Dave Yost files a lawsuit over Envolve’s subcontracting services.
Ohio attorney general Dave Yost has filed a lawsuit claiming Centene (CNC), a health insurance company, “misrepresented pharmacy costs that caused the state Medicaid program to spend millions of dollars unnecessarily.” The lawsuit contends the managed care plan, Buckeye Health Plan, owned by Centene, “was part of a web of subcontractors that provided prescription drug benefits to the state Medicaid program. In the process, Buckeye collected $20 million.”
Buckeye Health Plan was a managed care plan hired by Ohio Medicaid to provide prescription drug benefits. It contracted with two PBMs, CVS Caremark (CVS) and Optum Rx, to do the leg work. Following an audit, which found Buckeye paid a substantially higher fee for pharmacy benefit services than other plans, CVS and Optum Rx were told to end their contracts. However, Buckeye had also hired Envolve, a pharmacy benefits administrator, to provide similar services. Envolve is, too, owned by Centene.
“Buckeye was charged $321 million by CVS and Envolve, after reimbursing $268 million to pharmacies for prescription drugs,” according to the audit. “The $53 million difference represented a higher cost per prescription than any other plan – 6.5% versus 8% to 9.4%.” What’s more, Envolve “collected $20 million of the $53 million.” State officials in Ohio noted that Centene retained another of its companies, Health Net Pharmacy Solution.
Yost said at the time of filing, “Corporate greed has led Centene and its wholly owned subsidiaries to fleece taxpayers out of millions. This conspiracy to obtain Medicaid payments through deceptive means stops now. We are confident that Centene and its affiliates have materially breached their obligations both to the Department of Medicaid and the state of Ohio.”
A Centene spokesperson responded, “These claims are unfounded, and Envolve will aggressively defend the integrity of the pharmacy services provided to the State of Ohio. Envolve’s pharmacy contracts with the state are reviewed and pre-approved by state agencies before they ever go into effect. Furthermore, these services saved millions of tax-payer dollars for Ohioans from market-based pharmaceutical pricing.”
In February 2021, the controller in Lehigh County, Pa., estimated “the county could have saved $1.4 million in 2019 if local officials were aware of the extent of rebates that were pocketed by Highmark Blue Cross Blue Shield, which hired Express Scripts to provide pharmacy benefits, and if comparative pricing was pursued for 200 different prescription drugs.” And, in December, a report found pharmacy benefit managers” pocketed more than $89 million collected on behalf of the Florida Medicaid program.”
Now, states are now tightening the reigns. “Dozens of states have proposed or passed 160 laws to tighten oversight of PBMs over the past few years,” according to the National Academy for State Health Policy.
“Due to the purposeful ambiguity in how drug prices are set within the pharmacy benefit manager industry, opportunities for overcharging and anti-competitive behavior are aplenty,” said Antonio Ciaccia, who heads 46Brooklyn, a market research firm, and a former lobbyist for the Ohio Pharmacists Association. “As Congress twiddles their thumbs on long-overdue reforms, states like Ohio and attorneys general like Dave Yost are stepping up to cleanse the system of its embedded dysfunction. Anyone who thinks that these findings are outliers unique to Ohio, unique to Centene, or unique to Medicaid, I’ve got news for you: it’s happening everywhere.”
Sources:
Ohio AG Yost files suit against Centene, launching latest salvo in his war on PBMs
Ohio attorney general sues a health plan over its PBM contracts and Medicaid
Join the conversation!