June 14, 2021
Managed-care company establishes $1.1 billion reserve related to talks with other states.
Centene Corp. said it settled claims from Ohio and Mississippi related to its pharmacy-benefit billing practices, and it is setting aside $1.1 billion to resolve similar issues with other states.
The big managed-care company said it will pay about $88 million to Ohio and $55 million to Mississippi. Ohio’s attorney general, Dave Yost, sued the company in March, alleging that it had misled the state’s Medicaid program about its pharmacy-related costs, resulting in overpayments by the state.
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Mississippi’s attorney general and auditor investigated similar issues, though the state hadn’t sued Centene. They said in a press release that the settlement “resolves allegations of overpayments as a part of Mississippi’s Medicaid program.”
Centene, which is based in St. Louis, said it admitted no fault in the settlements and denies any liability for the practices that the states examined. The company said that the issues that the states focused on occurred “primarily during 2017 and 2018” and it has since restructured its pharmacy benefits operations.
Several states are investigating pharmacy benefit managers’ disclosure and billing practices, generally focused on their Medicaid and state-employee plans. Pharmacy benefit managers typically work for employers and health plans, managing drug benefits and negotiating pricing with pharmaceutical companies and drugstores. They often have many lines of business that involve state governments, including handling the drug benefits of state employees and working with managed-care companies that administer Medicaid benefits.
The stakes for Centene are particularly high in the Medicaid-related probes because managing Medicaid coverage is a core business for the company. Ohio had deferred a decision about whether Centene could participate in its new Medicaid contracts for 2022, due to the litigation. The settlement is “reopening the door for [Centene] to receive a contract award” in Ohio, wrote Scott Fidel, an analyst at Stephens Inc.
Centene said it was negotiating with two law firms, Liston & Deas and Cohen Milstein, that are working with other states “in an effort to bring final resolution to these concerns.”