CVS Will Pay $4.25 Million for Allegedly Denying Medicaid Claims for Reimbursement of Prescription Drug Costs

Caremark LLC, a pharmacy benefit management company (PBM), will pay the government and five states a total of $4.25 million to settle allegations that it knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries, who also were eligible for drug benefits under Caremark-administered private health plans, the Justice Department announced today.  Caremark is operated by CVS Caremark Corp., one of the largest PBMs and retail pharmacies in the country.  A PBM administers and manages the drug benefits for clients who offer drug benefits under a health insurance plan. 

Under the terms of the agreement, the government will receive approximately $2.31 million.  In addition, five states — Arkansas, California, Delaware, Louisiana and Massachusetts — will share $1.94 million. 

“It is vitally important that cash-strapped Medicaid programs receive reimbursement for costs they incur that should have been paid for by other insurers,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will take action against those who seek to gain at the expense of Medicaid or other federal health care programs.”

Caremark served as the PBM for private health plans that insured a number of individuals receiving prescription drug benefits under both a Caremark-administered plan and Medicaid.  When an individual is covered by both Medicaid and a private health plan, the individual is called a “dual eligible.”  Under the law, the private insurer, rather than the government, must assume the costs of health care for dual eligibles.  If Medicaid erroneously pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its PBM, in this case Caremark. 

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