11th state settles with Medicaid contractor over conduct first uncovered in Ohio

By: - August 29, 2022 3:50 am

The Centene Corporation headquarters. Photo from Google Maps.

Centene, the largest Medicaid contractor in the United States, has settled with an 11th state over conduct that was initially detected in Ohio.

On Aug. 24, a deal was announced between Washington Attorney General Bob Ferguson and St. Louis-based Centene to settle claims that Centene’s pharmacy benefit manager had overbilled the state’s Medicaid system, Reuters reported. Under the terms of the deal, the state will get $19 million, while another $13.3 million will go to the federal government, which funds the bulk of Medicaid, the health program for the poor.

Ohio is the only state to sue Centene in the matter, which it did in March 2021. Then just three months later, Attorney General Dave Yost announced that the company had agreed to settle the case for $88.3 million.

The same day, Mississippi announced that even though it hadn’t sued, it was settling similar allegations for $55 million. Centene announced that it was setting aside a total of $1.1 billion to settle similar claims with as many as 22 states. 

In Ohio and many other states, Medicaid represents the largest expenditure in the state budget. And in Ohio and many other states, the vast majority of care is done through managed-care companies. Centene is the largest such provider, covering nearly 15 million Medicaid recipients in the United States last year.

Medicaid managed-care providers have typically hired even bigger players such as CVS, UnitedHealth and Express Scripts as pharmacy benefit managers to manage prescription-drug transactions. Ohio is now moving away from that system after an analysis of 2017 determined that PBMs owned by CVS and UnitedHealth up-charged taxpayers for drugs by nearly a quarter-billion dollars in that year alone.

The same analysis turned up something else: Buckeye Health Plan, a Centene-owned managed-care provider, hadn’t only hired CVS to handle drug transactions. It also hired a Centene-owned company named Envolve, which was paid $20 million in 2017.

Reporting by The Columbus Dispatch revealed that Envolve and CVS were providing identically named services at a cost that was far higher than under other managed-care providers. For their part, the companies claimed there were technical differences in what they were doing. 

Ohio’s 2021 suit against Centene accuses it of using Envolve and yet another Centene-owned middleman, Health Net Pharmacy Solutions, of improper practices such as pocketing pharmacy dispensing fees and wildly marking up drug costs. It pocketed $400,000 in a single week in 2018 from the latter practice, the suit said.

Centene has been adamant that it admits no wrongdoing in any of its settlements.

But the fact that it set aside so much money and settled with 10 states that hadn’t sued it might indicate that it’s eager to put the matter behind it. In addition, the company announced last November that it was exiting the pharmacy benefit management business altogether.

There are signs that at least some states are willing to let bygones be bygones after their suspicions of massive fraud. A year ago — and just two months after Ohio’s settlement with Centene was announced — the Ohio Department of Medicaid entered into a new, multi-billion-dollar contract with Buckeye, Centene’s managed-care subsidiary.

Follow Marty Schladen on Twitter.



Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Marty Schladen
Marty Schladen

Marty Schladen has been a reporter for decades, working in Indiana, Texas and other places before returning to his native Ohio to work at The Columbus Dispatch in 2017. He's won state and national journalism awards for investigations into utility regulation, public corruption, the environment, prescription drug spending and other matters.