JACKSON • Mississippi announced a $55 million settlement with its largest Medicaid contractor, Centene, last week related to allegations it was overcharging taxpayers for prescription drugs, but state authorities say they are not finished scrutinizing pharmacy benefit management practices at other companies that are paid with public money.
State Auditor Shad White told the Daily Journal last week that his office has been probing another Medicaid contractor, UnitedHealthcare, and its subsidiary, OptumRx, over pharmacy benefits. He declined to provide more details.
From 2016 to 2020, Mississippi's Medicaid program paid $916 million for pharmacy benefit management services provided by OptumRx, according to agency data. OptumRx, a subsidiary of UnitedHealth Group, the fifth-largest company in the U.S., did not respond to a Daily Journal request for comment.
UnitedHealth and its PBM subsidiary are also facing investigations in other states, according to a recent report by The Wall Street Journal. And Ohio sued OptumRx in 2019, alleging the company bilked that state's workers' compensation program out of millions of dollars worth of generic drug discounts.
Meanwhile, the investigation into Centene and its subsidiary Envolve Pharmacy Solutions may be over after the recent settlement, but the mega corporation is apparently not finished doing business with the state. A Division of Medicaid spokesman said earlier this month the agency will exercise an optional one-year contract extension with Centene's subsidiary Magnolia Health, as well as the state's other two managed care providers, including UnitedHealthcare. New five-year managed contracts will be bid out by the state and begin next summer.
The three companies provide health insurance benefits for about 485,000 poor adults and children, disabled people, pregnant women, and others. They employ the pharmacy benefit managers as subcontractors to manage drug benefits, negotiate drug prices and reimburse pharmacists.
In the $55.5 million settlement agreement drawn up between Centene and Mississippi — in which Centene did not admit fault — the state had to acknowledge "Centene’s good faith and responsible corporate citizenship” by agreeing to settle. And it agreed that the company and its subsidiaries “have provided high quality pharmacy benefit services to the State and are qualified to continue to provide such services.”
Centene acknowledged it has an “obligation to comply with the requirements of Mississippi’s laws” as it delivers benefits for Medicaid patients going forward, and that the company will “provide full transparency” around its pharmacy benefit claims. Centene is set to pay the state in two installments, with some of the money going to attorney’s fees and the rest to compensate the Division of Medicaid.
Centene also will pay Ohio $88 million to settle a lawsuit alleging the company had inflated its pharmacy costs to the state in order to pad its profits. On top of the settlements with Mississippi and Ohio, the company has set aside another $1.1 billion for payments to 20 additional "affected states," according to a U.S. Securities and Exchange Commission filing. It is negotiating with a pair of law firms that includes Ridgeland-based Liston & Deas to settle those states' claims.
But neither Centene nor Mississippi officials have yet gone into detail about specific findings from the investigations into the company, including how much Centene may have cost taxpayers overall. White said the key finding from Mississippi — which was different than Ohio — was that Centene's PBM had been billing the state for drugs at a higher price than its contract with the Division of Medicaid allowed.
Centene's top executive only described the allegations in vague terms during a Wednesday call with shareholders, according to an Ohio Capital Journal report.
“The agreement addresses a situation from 2017 to 2018,” Michael Neidorff, the chairman, president and CEO of Centene, said of the settlement deals. “The policies and practices that created the situation were changed in 2019, making the matter very much a thing of the past. With this agreement, Centene will be able to put the situation behind us in a timely manner.”
Centene is the largest Medicaid managed care firm in the country, and the 24th-largest company overall. It brought in $111 billion in revenue last year. And this year, according to its Wednesday investor presentation, it expects to bring in more than $120 billion.
Rep. Becky Currie, R-Brookhaven, a nurse who serves on the House Medicaid Committee, said the state's $55 million settlement with Centene is "ridiculous" and a "slap on the wrist, with nothing else happening to them, and a possible new contract."
Currie, who has long raised concerns about the state's Medicaid managed care system, said she was also disappointed that Centene did not admit fault in the deal.
"If I stole $55 million, how am I not at fault?" Currie asked. "If Becky Currie stole $55 million, I would be in jail. Somebody would (be)."
Currie said she doesn't believe it's smart for the state to extend Centene for another year, despite the company's assurances of reform since 2017 and 2018.
She said she recently sent a letter to Gov. Tate Reeves and other state leaders urging them to take a careful approach as they bid out the next five-year managed care contracts. State officials, she said, need to provide more active oversight of the managed care firms.