CVS to pay $17.5M over inflated Medicaid claims

CVS Pharmacy, the pharmacy division of CVS Caremark Corp., will pay $17.5 million to the United States and 10 states to settle False Claims Act accusations, the Department of Justice announced late Friday afternoon.

The settlement resolves allegations that CVS overbilled the government for prescription drugs by charging the Medicaid programs in Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island more than what CVS was owed.  

According to the DoJ, CVS billed and was paid a higher amount by Medicaid than what the insured would have been obligated to pay had the claims been submitted solely to a third-party insurer.

"Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone, and won't be tolerated," Daniel R. Levinson, Inspector General of HHS, said in a statement. "OIG will work vigilantly with law enforcement partners at all levels of government to safeguard this vital program."

Under the agreement, CVS will pay the U.S. $8 million and the 10 states $9.5 million, plus interest.

CVS has denied any wrongdoing and said it chose to settle the claims to avoid the expense and uncertainty of protracted litigation. "CVS/pharmacy did not intentionally overcharge any state Medicaid program," it said in a statement. "The company regularly receives reimbursement from Medicaid and believes it is in compliance with each state's billing requirements for dual eligible patients."

The case was brought to the DoJ by a whistleblower in Minnesota. The St. Paul CVS pharmacist will receive $2.6 million.

For more:
- read the DoJ press release
- read the Wall Street Journal article
- read the statement from CVS