Attorney General Peter F. Kilmartin announced a settlement today with CVS Pharmacy, Inc. to resolve allegations that the company overcharged Medicaid for prescription drugs. CVS Pharmacy operates over 7,000 retail pharmacies across the country.
Under the terms of the settlement, CVS will pay $17.5 million to the federal government and 10 states, including Rhode Island. The settlement will recover $1,012,028.00 in federal and state dollars paid for prescriptions drugs for Rhode Island Medicaid beneficiaries Rhode Island will retain $558,884.41 in state monies.
The settlement resolves allegations that CVS Pharmacy billed the wrong amount to Medicaid for dual-eligible beneficiaries--Medicaid beneficiaries who also have third-party prescription coverage (other than Medicare). Pharmacies must bill the other insurer first, and submit a claim to Medicaid for only the amount of any remaining liability, typically the co-pay. The investigation showed that CVS billed more than the allowed amount for certain dual-eligible claims, resulting in excessive reimbursement.
“The state has an obligation to ensure that every taxpayer dollar is properly spent. Since Medicaid is one of the largest expenditures for the State of Rhode Island, and, with Medicaid costs continually rising year over year, it is simply good practice for us to ensure that we keep an eye on the purse strings and hold accountable those who do not follow the rules. Rhode Islanders are suffering economically, and it is shameful that corporations add further fiscal stress on them for their own corporate gain,” said Attorney General Peter F. Kilmartin.
The case was filed by a whistleblower who is a CVS pharmacist in Minnesota. The whistleblower will receive 16% of the total recovery. Investigation of the case involved complex analysis of billing and payment information, cross-referenced to private insurance payments. The states assisted the U.S. Department of Justice, the U.S. Attorney's Office in the Western District of Wisconsin, and the U.S. Department of Health and Human Services – Office of Inspector General in investigating and negotiating a resolution of the case.
As part of the settlement, an existing Corporate Integrity Agreement will be amended to require CVS to implement correct billing procedures and train employees. An independent review organization will regularly audit payments and issue reports on CVS’s compliance. CVS has started working with individual state Medicaid offices to make sure it bills correctly for dual-eligible beneficiaries.
The Medicaid Fraud Control and Patient Abuse Unit enforces the laws pertaining to fraud in the federal/state Medicaid program and prosecutes cases of abuse, neglect or mistreatment of patients in all state healthcare facilities. The Unit prosecutes criminal activity, pursues civil remedies where appropriate and participates with federal and state authorities in a variety of inter-agency investigations and administrative proceedings.
Since January, 2011, the Attorney General has recovered more than $924,742.51 on behalf of Rhode Island’s Medicaid program.
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