Fortune 50 company allegedly overcharged for pharmacy benefit management services

SEATTLE — Attorney General Bob Ferguson and the Washington State Health Care Authority announced today that managed health care giant Centene will pay $19 million to Washington state. The payment resolves allegations that the Fortune 50 company overcharged the state Medicaid program for pharmacy benefit management services. 

The resolution is the second-largest Medicaid fraud recovery for Washington state.

The Health Care Authority (HCA) contracts with managed care organizations like Coordinated Care of Washington, a Centene subsidiary, to manage its Medicaid program. Coordinated Care of Washington in turn contracts with pharmacy benefit managers, or PBMs, that negotiate prescription drug prices and other pharmacy related costs, including negotiating rebates and discounts on the cost of drugs.

The Attorney General’s Office and HCA’s Program Integrity Team began investigating pharmacy benefit managers in 2019 after a whistleblower provided information that they were failing to disclose true pharmacy benefits and services costs. Centene allegedly failed to pass on discounts it received to the state Medicaid program and inflated dispensing fees. The whistleblower later filed a separate claim against Centene.

The resolution was the result of a joint investigation conducted by the Washington Attorney General’s Office’s Medicaid Fraud Control Division and the Health Care Authority.

“Medicaid dollars are a precious resource meant to fund care for the most vulnerable among us,” Ferguson said. “My office works to ensure that these dollars go where they are intended — not toward fraud.”

“We commend the AG for their continued partnership in stewarding state resources,” said HCA Director Sue Birch. “Controlling health care expenditures, especially prescription drug costs, remains a top priority for HCA.”

Centene’s payment to Washington

As part of the resolution, Washington recovers a total of $18,999,999.80. Like all recoveries by the Medicaid Fraud Control Division, the amount goes back to the state through the state Medicaid Fraud Penalty Account.

As part of the resolution, an additional $13 million from Centene will be paid to the federal government for administration of Medicaid in Washington state. Ferguson’s resolution with Wyeth in 2016 is the only Medicaid fraud recovery larger than Centene.

Centene has resolved cases with 10 other states over the same conduct.

Senior Counsels Carrie Bashaw, Angela Coats-McCarthy and Bill Stephens, Principal Forensic Analyst David McDonald and Legal Assistant Kim Sobol handled this case for the Attorney General’s Office. HCA’s Program Integrity team has been integral in ensuring appropriate use of Washington State’s Apple Health (Medicaid) funds.

Attorney General’s Medicaid Fraud Control Division

The Attorney General’s Medicaid Fraud Control Division is responsible for the investigation and prosecution of health care provider fraud committed against the state’s Medicaid program. Since 2012, the Medicaid Fraud Control Division of the Attorney General’s Office has obtained recoveries in excess of $190 million for Washington state. The Medicaid Fraud Control Division receives 75% of its funding from the U.S. Department of Health & Human Services. The State of Washington funds the remaining 25%.

The Medicaid Fraud Control Division also investigates abuse and neglect of persons residing in residential facilities and in connection with the provision of Medicaid services.

Report suspected Medicaid fraud at 360-586-8888 or MFCUreferrals@atg.wa.gov.

You can also report provider fraud via the AGO website at www.atg.wa.gov/medicaid-fraud.

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Washington’s Attorney General serves the people and the state of Washington. As the state’s largest law firm, the Attorney General’s Office provides legal representation to every state agency, board, and commission in Washington. Additionally, the Office serves the people directly by enforcing consumer protection, civil rights, and environmental protection laws. The Office also prosecutes elder abuse, Medicaid fraud, and handles sexually violent predator cases in 38 of Washington’s 39 counties. Visit www.atg.wa.gov to learn more.

Media Contact:

Brionna Aho, Communications Director, (360) 753-2727; Brionna.aho@atg.wa.gov

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