June 10, 2023

Health insurance giant Centene Corp. has agreed to pay Texas $165.6 million to resolve claims it overcharged the state’s Medicaid program for pharmacy services, a deal California officials are closely watching.

It is the largest known payout by the nation’s largest Medicaid insurer over drug pricing practices. The agreement was signed on July 11 but was not publicly announced until Monday after Kaiser Health News obtained one Copy of settlement Through a texas public records request and start asking questions.

The agreement makes Texas at least the 12th state to settle pharmacy billing claims with St. Louis-based Centene.

Sentine did not respond to multiple requests for comment about the Texas settlement. But that’s several settlements, and Centene has denied wrongdoing between the president and chief operating officer Brent Layton said last year The settlements in Ohio and Mississippi reflect the company’s “commitment to making healthcare local, simple and transparent” and allow it to continue its “relentless focus on delivering high-quality outcomes to our members.”

Most states contract with private insurance companies such as Centene to cover Medicaid recipients who have disabilities or have low incomes. State Medicaid programs are jointly funded by state and federal taxpayers. In many of these states, insurance companies administer Medicaid prescription drugs through what’s called a pharmacy benefit manager to get lower prices. Such as working as a benefits manager Intermediaries between drug manufacturers and health insurers and between health plans and pharmacies. Centene provides both of these services in multiple states.

Medicaid provided a large launching pad for Centene’s growth and revenue. The company is the nation’s largest Medicaid managed-care insurer, offering benefits 15.4 million enrolled Nationwide

Multiple states have filed complaints against Centene’s pharmacy manager business, alleging that it overbilled their Medicaid programs for prescription drugs and pharmacy services. State totals are not publicly known. Centene settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire, New Mexico, Ohio, Texas and Washington for a total of $475 million, according to news releases and settlement documents from those states’ attorneys general. The other three states and the extent of their settlements were not identified by Sentin or the states themselves.

The company’s first settlement came in 2021 with Ohio and Mississippi. The $88 million Centine agreed to pay Ohio before the deal with Texas was its largest public settlement.

Exactly how the agency may have overcharged the states, or failed to meet the terms of its contract, was not disclosed in the settlement, said Joey Mattingly, University of Maryland School of Pharmacy Associate Professor Dr. “There are many ways you can overcharge Medicaid,” Mattingly said. “It’s pretty amazing that’s the number of these states.”

The Texas settlement is not expected to be Centene’s final payment. A July filing With the U.S. Securities and Exchange Commission, Centene wrote that “discussions are underway to bring about a final resolution” to drug billing concerns in “other affected states” but did not specify the states. It also allocated $1.25 billion in 2021 to address pharmacy benefit manager settlements.

Other states may include California, which is investigating Centene’s role in providing pharmacy benefits to its Medicaid enrollees. KHN first reported on April. Florida and South Carolina signed legal agreements with a Mississippi-based firm, Liston & Dees, which has represented other states, including Texas, in their search for pharmacy facilities in Centene.

Still, the settlement did not end the business relationship. In Ohio and Mississippi, the company renewed original state managed-care contracts after settling pharmacy benefit complaints.

And just last week, Centene announced that it renewed the company’s Texas-affiliated, Superior Health Plan’s contract to provide health care to foster care children and youth, despite a July settlement over Texas’ handling of its prescription drugs. Centene did not disclose financial terms of the new deal.

An undisclosed portion of the Texas prescription drug settlement is expected to go to the federal government because it helps fund Medicaid. Centine’s deal with Texas requires the company to pay half of the settlement amount in August.

Centene likely agreed to pay more in Texas than in Ohio because of the higher number of prescription drug claims, said Antonio Ciaccia, its president. 3 axis advisorA consulting firm that worked with Liston & Deas on drug billing issues

“The results we achieved in this case send a clear message to providers that Texas expects transparency from its Medicaid partners as required by Texas law,” Atty. General Ken Paxton Dr a statement. The department did not clarify why it did not disclose the settlement earlier.

Pharmacy benefit managers in general have faced increasing scrutiny and criticism. Federal Trade Commission announced in June That it is launching an investigation into the pharmacy benefit management industry and its impact on consumer access to prescription drugs and drug costs.

“You’re seeing a growing recognition that this is a significant part of the drug affordability problem in our country,” said Erin Trish, associate professor at the USC School of Pharmacy. “It’s actually a pretty consolidated and poorly functioning industry that’s been shrouded in obscurity and secrecy for a decade or more now.”

Produced this story KHNwhich reveals California HealthlineAn editorially independent service California Health Care Foundation. Rebecca Grapevine contributed to this article.

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