2nd questionable Medicaid outlay revealed

Probe finds $20M goes to middleman seen as redundant.

The team that discovered that Ohio taxpayers were overcharged up to $186 million for Medicaid prescription drugs last year has uncovered an additional $20 million that might have been wasted to fund services for which taxpayers already were paying.

And state Medicaid officials initially did not want that information made public.

Now, however, they concede that the consultant hired by the state after a series of Columbus Dispatch stories is justified in questioning the $20 million outlay.

The possible misspending was found deep in the bureaucratic maze through which Ohio’s poorest residents get needed drugs.

First, the team headed by Gary Rutherford, CEO of HealthPlan Data Solutions in Columbus, determined that pharmacy benefit managers — middlemen in the complicated process — were raking off $149 million to $186 million a year above the industry’s standard profit margin.

Then his team came across what essentially was a second middleman, given $20 million annually to perform services seemingly already provided by the existing middleman.

And in a possible conflict of interest, the second, possibly redundant middleman and the managed-care organization that hired it are owned by the same multibillion-dollar corporation.

The possible duplicate payments were turned up as Rutherford’s auditors probed why Buckeye Community Health Plan — one of five managed-care organizations hired by the state to deliver health-care services to the 3 million Ohioans on Medicaid — was charging the state more than twice the per-prescription costs of the other four.

Buckeye charged an average of $11.60 each to fill the 4.6 million prescriptions it handled. The average for the other four: about $5.60.

The main reason for the big difference? Buckeye rolled up additional costs because it hired a company called Envolve to act as a pharmacy benefits “administrator” — even though Buckeye had hired CVS Caremark as a pharmacy benefits “manager.”

More questions were sparked when investigators realized that Envolve and Buckeye are both owned by Centene, a health-care company in the Fortune 100.

None of the four other managed-care organizations saw a need to hire another company in addition to their pharmacy benefits manager.

Buckeye gave The Dispatch a list of services performed by Envolve. Its functions include “utilization management, specialty management, data analytics, drug utilization review and formulary management.”

When Buckeye’s list was forwarded to Michael DeAngelis, spokesman for CVS Caremark, he said it duplicates what CVS already is doing for Buckeye. “We provide all of the services you listed to our Medicaid (managed-care organization) clients in Ohio,” he said.

A spokeswoman for Buckeye said comparing its way of doing things to the operations of the four other companies is unfair.

“Buckeye’s data included spending on pharmacy-care coordination and other activities, or PBA services, in addition to the expenditures for our PBM,” Buckeye’s Kimberly Scher said in an email. “Buckeye Health Plan meets or exceeds the state’s requirements as laid out in our contract and is fully committed to working with the state in a transparent and collaborative manner.”

Scher said Envolve’s role is to work to reduce opioid prescriptions and abuse and “help coordinate care and promote positive health outcomes.”

Centene is headquartered in St. Louis. It reported revenue of $48.3 billion in 2017, according to its business filings.

Antonio Ciaccia, lobbyist for the Ohio Pharmacists Association, said Centene’s decision to use its own PBM highlights “self dealing” at the expense of taxpayers.

He said Centene is using Buckeye to make money off taxpayers on the front end, and using Envolve to make more money on the back end when prescriptions are processed.

“This is a textbook warped incentive,” he said.

Centene didn’t respond to requests for comment for this story.