The opening line of a counterpunch to an Ohio lawsuit against health care conglomerate Centene is short and to the point: “There are no secrets here; there is nothing that needs to be hidden or, in fact, that even justifies the filing of this lawsuit,” said the St. Louis-based corporation in response to court action filed March 11th on behalf of Ohio Attorney General Dave Yost.
The Fortune 50 company noted that the lawsuit was filed by special counsel Yost hired from Akron; Jackson, Mississippi; and Washington D.C. in connection with the state Medicaid program to provide prescription drugs and other medical services to poor Ohioans.
“These outside counsel failed to recognize the regulatory history and precedents of Ohio’s Medicaid system and violated the state’s contractual requirements to first provide ‘timely written notification’ of any alleged violation and ‘to make every reasonable effort to resolve the dispute,’” the company’s motion said.
Two Centene wholly owned subsidiaries — Buckeye Health Plan Community Solutions and Envolve Pharmacy Solutions — also were named in the Ohio lawsuit. The state’s legal claims are “easily explained away once the facts about Buckeye’s reporting and billings to the Ohio Department of Medicaid are understood,” the new Centene filing says.
The Ohio lawsuit said Centene spent millions in taxpayer money to hire a pharmacy benefits manager to provide services for Medicaid recipients that essentially already were being handled by another PBM paid by the state.
The latest filing, contained in multiple motions stretching for dozens of pages, shows how attempts by Yost and other across the country to clamp down on PBMs are adamantly opposed by deep-pocketed health care organizations.
Yost filed the action in Franklin County Common Pleas Court under seal, noting a non-disclosure agreement among the parties.
A PBM serves as a middleman in the drug supply chain between drug-makers and health insurers, such as Medicaid. That state-federal effort currently insures about 3 million low-income or disabled Ohioans.
“Corporate greed has led Centene and its wholly owned subsidiaries to fleece taxpayers out of millions,” the attorney general said in a news release. That lawsuit was the latest of several actions taken by Yost and others in relation to accusations that PBMs have ripped off Ohioans.
Make Ohio lawsuit details public, Centene says
But Centene filed its challenge Friday in federal court for the southern district of Ohio, and said the state’s lawsuit should be made public.
The state lawyers’ “basic misunderstanding of Medicaid accounting and billing practices for (managed-care organizations) and PBMs under (Ohio Medicaid) contracts should be reviewed in the light of day,” Centene said. “Lifting of the seal is necessary to avoid any implication that defendants are hiding anything.”
Yost said he is all for that.
“The last thing I wanted was a sealed lawsuit — this is, after all the people’s business,” he said in an emailed statement Monday. We were forced to sign a non-disclosure agreement in order to get the data. If Centene is not going to hold our feet to the fire on the NDA … let the sun shine in!
“We remain confident of our complaint and the righteousness of our cause.”
Despite the seal, granted by a common pleas court judge, Centene makes numerous citations of the lawsuit in its response.
For example, Centene says it stands accused of developing a “three-tiered PBM structure” to hide Information from the state Medicaid department. In denying that accusation, the company cites emails from as far back as 2016 in which the setup was openly described to Medicaid officials.
Centene acknowledges that it brought in CVS Caremark to help handle the work, which meant that Walgreen’s was removed and its customers had to find an alternative source to fill their prescriptions.
Centene also admitted that it engaged in spread pricing — reimbursing pharmacies less than what the PBMs receive for buying drugs — but said the practice was allowed by the state Medicaid agency at the time.
The company acknowledged that spread pricing also was used to determine dispensing fees — the amount paid to a pharmacy for its cost of filling a prescription beyond the actual price of the drug. Again, Centene said it was permitted by the state to keep a slice of those fees for itself.
Meanwhile, the state’s allegation that Centene, Buckeye and Envolve engaged in a conspiracy against the state is prohibited by a legal principle known as intra-corporate conspiracy doctrine, which essentially means “a corporation cannot conspire with its own agents or employees.”
The Centene case was assigned to District Court Judge Michael H. Watson, as well as Magistrate Judge Vascura.