Centene Managed Care Plans Will Pay Medi-Cal $215M for Overcharges

Centene must pay Medi-Cal, California’s state Medicaid program, over $215 million to settle allegations that it two of its managed care plans overcharged the program by reporting inaccurate prescription drug costs.

According to the settlement, the costs were incurred by Centene managed care plans California Health & Wellness and Health Net. These plans provide healthcare services to Medi-Cal beneficiaries in over 20 California counties.

Over 80 percent of Medicaid beneficiaries in California receive care through a manage care plan contracted with Medi-Cal, the press release noted.

"Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians,” California Attorney General Rob Bonta said. “When companies overcharge the Medi-Cal system, it drains valuable resources from the people who rely on this care. 

“Today’s settlement is a win — it brings resources directly back to our state. At the California Department of Justice, we will continue using every tool we have to fight for California’s vulnerable communities.”

Investigators from the state’s Department of Justice (DOJ) found that California Health & Wellness and Health Net reported inflated costs they incurred for prescription drugs provided to patients between January 2017 and December 2018.

Centene used advantages in its pharmacy benefit manager (PBM) contracts to save its plans $2.70 per prescription drug claim for two years, according to the settlement. DOJ alleged that Centene and the PBM did not disclose or pass on these discounts to Medi-Cal, leading to higher fees and drug costs that were reported to the state.

As a result of the alleged False Claims Act violations, Centene has agreed to pay $215,392,758 to California, recovering twice the value of the inflated cost reporting and ensuring full restitution to Medi-Cal.

The case was investigated by DOJ and the California Department of Health Care Services. The Department of Managed Health Care, the Department of Insurance, and Covered California assisted with the case’s resolution.

Overbilling and submitting false claims can lead to overpayments, which has been an issue particularly in the Medicare Advantage space.

Recently, major payer Cigna faced allegations of overpayments from the Office of Inspector General (OIG). An audit revealed that Cigna-HealthSpring of Tennessee may have received at least $5.9 million in overpayments for high-risk diagnoses that did not have supporting medical records.

OIG recommended that the payer refund the government $5.9 million and improve its compliance protocols for high-risk diagnosis codes.

Additionally, research from the Urban Institute found that structural problems with Medicare Advantage’s payment system, including bidding benchmarks, quality bonuses, and risk adjustment, have contributed to overpayments.

HHS recently finalized a rule to improve the Medicare Advantage risk adjustment data validation program, which would increase oversight of payment processes.