Audit: Firm’s Medicaid drug costs too high

The health insurance group that billed Ohio twice the amount of its competitors to deliver medicine to Medicaid patients also fell significantly short of its goal to keep drug costs low.

The revelation is yet another from an audit by HealthPlan Data Solutions that was commissioned by the Ohio Department of Medicaid to determine whether the state is getting fair prices on drugs.

Portions of the audit were at first kept from the public, but a judge recently ordered that they be made public in response to a Dispatch public records request.

Auditors for HealthPlan found that the pharmacy benefit manager Envolve charged too much overall for drugs as compared to what it agreed to in its contract with Buckeye Health Plan. It is unclear how much more Envolve charged for prescription drugs because the number is redacted, or blacked out. Three sources, including one who helped write the contract, told the Dispatch the overcharge was in the millions.

The finding is significant because Medicaid agrees to pay managed-care plans based on contracts from the previous year. So an underperforming pharmacy benefit manager raises costs. Pharmacy benefit managers are middlemen in the supply chain, and their intended purpose is to keep costs down.

Buckeye Health Plan and its pharmacy benefit manager Envolve, along with a second pharmacy benefit manager, CVS Caremark, handle one of the five managed-care contracts the state uses to care for 3 million Ohioans on Medicaid.

The Ohio Medicaid-commissioned audit also found that Envolve paid too much in dispensing fees to pharmacists. The amount of those fees also is unknown because the number is redacted.

A spokeswoman for Buckeye said the company is uncertain how auditors calculated the PBM performance and declined to comment further.

Through a spokesman, HealthPlan auditors declined to comment.

None of the four other plans and their PBMs underperformed in their contractual goals to deliver discounted drug prices, according to the audit. In those contracts, the benchmarks were guaranteed in the contract and the PBMs would have had to pay penalties if they weren’t met.

Auditors noted that if the rates had been guaranteed in the contract between Buckeye and Envolve, Envolve would owe the difference. A Medicaid spokesman said the state would not recoup any of that money because the contract is a flat rate paid to Buckeye.

Auditors noted that Buckeye didn’t hold Envolve to guarantees; Envolve instead had performance goals.

The audit did not explain why Envolve’s contract didn’t have guarantees, and no one from parent company Centene could explain why.

Buckeye and Envolve both are owned by Centene, a Fortune 100 company headquartered in St. Louis. It reported revenue of $48.3 billion in 2017, according to its business filings.