Oklahoma and more than two dozen other states, the federal government and the District of Columbia, have sued CVS Health Corporation, CVS Pharmacy, Oklahoma CVS Pharmacy LLC and two other subsidiaries, to recover taxpayer funds that allegedly were obtained fraudulently as Medicaid reimbursements.
Oklahoma alleges CVS violated this state’s False Claims Act and committed breach of contract by charging Medicaid programs higher prices than the “usual and customary” prices charged to the general public. The complaint was filed April 14 in the District of Columbia federal district court but wasn’t unsealed until last week.
“Because of CVS’s conduct, the intervening states’ Medicaid programs regularly paid higher prices to CVS than non-Medicaid payer for prescription drugs,” the complaint alleges.
“That is because CVS used discount card programs, specifically a discount card program with the Medicaid Security Card Company d/b/a ScriptSave, to offer cash-paying customers with a ScriptSave discount card lower prices than it reported … as its usual and customary prices” to the intervening states’ Medicaid programs.
Regulations require CVS to submit usual and customary (“U&C”) prices on prescription drug claims to Medicaid, because the intent is “to ensure that Medicaid does not pay higher prices” than non-Medicaid customers pay, the plaintiffs state.
Medicaid programs in the complaining states “do not have access to data for cash-paying customers, like those paying with a ScriptSave discount card, and thus were unaware that CVS was offering lower prices to the cash-paying general public than it was offering to Medicaid,” the plaintiffs assert.
“This material misrepresentation by CVS caused the intervening states’ Medicaid programs to reimburse CVS at higher prices than CVS was entitled” under those states’ regulations.
Oklahoma’s Medicaid program, SoonerCare, is a jointly funded and administered federal and state program that covers medical costs – including prescription drug costs – for Oklahomans with limited income.
SoonerCare reimburses CVS pharmacies for dispensing prescription drugs, using the lowest of four reporting price points, one of which is the pharmacy’s “usual and customary price” for the public.
Oklahoma alleges that from 2016 until at least 2022, CVS knowingly concealed lower prices offered to the public and misrepresented its usual and customary prescription drug prices to fraudulently increase Medicaid reimbursements.
The state Legislature established the Oklahoma Health Care Authority “as the single state agency responsible for administering and supervising” this state’s Medicaid program.
The Legislature “recognizes that … Oklahoma is a major purchaser of health care services, and the increasing costs of such health care services pose a great financial obligation on the state,” the lawsuit petition points out. Thus, any improper billing or overcharging of Medicaid by a provider “causes financial injury to the State of Oklahoma and its taxpayers.”
According to the OHCA, 1,036,454 Oklahomans – approximately one-fourth of all state residents – were enrolled in SoonerCare in March (the latest month for which statistics are available). Of those enrollees, 53% were children and 47% were adults. Also, 50% of the enrollees were aged 18 or younger, 42% were aged 19 to 64, and 8% of them were 65 or older.
Besides the federal government and Oklahoma, other plaintiffs in the case include California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Rhode Island, Tennessee, Vermont, Virginia, and Washington.