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Iowa announces a $44 million settlement with Medicaid managed care organization Centene

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The Iowa attorney general's office announced it has reached a $44 million settlement with managed care organization Centene over its pharmaceutical billing practices.

Editor's note: This post was updated on December 16 at 9:15 a.m. to include a statement from Iowa Health and Human Services.

The state attorney general’s office has reached a $44.4 million settlement with managed care company Centene over its pharmaceutical billing practices.

Missouri-based Centene operates as Iowa Total Care in the state. It’s one of two managed care organizations currently contracted with the state and providing services under its Medicaid program.

The Iowa attorney general’s office alleged that Centene used Envolve, a pharmacy benefits management company it owns, to overbill the state for pharmacy benefits and services by misrepresenting the cost of services and failing to disclose retail discounts to the state.

Centene did not admit any wrongdoing under the settlement, but it is required to provide full transparency for all pharmacy benefit claims.

"We respect the deep and critically important relationships we have with our state partners," a company spokesperson said in a statement. "This no-fault agreement reflects the significance we place on addressing their concerns and our ongoing commitment to making the delivery of healthcare local, simple and transparent. Importantly, this allows us to continue our relentless focus on delivering high-quality outcomes to our members."

The state attorney general's office said the settlement money will be split between the state and the federal Medicaid program to comply with federal requirements.

Iowa Attorney General Tom Miller said his office started investigating Centene following reports of settlements between the company and other states, like Texas and Massachusetts, over pharmaceutical pricing practices.

“We are pleased to come to a resolution with Centene in this matter,” Miller said in a statement. “Medicaid funds are a vital resource for so many Iowans. Ensuring these dollars are used as intended means that our health care system is in a better spot to help our residents.”

A statement from a spokesperson at the Iowa Department of Health and Human Services, which oversees Medicaid, said Centene "proactively" reached out to the Iowa attorney general's office after investigations in other states "came to light."

"Today's settlement does not indicate Iowa-specific findings or suspected inappropriate billing practices," the statement said. "The agreement requires Centene to provide full transparency related to the adjudication and payment of all pharmacy benefit claims."

HHS said Iowa's Medicaid program has "strong safeguards in place" to reduce improper payments and overbilling.

Iowa Total Care joined the state in July 2019, replacing AmeriHealth Caritas, which left the state in 2017 after claiming large losses under the program.

It currently operates along with Amerigroup Iowa under the state's privatized Medicaid system.

Iowa HHS officials announced earlier this year that it had selected a third MCO, Molina Healthcare of Iowa, to join the state in July of next year.

Iowa officials previously withheld $44 million in payments to Iowa Total Care in early 2020 after they said the company failed to pay more that 106,000 claims. By July of 2021, officials said they had released all the funds after resolving most of the claims.

State figures show more than 840,000 Iowans are enrolled on the state's Medicaid program with about 795,000 of recipients receiving services through one of the two MCOs.

Approximately 57% of Medicaid recipients are on Amerigroup, and 43% of recipients are on Iowa Total Care.

Natalie Krebs is IPR's Health Reporter