CVS Health sued by coalition of states alleging Medicaid fraud by pharmacies
A coalition of state attorneys general have filed a lawsuit against CVS Health, alleging the company’s pharmacies defrauded Medicaid by overbilling for prescriptions.
The listed plaintiffs include California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Vermont, Washington, and Washington D.C.
According to them, CVS pharmacies submitted “false and fraudulent” claims to state Medicaid programs, charging more for drugs than what was billed to private insurers and prescription discount programs. The alleged practice is a violation of state and federal laws that govern drug prices.
The lawsuit, based on a whistleblower complaint, alleges the billing discrepancy has been going on since 2016.
In the complaint from Massachusetts—filed by Attorney General Andrea Joy Campbell—CVS is accused of offering lower prices to cash-paying customers, through a discount offered by ScriptSave. However, those lower rates were allegedly not reported or billed to MassHealth, the state’s Medicaid manager.
Massachusetts law requires pharmacies to bill Medicaid the lowest price they charge any other customer, Campbell’s office confirmed in a statement.
“When pharmacies offer discounted drug pricing to its customers, they must also charge MassHealth that same low price,” Campbell said. “At a time when costs are sky-high, our taxpayers should not have to foot the bill for pharmacies’ inaccurate price reporting.”
Campbell, and her co-plaintiff attorneys general, are asking the federal government to intervene and force CVS to comply with the law.
Four states, Connecticut, Indiana, Oklahoma and Massachusetts, made the initial legal filing on May 7, along with the whistleblower.
In public statements to multiple media outlets, CVS denied any wrongdoing and said state regulators have “never issued guidance to pharmacies contending that third-party discount card prices constitute a pharmacy’s usual and customary prices.” Its cash discount program, Health Savings Pass, has been in effect since 2008. However, it remains unclear whether the plaintiffs are claiming that the program violates the law, or if the issue is strictly related to Medicaid billing.
The lawsuit is newly filed, and arguments have yet to be heard in federal court. The filing was submitted to a U.S. District Court in Washington, D.C., where the whistleblower made the complaint.
HealthExec reached out to CVS Health for comment and received the following statement:
"We strongly dispute the allegations that our prices for Medicaid programs were inaccurate or inflated. We’ve always been transparent with Medicaid programs concerning the prices we were submitting. The four states involved in this lawsuit have never issued guidance to pharmacies contending that third-party discount card prices constitute a pharmacy’s Usual & Customary prices.
For the last several years, many pharmacies, including CVS Pharmacy, have been named as defendants in other U&C lawsuits accusing the pharmacies of having submitted inflated U&C prices. In the cases involving CVS, we’ve prevailed many times, including by dismissal of the plaintiff’s allegations by the Court and by verdicts from juries or final awards by arbitrators."
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.