Tuesday, June 15, 2021

PBM Agrees to Pay a Record $88.3 Million to Settle Ohio Case

The settlement is the first and largest in the country secured by a state attorney general against a pharmacy benefit manager (PBM). “Centene used sophisticated moves to bill unearned dollars – moves known only at the top levels of health care companies,” Yost said. “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.”

Centene Corp. (CNC) has agreed to pay Ohio $88.3 million to settle a lawsuit filed by Attorney General Dave Yost in March alleging the pharmacy benefit manager overbilled the Ohio Department of Medicaid for pharmacy services it provided. Yost also alleged Centene and its subsidiary, Buckeye Health Plan, conspired to misrepresent the costs of pharmacy services, including the price of prescription drugs.

Formula: True Cost of PBM Services

Most Ohioans’ prescription-drug plans are under the management of a PBM through their health insurance plans. PBMs are middlemen in control of prescription-drug costs, and they decide which prescription drugs are covered by health insurance companies.

Tyrone's Commentary:

Well that didn't take long for Centene to fold. Now that the cat is out of the bag, I wonder if commercial plan sponsors and their advisors will be as aggressive in eliminating overpayments to non-fiduciary PBMs? 

AG Yost began investigating PBMs in 2018 while state auditor. Yost found that PBMs, while managing the Department of Medicaid prescription drug program, were engaged in spread pricing, which is an artificial inflation of prescription drug pricing. That investigation found that PBMs collected more for drugs compared to the actual cost to dispense the drugs. With help from outside counsel, the Office of Attorney General Yost conducted a thorough investigation of these practices, finding significant breaches of contract.

Notably, the breaches include:

  • 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.
  • Artificially inflating dispensing fees.

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