Massachusetts has become the latest state to settle with health insurance giant Centene Corp. over allegations that it overbilled the state’s Medicaid program for pharmacy services, KHN has learned.
St. Louis-based Centene, the nation’s largest Medicaid managed-care insurer, will pay $14.2 million, according to Massachusetts Attorney General Maura Healey. An official announcement is expected later Thursday.
“This settlement is a significant result in our work to protect taxpayer dollars and the integrity of our MassHealth program,” Healey said in a statement. “We are pleased to secure these funds to help control Medicaid costs and ensure that state resources are directed to the best possible uses in our health care system.”
“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,” Centene said in a statement emailed to KHN. “Importantly, this allows us to continue our relentless focus on delivering high-quality outcomes to our members.”
Centene provides health insurance to 15.4 million Medicaid enrollees across the country by contracting with states to cover people who have disabilities or are in low-income families. The St. Louis-based insurer earns about two-thirds of its revenue from Medicaid, which is jointly funded by state and federal taxpayers.
In many states, insurance companies such as Centene also administer Medicaid enrollees’ prescription medications through what is called a pharmacy benefit manager. These benefit managers act as middlemen between drugmakers and health insurers and as intermediaries between health plans and pharmacies.
Centene’s CeltiCare subsidiary offered insurance to Massachusetts Medicaid enrollees until the state began to overhaul its program. Centene also administered pharmacy benefits for the state Medicaid program, MassHealth, according to the attorney general’s office.
A review by Healey’s office found “irregularities in the pricing and reporting of pharmacy benefits and services” by Centene’s pharmacy benefits manager, Envolve Pharmacy Solutions, its statement said.
Multiple states have settled with Centene’s pharmacy manager business over allegations that it overbilled their Medicaid programs for prescription drugs and pharmacy services. But the total number of states is not publicly known because many of the settlement negotiations are conducted behind closed doors. Some states, such as California, have been investigating the company, KHN first reported in April.
Before the Massachusetts agreement, Centene had 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 attorneys general in those states. The Massachusetts settlement, which was signed Sept. 23, brings Centene’s pharmacy services settlement total to at least $489 million. Other states have also settled with Centene, but the settlement amounts — and the states themselves — have not been publicly disclosed.
Centene set aside $1.25 billion in 2021 to resolve the pharmacy benefit manager settlements in “affected states,” according to a July filing with the US Securities and Exchange Commission that did not specify how many states.
Florida and South Carolina have signed legal agreements with a Mississippi-based firm, Liston & Deas, that has represented other states in their pharmacy benefit inquiries into Centene.
Pharmacy benefit managers in general have drawn 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 medication costs.
KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.