CVS to Pay Over $17.5 Million in Medicaid Settlement

April 19, 2011 Updated: October 1, 2015

CVS Caremark Corporation last week agreed to pay over $17.5 million to the federal government and 10 states in a settlement involving false prescription billing cases. (Scott Olson/Getty Images)
CVS Caremark Corporation last week agreed to pay over $17.5 million to the federal government and 10 states in a settlement involving false prescription billing cases. (Scott Olson/Getty Images)
CVS Caremark Corporation last week agreed to pay over $17.5 million to the federal government and 10 states in a settlement involving false prescription billing cases. The settlement aims to resolve allegations that the company's retail pharmacies overcharged customers’ Medicaid for prescription drugs.

According to the U.S. Department of Justice, CVS billed states’ Medicaid programs for more than what was owed in cases with dual eligible beneficiaries. Rather than billing the government for what these particular Medicaid recipients—individuals who were also eligible for benefits under a primary third party insurance plan—would have been obligated to pay had the claims been submitted solely to a third party insurer, CVS allegedly billed and was paid a higher amount by Medicaid.

In addition to the $17.5 million payout, the settlement also requires CVS to train employees in updated billing procedures. An independent review organization will routinely audit payments and issue reports monitoring the company’s compliance. CVS has already begun working with state Medicaid offices to ensure it bills correctly for dual eligible beneficiaries.

CVS, however, expressly denies engaging in any wrongful conduct and says in a statement that it “settled the matter to avoid the expense and uncertainty of protracted litigation.”

“CVS Caremark is committed to ensuring its business operations are in compliance with the law and adhere to the highest ethical standards,” the company stated in a recent press release, adding that it “continues to work with the government to reconcile the complicated billing processes for dual eligible patients, which vary based on each state's Medicaid program, to ensure compliance with all reimbursement regulations.”

The case was filed by Stephani LeFlore, a CVS pharmacist in Minnesota, who will receive 16 percent of the total settlement. Officials say investigation of the case involved complex analysis of billing and payment information, cross-referenced to private insurance payments. CVS operates over 7,000 retail pharmacies across the country.

“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,” said Daniel R. Levinson, inspector general of the U.S. Department of Health & Human Services in a statement. “The Office of Inspector General will work vigilantly with law enforcement partners at all levels of government to safeguard this vital program.”

Under terms of the agreement, CVS will pay the federal government nearly $8 million with an additional $9.5 million allocated among 10 participating states: Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada, and Rhode Island.

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