CVS pays $4.25M over claims of failing to reimburse Medicaid

Caremark, LLC, the pharmacy benefits manager operated by CVS Caremark Corporation, agreed to pay the federal government and five states $4.25 million to resolve allegations that it intentionally denied Medicaid claims for payment on behalf of beneficiaries covered by both Medicaid and private insurers, according to the U.S Department of Justice. For these dual-eligible customers, private payers are legally responsible for healthcare claims reimbursement.

The government alleged Caremark used a claims processing platform to cancel Medicaid claims for dual eligibles, thereby causing financial harm to the government insurance program. This settlement comes on the heels of a CVS Caremark proposal to Alabama claiming it could save the state up to $50 million by managing its Medicaid prescription drug benefit.

"It is vitally important that cash-strapped Medicaid programs receive reimbursement for costs they incur that should have been paid by other insurers," Stuart F. Delery, assistant attorney general for the Justice Department's civil division, said Monday in the DOJ announcement.

Caremark's settlement does not admit liability, but will give the government $2.31 million and divide the balance of the settlement among Arkansas, California, Delaware, Louisiana and Massachusetts.

This case began as a whistleblower lawsuit brought on by Janaki Ramadoss, a former Caremark employee. As qui tam relator under whistleblower provisions of the False Claims Act, Ramadoss will collect about $505,680 from the government's portion of the settlement along with additional money from the states, the Justice Department noted.     

The DOJ announcement touts the Caremark settlement as another victory in governmental anti-fraud efforts. Since 2009, DOJ fraud recoveries have topped $17 billion through False Claims Act cases, the announcement noted. Recovering government program overpayments resulting from health insurance fraud also is a top priority of the Office of Inspector General.   

For more:
- see the DOJ announcement