Largest Pharmacy Benefit Manager Settlement In The Nation: Centene To Pay Ohio $88 Million

DrugsLegal News

In what’s been described as a case of massive Medicaid fraud, Centene Corporation—the largest Medicaid managed care organization in the U.S—has agreed to pay $88.3 million to settle a lawsuit filed by Ohio Attorney General, Dave Yost. The lawsuit, filed in March, alleged that Centene overbilled the Ohio Department of Medicaid for pharmacy services it provided.

Centene serves as a health insurance program for mostly low-income individuals, and functions as a go-between between the federal government’s Medicaid health insurance and private health care clinics and programs. 

Buckeye Health Plan, a Centene subsidiary, was also named as a defendant for allegedly conspiring to misrepresent the costs of pharmacy services, including the price of prescription drugs.

The settlement is the first and largest in the country secured by a state attorney general against a pharmacy benefit manager (PBM), reports the Indiana-based news website

“Centene used sophisticated moves to bill unearned dollars – moves known only at the top levels of health care companies,” Yost said, per Yost added, “It has taken a huge effort by my team to untangle this scheme–and now that we know how it works, the alarm bells should be ringing for anyone using similar tactics.”

Insured individuals who have a Buckeye Health Plan have a prescription drug plan that is managed by a PBM, which functions as a middleman, negotiating drug prices and deciding which drugs are covered by the health insurance plans. 

Prior to his role as Attorney General for the state of Ohio, Yost served as state auditor. While in that position in 2018, he discovered that PBMs like Centene were artificially inflating drug prices. In other words, the PBMs were collecting more money from prescriptions compared to the cost of the drugs. 

In Ohio, taxpayers foot the bill for a statewide medical assistance plan. Nearly 3 million residents of the state are covered under this plan. (In 2019, the state’s population was nearly 11.7 million.) So-called Managed-Care Organizations or MCOs run the state’s Medicaid program. Buckeye Health is one such MCO that manages Ohio’s Medicaid assistance health insurance plan. 

But rather than manage the prescription-drug plan itself, Buckeye Health subcontracted the pharmacy benefits plan to two PBM entities: Envolve Health Solutions and Health Net Pharmacy Solutions. This practice of utilizing more than one PBM raised Yost’s eyebrows. 

Significant breaches of contract were alleged by Yost and outside counsel, including: Filing reimbursement requests for amounts already paid by third parties; Failing to accurately disclose to ODM the true cost of pharmacy services, including the disclosure of discounts received; and artificially inflating dispensing fees.

Per, Yost said of the breaches of contract, “Centene took advantage of all of us who pay taxes to care for the most vulnerable Ohioans. This settlement is the big first step Centene is taking to repair Ohio’s trust and it’s my hope they continue on this path of good faith.”

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