California handed its Medicaid drug program to one company. Then came a corporate takeover.

[ad_1]

Centene’s Legal Troubles

In the past 10 months, Centene has settled with nine states over accusations that it and its pharmacy business, Envolve, overbilled their Medicaid programs for prescription drugs and services: It settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire, and Ohio, according to news releases from attorneys general in those states. The three other states have not been identified by Centene or the states themselves.

The company has set aside $1.25 billion for those settlements and future lawsuits, according to its 2021 report to the SEC.

Centene, which has denied wrongdoing in public statements, did not respond to multiple requests by KHN for interviews, nor did it respond to emailed questions. Magellan also did not respond to interview requests.

From the start, other California health insurers opposed the state takeover of the Medi-Cal drug program, partly because it took away a line of business. They were even more furious when the state allowed one of their biggest competitors to seize the reins — especially given its legal entanglements.

The state Department of Health Care Services, which administers Medi-Cal, acknowledged to KHN in March that it’s investigating the company but declined to provide specifics. The state is investigating Centene’s role in providing pharmacy benefits before the state took the job from managed-care insurers.

“DHCS takes all allegations of fraud, waste, and abuse seriously and investigates allegations when warranted,” department spokesperson Anthony Cava said in a statement.

Not a Modern Healthcare subscriber? Sign up today.

A Sale in the Offing?

When Medi-Cal Rx debuted Jan. 1, thousands of Californians couldn’t refill critical — sometimes lifesaving — medications for days or weeks. Doctors, pharmacists, and patients calling for help often languished on hold for as many as eight hours.

Magellan blamed the problems on staff shortages during the COVID-19 omicron surge and missing patient data from insurance plans. State health officials went to great lengths to fix the problems and appeared before legislative committees to provide lawmakers with assurances that the contractor wouldn’t be paid in full.

But Medi-Cal patients still face uncertainty.

Not long after Magellan took over California’s Medi-Cal drug program, reports surfaced in Axios and other publications that Centene might sell Magellan’s pharmacy business.

Centene officials have not confirmed a sale. But it would align with the company’s recent moves to restructure its pharmacy operations in the face of state investigations — such as seeking an outside company to begin managing its drug spending.

“Once you tell a PBM they actually have to behave, that’s when there’s no more money in it. It’s time to go,” said Antonio Ciaccia, president of drug-pricing watchdog 3 Axis Advisors, referring to businesses known as pharmacy benefit managers.

Yet another ownership change in California’s drug program could bring more disruption to the state’s most vulnerable residents, some of whom are still having trouble getting their drugs and specialty medical supplies after Magellan’s rocky takeover.

“I don’t know what kind of instability that creates internally when there’s a change of this magnitude,” said Linnea Koopmans, CEO of Local Health Plans of California, which represents the state’s publicly run Medicaid insurers that compete against Centene. “It’s just an open question.”

Koopmans and other Centene critics acknowledge that California has long relied on private insurance plans to offer medical and prescription drug coverage to Medi-Cal enrollees and that the state shouldn’t be surprised by ownership changes that come with consolidation in the health care industry. For example, Centene has a history of taking over California contracts after an acquisition — it did so when it purchased Health Net in 2016.

But consumer advocates say the Centene fiasco makes it clear that the state must improve oversight of corporate mergers if it chooses to hand over responsibility for public programs.

“In an ideal world, this is all backroom machinations that people don’t notice — until they do, until there is a problem,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group. “It just increases the need to make sure that that oversight is there, that accountability is there.”

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

Kaiser Health News is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

[ad_2]

Source link

We will be happy to hear your thoughts

Leave a reply

hnfnews
Logo