Columbus, Ohio – 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.

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.”

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

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. 

The Department of Medicaid administers a taxpayer-funded medical assistance plan that provides coverage to about 2.9 million Ohioans, and it does so through the use of managed care organizations (MCOs).

One such MCO, Centene’s Buckeye Health Plan, administered its pharmacy benefits via sister companies Envolve Health Solutions and Health Net Pharmacy Solutions. The practice of subcontracting with more than one PBM prompted questions about Buckeye Health Plan’s business practices and, ultimately, Centene. With help from outside counsel, the Office of Attorney General Yost conducted an 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.

“Centene took advantage of all of us who pay taxes to care for the most vulnerable Ohioans,” Attorney General Yost said. “This settlement is the big first step Centene is taking to repair Ohio’s trust and it’s my hope they continue on this path of good faith.”

As part of the settlement, the lawsuit – filed on March 11 in the Franklin County Court of Common Pleas – has been unsealed.