Centene hands over millions to another state as Medicaid PBM oversight rises


Centene will pay Kansas $32.4 million to resolve the fifth—but not final—allegation that the St. Louis-based insurer overcharged state Medicaid programs for drugs.

The company has reserved $1.25 billion for future settlements related to its Envolve pharmacy benefit manager, which it has since restructured to serve solely as a third-party administrator for processing claims. The nation’s largest Medicaid carrier has so far paid a combined $214 million in settlements to Arkansas, Illinois, Mississippi and Ohio over its now-defunct PBM. Kansas joins more than a dozen other states that hired the law firm Liston & Deas to investigate PBMs’ Medicaid billing and clawback practices, which the states say sidestep bans on spread pricing.

Centene has Medicaid contracts in 30 states and covers 14 million enrollees.

The for-profit company is now on the hunt for a new PBM to manage its $30 billion in annual drug spending and plans to evaluate proposals next year then have a new contractor take over the operations by 2024. In the meantime, Centene is offloading its drug-management platforms. During the third quarter, the insurer paid $229 million to transition from using RxAdvance, a company that offers an automated drug-pricing tool.

Kansas Attorney General Derek Schmidt (R) did not respond to interview requests about the settlement deal, which does not represent an admission of guilt on the insurers’ part.

“We take seriously our role of protecting Kansas taxpayers and finding and stopping fraud and overpayments in the state Medicaid program,” Schmidt said in a news release. “Today’s settlement involving PBM practices is the first of its sort in Kansas and other investigations continue.”

Centene will continue to participate in Kansas’ Medicaid program—known as KanCare—with CVS Health’s Aetna and UnitedHealth Group’s OptumRx. The three companies control 75% of U.S.’ prescription drug claims. Consolidation within the PBM industry has made it hard for regional health plans to find PBMs not owned by their competitors. Many of the startups promising independent operations are simply white glove these PBMs services provided through group purchasing organizations. PBMs enjoyed gross profits of 12% over three years, reaching $28 billion in 2019, according to a report the PBM Accountability Project released last week.

CVS Health, UnitedHealth Group and Centene also handled prescription drugs for Ohio’s Medicaid program when the state’s auditor concluded in 2018 that its middlemen charged $225 million more for drugs than they paid to pharmacies. Next year, Ohio plans to operate its own PBM that the state expects will save $240 million a year.

Centene must rebid to retain its contract with KanCare once its current contract expires in 2023. The company now gives Kansas access to all its pharmaceutical transaction data, from the point of sale through reimbursement, according to the settlement agreement.

“We respect the deep and critically important relationships we have with our state partners,” a Centene spokesperson wrote in an email. “This no-fault agreement reflects the significance we place on addressing their concerns and our ongoing commitment to making the delivery of healthcare local, simple and transparent.”

States are stepping up their oversight of PBM practices in Medicaid and beyond, said Antonio Ciaccia, president of drug-pricing watchdog 3 Axis Advisors and CEO of 46brooklyn Research.

“Over the last four years, we’re seeing an intense amount of accountability and scrutiny, thanks in large part to the liberation of drug pricing data,” Ciaccia said. “No matter how you slice it, that ability to assess what we’re buying, and for what price we’re buying it at, not only holds the PBMs accountable, but it holds the entire drug supply chain accountable because everybody profits off of the excessive complexity of this system.”


Source: modernhealthcare.com

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