Centene to pay $215 million to settle allegations it ripped off California Medicaid

Medicaid managed-care giant Centene Corp. has agreed to pay California $215 million to settle a drug-pricing scandal.

In a press release last week, California Attorney General Rob Bonta said that two Centene-owned managed-care plans, California Health & Wellness and Health Net, ripped off the state’s Medicaid system. They overcharged the system “by falsely reporting higher prescription drug costs incurred by two of its managed care plans,” the statement said.

Between 2017 and 2018, Clayton-based Centene “leveraged advantages in its pharmacy benefit manager (PBM) contracts to save its managed care plans $2.70 per prescription drug claim over the two-year period. (The California Department of Justice) alleges that Centene and its PBM failed to disclose or pass on these discounted fees to Medi-Cal, which inflated fees and drug costs reported to California,” the statement said.

Ohio is the only state to sue Centene over such allegations. In March 2021, Attorney General Dave Yost accused the company of funneling money through two pharmacy benefit managers — drug middlemen — and hiding discounts it had received.

Centene admitted no wrongdoing, but it agreed to settle with Ohio for $88.3 million just three months after the suit was filed. It also announced that it was setting aside more than $1 billion to settle similar claims with other states. California is at least the 13th state to settle with the company.

The Ohio suit followed reporting in 2018 by The Columbus Dispatch that a pharmacy middleman owned by Centene might have overbilled taxpayers $20 million for services. Centene denied wrongdoing, but an independent analysis showed that Centene’s Buckeye Health Plan billed the state Medicaid program almost twice as much per prescription as the state’s other four managed care plans.

Even though Centene agreed to pay the state scores of millions over claims of misconduct in its dealings with the Medicaid program, the Ohio Department of Medicaid awarded the company another contract worth billions just six months later.

This story was originally published by the Ohio Capital Journal, a States Newsroom affiliate.