Health Plans Attempt to Allow “Bad Actors” to Bid on Texas Medicaid Managed Care Contracts

AUSTIN, Texas--(BUSINESS WIRE)-- A new clause slipped into the Texas Legislature Senate Bill 7 amendments returned Wednesday to the House from the Senate conference committee nullifies the contractor integrity amendment.

This amendment initially passed the House 143 to 1 and reaffirmed by defeating a motion to table in the special session by a vote of 133 to 7.

Rep. Fred Brown (R-Bryan) authored the amendment to weed out unscrupulous HMOs and pharmacy benefit managers PBMs. The amendment bars these businesses from bidding on the HHSC Medicaid managed care contract if they have been assessed penalties or fines in excess of $500,000 for Medicaid fraud, or breaking other state or federal laws, in the past three years.

The new clause only prohibits those unscrupulous HMOs and PBMs that are “subject to a final judgment by a court of competent jurisdiction resulting in a conviction of a criminal offense.”

“The standard operating procedure for these guys is to deny state and federal government’s allegations of wrongdoing, and when the end is nigh, they settle for huge amounts of money without having to admit fault,” said Richard Beck, RPh, executive director of the Texas Pharmacy Business Council. “Because these companies consider the fines just another cost of doing business, there is no incentive to stop fraudulent business practices.

“It is fiscally responsible to filter out contractors who have been assessed penalties or fines in excess of $500,000 for Medicaid fraud through monetary settlements with the government, not just criminal convictions,” Beck added.

Examples of Medicaid fraud settlement actions below would not be covered by the proposed language in the new conference committee report.

  • CVS, the retail pharmacy division of CVS Caremark Corporation, (PBM) recently (4/15/11) settled with state (10 states total) and federal authorities for a $17.5 million fine. The allegation is that CVS Caremark submitted inflated prescription claims to the government by billing the Medicaid programs in the 10 states for more than what CVS was owed for prescription drugs dispensed to Medicaid beneficiaries who were also eligible for third party insurance benefits.
  • Amerigroup Corporation (HMO) settled (8/14/08) with state and federal authorities, agreeing to pay a $225 million fine to resolve claims it defrauded Medicaid by systematically avoiding enrollment of pregnant women and other high-risk patients.
  • WellCare Health Plans, Inc. (HMO) recently (4/26/11) settled with state (9 total) and federal authorities, as well as five whistleblowers, agreeing to pay a $137.5 million fine as a final resolution to Medicaid fraud charges alleging it defrauded Florida's Healthy Kids program and subsequently made misleading earnings statements on the ill-gotten gains.

The Texas Pharmacy Business Council represents 17,000 independent community pharmacies in Texas. It is a collaboration between American Pharmacies (a for-profit, member-owned buying group) and the Academy of Independent Pharmacists-Texas.


Texas Pharmacy Business Council
Pam Baggett, 512-925-9492

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