Centene Corp. to repay $27.6 million, change business practices after Kansas investigation

FILE - Kansas Attorney General Derek Schmidt discusses a legal settlement of nearly $27.6...
FILE - Kansas Attorney General Derek Schmidt discusses a legal settlement of nearly $27.6 million with Centene Corp., of St. Louis, during an interview, Monday, Dec. 6, 2021, in his office in Topeka, Kan. Centene manages prescription drug costs for the Kansas Medicaid program and faced questions about whether it was overcharging the state. (AP Photo/John Hanna)(John Hanna | AP)
Published: Dec. 14, 2021 at 4:18 PM CST
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TOPEKA, Kan. (WIBW) - Following a years-long investigation, a major pharmacy benefit management corporation has agreed to repay about $27.6 million to Kansas after its business practices were found to be inefficient.

Kansas Attorney General Derek Schmidt said his team reached a settlement on Monday, Dec. 6, with Centene Corp. He said the settlement is in regards to pharmacy benefit management practices for the state Medicaid program and resulted in the recovery of almost $27.6 million for Kansans and a change in the company’s practices to make sure there is greater transparency moving forward.

AG Schmidt said the settlement is a result of a years-long investigation into Centene Corp.’s business practices. The investigation started after a separate investigation in Ohio revealed the company was overbilling the state for its services. In general, Schmidt accused the company of failing to satisfy its obligation to represent Kansas’s best interests in negotiations with other companies that supply drugs to the state’s Medicaid program.

“We take seriously our role of protecting Kansas taxpayers and finding and stopping fraud and overpayments in the state Medicaid program,” Schmidt said. “Today’s settlement involving PBM practices is the first of its sort in Kansas, and other investigations continue.”

Schmidt said his office started the investigation into the business practices of pharmacy benefit managers after the Ohio investigation became public in 2019. He said the extremely technical nature of data analysis required to find the misconduct needed specialized assistance, so his office retained Liston & Deas, PLLC, in 2020 to review PBM practices in the Sunflower State.

Schmidt said the investigation found failures on Centene’s part to accurately report pharmacy expenditures to state regulators. He said an opaque reporting system used by the corporation made it difficult for investigators to determine the nature and appropriateness of certain pharmacy transactions.

The settlement covers the time between Jan. 1, 2016, and Nov. 12, 2021.

In the settlement, Schmidt said Centene guaranteed it will improve transparency by providing the state with access to all necessary data to track pharmaceutical transactions, from point of sale through reimbursement.

In addition, Schmidt said Centene will pay the financial costs of the investigation which led to the recovery of nearly $27.6 million for Kansans.

Schmidt said the investigation found Centene failed to accurately report discounts it got from CVS-Caremark on various retail pharmacy claims. The corporation also artificially inflated dispensing-fee amounts reported to regulators.

Schmidt said he wanted to thank the Kansas Medicaid program and the Kansas Insurance Department for their help in the settlement.

To read a copy fo the settlement, click HERE.

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