Centene to Pay $166 Million to Texas in Medicaid Drug Pricing Settlement

Medical insurance big 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 most important 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 replica of the settlement by means of a Texas public information request and commenced 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. But it surely has denied wrongdoing in a number of settlements, and Centene President and Chief Working Officer Brent Layton stated final 12 months 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 deal with delivering high-quality outcomes to our members.”

Most states contract with non-public insurance coverage firms resembling Centene to cowl individuals who have disabilities or earn low incomes of their state Medicaid packages, that are collectively paid for by state and federal taxpayers. In a lot of these states, the insurance coverage firm handles Medicaid prescription medicines by means of what is named a pharmacy profit supervisor, or PBM, to get decrease costs. Such profit 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 development and income. The corporate is the biggest Medicaid managed-care insurer within the nation, offering medical insurance advantages to fifteen.4 million enrollees nationwide.

A number of states have pursued allegations towards Centene’s pharmacy supervisor enterprise, alleging that it overbilled their Medicaid packages for pharmaceuticals and pharmacy companies. The entire variety of states is just not 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 keeping with information releases and settlement paperwork from attorneys basic 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 could have overcharged states, or failed to satisfy the phrases of its contracts, is just not disclosed within the settlements, stated Joey Mattingly, affiliate professor on the College of Maryland College of Pharmacy. “There are a number of methods you can 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 last PBM payout. In a July submitting with the U.S. Securities and Trade Fee, Centene wrote that “it’s in discussions to deliver last decision” to drug billing considerations 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 brought about 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 predicted 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 most likely agreed to pay extra to Texas than Ohio due to a bigger variety of prescription drug claims there, stated Antonio Ciaccia, president of three 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 legislation,” stated Legal professional Normal Ken Paxton in a press release. The workplace didn’t make clear why it didn’t disclose the settlement earlier.

Pharmacy profit managers on the whole have drawn rising scrutiny and criticism. The Federal Commerce Fee introduced in June that it was launching an investigation into the pharmacy profit administration business and its impression on client entry to pharmaceuticals and medicine prices.

“You’re seeing rising recognition that this is a vital 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 fairly 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.

This story was produced by KHN (Kaiser Well being Information), a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is without doubt one of the three main working packages at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering info on well being points to the nation.

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