Kansas to get $27 million from insurance giant investigated for overcharging state
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Kansas will recoup $27 million as part of a deal with insurance giant Centene to settle allegations that middlemen who manage prescription drug benefits for the state's Medicaid program overcharged, Attorney General Derek Schmidt announced Monday.
The state retained an independent law firm last year to examine the work of Centene subsidiary Envolve after an Ohio investigation found the middlemen, known as pharmacy benefit managers, had not passed along discounts they received on drugs from pharmacy behemoth CVS Caremark.
Schmidt said in a news release there was evidence of similar practices in Kansas, as well as signs the company inflated dispensing fees, or costs paid to pharmacists for filling prescriptions. The scope of the investigation began in 2016, Schmidt's office said.
Kansas spends $106 million annually on drug costs related to the Medicaid program, according to data from the Kaiser Family Foundation.
Centene will pay the state $27.6 million, as well as the costs of the independent investigation, per the terms of the settlement, with the company not admitting to any wrongdoing.
The company will also continue to implement policy changes "providing full transparency related to the adjudication and payment of pharmacy benefit claims," allowing Kansas to better track exactly how much was paid to pharmacies at each stage of the process.
“We take seriously our role of protecting Kansas taxpayers and finding and stopping fraud and overpayments in the state Medicaid program,” Schmidt said in a statement. “Today’s settlement involving PBM practices is the first of its sort in Kansas, and other investigations continue.”
In a statement, Centene said they "respect the deep and critically important relationships we have with our state partners."
“This no-fault agreement reflects the significance we place on addressing their concerns and our ongoing commitment to making the delivery of healthcare local, simple and transparent," the company said. "Importantly, this allows us to continue our relentless focus on delivering high-quality outcomes to our members.”
Earlier this year, officials in Ohio and Mississippi reached settlements with Centene over similar allegations and the company announced $1.1 billion has been reserved to resolve similar cases, though it is unclear if Kansas' case would come out of that bucket.
Interest has increased nationally and in Kansas over granting PBMs increased scrutiny. The U.S. Supreme Court ruled last year in an Arkansas case, allowing that state to regulate PBMs.
More: Clinics push back as drug companies want changes to program helping low-income Kansans
In Kansas, that paved the way for legislators to consider a wave of new regulations that would require PMBs become licensed with the state, increase transparency about their relationships with pharmacies and restrict potential conflict-of-interests.
While the bill, House Bill 2383, was introduced in the House Insurance Committee during the 2021 session, it did not ultimately move forward.
Andrew Bahl is a senior statehouse reporter for the Topeka Capital-Journal. He can be reached at abahl@gannett.com or by phone at 443-979-6100.
This article originally appeared on Topeka Capital-Journal: Kansas, Centene settle over Medicaid drug cost allegations
