allegations "unfounded" and pledged to aggressively defend its pharmacy services.
Ohio Attorney General Dave Yost filed a lawsuit this week against health insurer Centene, alleging that company subsidiary Buckeye Health Plan utilized a web of subcontractors for the provision of pharmacy benefits in order to misrepresent pharmacy costs, resulting in millions of dollars of overpayments by the Ohio Department of Medicaid.
Yost said in a statement on Thursday that Centene materially breached its obligations to the state Medicaid program and to the state as a whole, calling it a "conspiracy" and a "complex scheme" to obtain Medicaid payments through deceptive means.
The Ohio Department of Medicaid administers a medical assistance plan that provides coverage to about 2.9 million Ohioans, and it does so through the use of Managed Care Organizations (MCOs), such as Buckeye Health Plan, which administered its pharmacy benefit via sister companies Envolve Health Solutions and Health Net Pharmacy Solutions. The practice of subcontracting to more than one Pharmacy Benefit Manager raised questions about Buckeye Health Plan's business practices and, ultimately, Centene's.
The Office of the Attorney General is alleging breaches of contract, including filing reimbursement requests for amounts already paid by third parties; failing to accurately disclose to ODM the true cost of pharmacy services, including the disclosure of discounts received; and artificially inflating dispensing fees.
As expected, the lawsuit received pushback from Centene, specifically Envolve Health, which claimed the allegations are "unfounded" and pledged to aggressively defend its pharmacy services.
"Envolve's pharmacy contracts with the State are reviewed and pre-approved by state agencies before they ever go into effect," the company said in a statement. "Furthermore, these services saved millions of tax-payer dollars for Ohioans from market-based pharmaceutical pricing."
The lawsuit was filed under seal due to a confidentiality and nondisclosure agreement.
THE LARGER TREND
In 2020, after adding 10 million members, Centene saw full-year revenue of $111 billion, representing 49% growth and adjusted diluted earnings per share of $5, up 13% over the prior year.
Centene's fourth quarter revenues were $28.3 billion, an increase of 50% over the fourth quarter of 2019 and adjusted diluted earnings per share was $0.46 compared to $0.73 last year. CFO, treasurer and executive vice president Jeff Schwaneke said total revenues grew by $9.4 billion over the fourth quarter of 2019 due to the acquisition of WellCare and growth in the Medicaid and Health Insurance Marketplace business.
This growth also includes the impact from the suspension of Medicaid eligibility redeterminations and the reinstatement of the health insurer fee in 2020 – partially offset by the divestiture of Centene's Illinois health plan and retroactive state premium-rate adjustments and risk-sharing mechanisms.
In January, Centene and Magellan Health entered into a definitive merger agreement under which Centene will acquire Magellan Health for $2.2 billion. As a result of the transaction, Centene will establish one of the nation's largest behavioral health platforms across 41 million unique members.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
