Centene Corp. criticized the Ohio attorney general for lacking a “basic understanding” of the state’s $26 billion Medicaid program, claiming he wasted taxpayer time and money accusing Centene of overcharging the state by millions in drug costs.
“There are no secrets here; there is nothing that needs to be hidden or, in fact, that even justifies the filing of this lawsuit,” Centene wrote in a federal court filing in Ohio on Friday.
In March, Ohio Attorney General Dave Yost sued Centene, alleging its Buckeye Health Plan subsidiary used a “web of subcontractors” to obscure drug costs and fleece the state’s Medicaid program out of millions of dollars in pharmacy benefits. The suit was filed in the Franklin County Court of Common Pleas and is sealed.
Buckeye Health Plan is a managed-care organization the Ohio Department of Medicaid has contracted with to administer health benefits to its 2.9 million lower-income adult and children enrollees. By contracting with multiple sister companies Envolve Health Solutions and Health Net Pharmacy Solutions, Yost alleged that Centene filed reimbursement requests for amounts already paid by third parties, artificially inflated drug dispensing fees and failed to disclose the actual cost of its pharmacy services.
Centene claimed it wasn’t notified about the Ohio Department of Medicaid lawsuit and instead learned about it in a state press release. The insurer argued that this violates the terms of its contract and urged the judge to unseal the complaint, so it can review “counsel’s basic misunderstanding of Medicaid accounting and billing practices” for managed-care organizations and pharmacy benefit managers.
The Ohio Department of Medicaid did not respond to an interview request.
Centene pointed to multiple emails the insurer sent Ohio officials, notifying them that Caremark and Envolve would split the Medicaid contract’s responsibilities. It added that the state’s lawyers misunderstand PBM’s capitation payment policy. By assuming risk and effectively managing member costs, Centene said it can legally retain any cost savings related to their care.
“Any resulting cost savings also benefit [the Ohio Department of Medicaid] through the calculation of the next year capitation rate,” Centene’s response reads.
Centene pointed to emails notifying the attorney general’s office about its spread pricing policy, which said that Buckeye charged the state $1.95 to dispense drugs while incurring a cost of just $0.50. But the insurer said the practice was allowed by the Ohio Medicaid agency at the time.
“To suggest now this has been hidden from the state is wrong,” the response reads.
In a statement, Centene called the claims “unfounded” and said the company is “committed to the highest levels of quality and transparency.” The insurer added that Envolve’s services saved taxpayers millions of dollars compared to market-based drug pricing.
Ohio is not the only state questioning the insurer’s Medicaid managed care program.
In late March, the Mississippi Attorney General announced that it was investigating a Centene subsidiary for allegedly obscuring and overcharging the Mississippi Department of Medicaid by millions of dollars in drug costs.
For his part, Yost has sued other insurers over their Medicaid managed care administration. In 2019, Yost sued UnitedHealth Group subsidiary OptumRx, aiming to recover the $16 million that he said the pharmacy benefit manager overcharged the state’s Medicaid program for drugs. The same year, he also sued against Cigna subsidiary Express Scripts, accusing the company of breaching its contract with the Ohio retirement system and pocketing millions of dollars in overcharges to the state.
“This conspiracy to obtain Medicaid payments through deceptive means stops now,” Yost said in a statement announcing the Centene lawsuit.