Health insurer Centene Corp. has agreed to pay Texas $165.6 million to settle claims that it overcharged the state’s Medicaid program for pharmacy services.
It is the most well-known reimbursement for drug pricing practices by the nation’s largest Medicaid insurer. The agreement was signed July 11 but was not publicly announced until Monday after KHN obtained a copy of the settlement through a Texas public records request and began asking questions.
The settlement makes Texas at least the 12th state to settle pharmacy billing claims with St. Louis-based Centene.
Centen did not respond to multiple requests for comment about the Texas settlement on Monday. But it has denied wrongdoing in several settlements, and Centen President and Chief Operating Officer Brent Layton said last year that the settlements in Ohio and Mississippi were the company’s “commitment to make health care local, simple and transparent.” ” reflect and allow it to continue. “A continued focus on delivering high-quality results to our members.”
Most states contract with private insurance companies like Centene to cover people who are disabled or have low incomes in their state Medicaid programs, which are paid for jointly by state and federal taxpayers. In many of these states, the insurance company handles Medicaid prescription drugs through a pharmacy benefit manager, or PBM, to get lower prices. Such benefit managers act as intermediaries between drug manufacturers and health insurance companies and between health plans and pharmacies. Centene provides both of those services in multiple states.
Medicaid has provided a major launching pad for Centene’s growth and revenue. The company is the nation’s largest Medicaid managed care insurer, providing health insurance benefits to 15.4 million enrollees nationwide.
Several states have pursued charges against Centene’s pharmacy manager business, alleging that it overbilled their Medicaid programs for prescription drugs and pharmacy services. The total number of states is not publicly known. Santini has 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. Three other states and their settlement amounts have not been identified by Sentinel or the states themselves.
The company’s first settlements came in 2021 with Ohio and Mississippi. The $88 million Santini agreed to pay Ohio was the largest public settlement he had received before the deal with Texas.
Exactly how the company may have overcharged states, or failed to meet the terms of its contracts, is not clear from the settlements, said Joe Mattingly, associate professor at the University of Maryland School of Pharmacy. has been done “There are a lot of ways you can overcharge Medicaid,” Mattingly said. “It’s pretty amazing that it’s this number of states.”
The Texas settlement is not expected to be Santini’s last PBM payment. In a July filing with the U.S. Securities and Exchange Commission, Centen wrote that “discussions are ongoing to finalize” the drug billing concerns in “other affected states,” but did not specify the states. It earmarked $1.25 billion to address pharmacy benefit manager settlements in 2021.
Other states may include California, which is investigating Centene’s role in providing pharmacy benefits to its Medicaid enrollees, KHN first reported in April. Florida and South Carolina have signed legal agreements with Mississippi-based firm Liston & Dess, which has represented other states, including Texas, in pharmacy-related inquiries into Centene.
Still, the settlements did not end business relations. In Ohio and Mississippi, the company has renewed key state-administered contracts after settling pharmacy benefit charges.
And just last week, Santini announced that Texas had renewed a contract with the company’s Texas affiliate, Superior Health Plan, to provide health care to children and youth in foster care. Centen did not disclose the financial terms of the new deal.
An undisclosed portion of the Texas prescription drug settlement is expected to go to the federal government because of its role in helping fund Medicaid. Centen’s contract with Texas required the company to pay half of the settlement in August.
Santini probably agreed to pay more in Texas than in Ohio because there were a higher number of prescription drug claims, said Antonio Ciaccia, president of 3 Axis Advisors, a drug consulting firm that worked with Liston & Deas. Worked on billing issues.
“The findings we reached in this case send a clear message to providers that Texas expects its Medicaid partners to be transparent as required by Texas law,” Attorney General Ken Paxton said in a statement. ” The office did not explain why it did not disclose the settlement earlier.
Pharmacy benefit managers in general have come under increasing scrutiny and criticism. The Federal Trade Commission announced in June that it was launching an investigation into the pharmacy benefit management industry and its impact on consumer access to prescription drugs and drug prices.
“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 University of Southern California School of Pharmacy. “It’s actually a pretty stable and poorly functioning industry that’s been shrouded in obscurity and secrecy for a decade or more.”
Rebecca Grapevine contributed to this article.
This story was prepared by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.
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