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OAKLAND – California Attorney General Rob Bonta today announced a settlement of more than $215 million against the Centene Corporation over allegations that the national healthcare company overcharged California’s Medi-Cal program by falsely reporting higher prescription drug costs incurred by two of its managed care plans. In doing so, Centene is alleged to have violated the California False Claims Act. California Health & Wellness and Health Net, the two managed care plans, provide healthcare services to Medi-Cal beneficiaries in over 20 California counties. More than 80% of Medi-Cal beneficiaries receive care from a managed care plan contracted with Medi-Cal.
“Medi-Cal is a lifeline that provides access to free or affordable healthcare services for millions of Californians,” said Attorney General Bonta. “When companies overcharge the Medi-Cal system, it drains valuable resources from the people who rely on this care. Today’s settlement is a win — it brings resources directly back to our state. At the California Department of Justice, we will continue using every tool we have to fight for California’s vulnerable communities.”
California Department of Justice (DOJ) investigators found that between January 2017 and December 2018, California Health & Wellness and Health Net reported inflated figures for the costs they incurred in providing prescription drugs to patients. Centene leveraged advantages in its pharmacy benefit manager (PBM) contracts to save its managed care plans $2.70 per prescription drug claim over the two-year period. DOJ alleges that Centene and its PBM failed to disclose or pass on these discounted fees to Medi-Cal, which inflated fees and drug costs reported to California.
The settlement amounts to a total of $215,392,758, recovers twice the value of Centene’s inflated price reporting, and ensures full restitution to the Medi-Cal program.
DOJ investigated this case, with assistance from the California Department of Health Care Services. Three other state agencies, the Department of Managed Health Care, the Department of Insurance, and Covered California, helped in the resolution of the case.
The DOJ’s Division Medi-Cal Fraud and Elder Abuse (DMFEA) protects Californians by investigating and prosecuting those who defraud the Medi-Cal program. These settlements are made possible only through the coordination and collaboration of governmental agencies, as well as the critical help from whistleblowers who report incidences of abuse or Medi-Cal fraud at oag.ca.gov/dmfea/reporting
DMFEA receives 75% of its funding from HHS under a grant award totaling $53,792,132 for federal fiscal year 2022-2023 The remaining 25% is funded by the State of California. The federal fiscal year is defined as October 1, 2022, through September 30, 2023.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
A copy of the settlement agreement is available here.
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