On Feb. 8th, California Attorney General Rob Bonta announced a settlement of over $215 million against Centene Corporation. Centene is alleged to have violated the California False Claims Act by overcharging California’s Medi-Cal program through falsely reporting higher prescription drug costs, collected through its two managed care plans.
The managed care plans in question are California Health & Wellness and Health Net. The two plans provide health services to Medi-Cal beneficiaries in over 20 California counties, and over 80% of Medi-Cal beneficiaries receive care from a managed care plan contracted with Medi-Cal.
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“Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians,” Bonta said. “When companies overcharge the Medi-Cal system, it drains valuable resources from the people who rely on this care.”
Between Jan. 2017 and Dec. 2018, California’s Department of Justice (DOJ) found that Centene’s two managed care plans reported inflated figures for costs they paid for prescription drugs provided to patients. The DOJ claims that Centene leveraged advantages in its pharmacy benefit manager contracts to save its managed care plans $2.70 per prescription drug claim over the two-year period.
The DOJ also alleges that Centene and its pharmacy benefits managers failed to disclose or pass along the discounted fees to Medi-Cal, which in turn inflated fees and drug costs in the state.
The DOJ investigated Centene in collaboration with California’s Department of Health Care Services, the Department of Managed Health Care, the Department of Insurance, and Covered California.
The settlement totals $215,392,758 and recovers twice the value of Centene’s inflated price reporting, while ensuring full restitution to the Medi-Cal program.
“Today’s settlement is a win—it brings resources directly back to our state,” Bonta said. “At the California Department of Justice, we will continue using every tool we have to fight for California’s vulnerable communities.”
DHCS awarded Health Net new Medi-Cal managed care contracts for the 2024 contract period at the end of December following the organization’s protest of the initial contract awards, which omitted Health Net from the Los Angeles service area. Health Net is now slated to conduct managed care in Los Angeles County in addition to nine other counties beginning in 2024.