Centene to Pay $166 million to Texas in Medicaid drug pricing settlement

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Health insurance coverage large 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 largest 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 Kaiser Health News obtained a copy of the settlement by way of a Texas public data request and started asking questions.

The settlement makes Texas a minimum of 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 in regards to the Texas settlement. But it has denied wrongdoing in a number of settlements, and Centene president and chief working officer Brent Layton said last year that settlements in Ohio and Mississippi mirrored the corporate’s “commitment to making the delivery of healthcare local, simple and transparent” and permit it to proceed its “relentless focus on delivering high-quality outcomes to our members.”

Most states contract with personal insurance coverage firms comparable to Centene to cowl individuals who have disabilities or earn low incomes in their state Medicaid applications, that are collectively paid for by state and federal taxpayers. In lots of these states, the insurance coverage firm handles Medicaid prescription medicines by way of what known as a pharmacy profit supervisor, or PBM, to get decrease costs. Such benefit 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 firm is the most important Medicaid managed-care insurer in the nation, offering medical health insurance advantages to 15.4 million enrollees nationwide.

Multiple states have pursued allegations in opposition to Centene’s pharmacy supervisor enterprise, alleging that it overbilled their Medicaid applications for prescribed drugs and pharmacy companies. The whole variety of states will not be 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 accordance to news releases and settlement paperwork from attorneys common in these states. Three different states and their settlement quantities haven’t been recognized by Centene or the states themselves.

The firm’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 take care of Texas.

Exactly how the corporate could have overcharged states or failed to meet the phrases of its contracts will not be disclosed in the settlements, mentioned Joey Mattingly, affiliate professor on the University of Maryland School of Pharmacy.

“There are a lot of ways you could overcharge Medicaid,” Mattingly mentioned. “It’s quite amazing that it’s this number of states.”

The Texas settlement isn’t anticipated to be Centene’s remaining PBM payout. In a July filing with the U.S. Securities and Exchange Commission, Centene wrote that “it is in discussions to bring final resolution” to drug billing issues in “other 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 opposite 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, in their pharmacy profit inquiries into Centene.

Still, the settlements haven’t brought on 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 anticipated 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, mentioned Antonio Ciaccia, president of 3 Axis Advisors, a consulting agency that has labored with Liston & Deas on drug billing points.

“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,” mentioned Attorney General Ken Paxton in a statement. The workplace didn’t make clear why it didn’t disclose the settlement earlier.

Pharmacy profit managers in common have drawn growing scrutiny and criticism. The Federal Trade Commission announced in June that it was launching an investigation into the pharmacy profit administration business and its affect on shopper entry to prescribed drugs and drugs prices.

“You’re seeing increasing recognition that this is an important part of the drug affordability problem in our country,” mentioned Erin Trish, affiliate professor on the University of Southern California School of Pharmacy. “This is actually a pretty consolidated and poorly functioning industry that’s hidden under the veil of opacity and secrecy for a decade or so now.”

Rebecca Grapevine contributed to this text.

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