Caremark: When Medicaid Paid the Private Plan’s Share

The Caremark Medicaid settlement required the company to pay the United States $6 million to resolve allegations that its RxCLAIM system improperly deducted copayments or deductibles from reimbursements owed to Medicaid. The patients also had private drug coverage. For someone who works on claims, the revealing detail is the subtraction: the system allegedly left the public program carrying costs that belonged to the private plans.

The Justice Department announced the settlement on September 26, 2014. Caremark was the pharmacy benefit manager administering those private drug benefits. A former employee brought the qui tam case, and the United States joined it.

Medicaid and Private Insurance Covered the Same Patient

When Medicaid and a private health plan cover the same person, the private insurer is supposed to bear the covered prescription cost. If Medicaid pays a claim the private coverage should have paid, it can seek reimbursement from the insurer or its pharmacy benefit manager. That is the payment order the Justice Department described in its Caremark announcement.

The release called these patients dual eligibles: people with Medicaid and private coverage. Caremark administered the private drug benefits for patients in that position.

The company from which Medicaid sought reimbursement also ran the calculation that determined the payment. The public program depends on that calculation to recover money it should not have had to spend. A deduction from the reimbursement leaves the cost with taxpayers.

How RxCLAIM Allegedly Shorted Medicaid

The government alleged that Caremark’s RxCLAIM computer platform failed to pay the full amount due on certain claims because it improperly deducted copayments or deductibles. Those deductions allegedly caused Medicaid to absorb prescription costs that the Caremark-administered private plans should have paid.

The transaction at issue here was reimbursement to Medicaid after the public program had paid for the prescription. The government challenged the subtraction of certain copayment or deductible amounts from that reimbursement.

For a healthcare claims employee familiar with the calculation, the meaningful comparison is the amount owed to Medicaid against the amount the system produced after the deduction. The government alleged that Caremark knowingly failed to reimburse the program. Understanding why the deduction was there, who understood its effect and how it reached the payment is central to the case we would examine with an insider.

The Pharmacy Benefit Manager Sees More Than the Pharmacy’s Payment

A pharmacy benefit manager works with both the health plan and the dispensing pharmacy, under separate payment arrangements. The amount the plan pays that manager can differ from what it pays the pharmacy. Spread pricing follows that difference. Medicaid reimbursement adds another comparison: what the public program paid and what the private coverage returned.

The 2004 American Journal of Health-System Pharmacy paper Examining the Value of Pharmacy Benefit Management Companies describes the work behind a prescription claim. The processor checks whether the patient has coverage, verifies the contract price and determines the copayment the patient should be charged. It processes and records claims according to its contract with the payer.

The paper also describes a switch between the pharmacy and claims processor that reformats data so their software can communicate. For an insider tracing a deduction, the claim’s path matters as well as the final payment: we would examine where the amount changed and which part of the processing chain produced the reimbursement.

Those are separate decisions inside what can look like a single payment. An insider who understands those inputs can explain how a reimbursement output was reached, and where a deduction entered it.

In the Caremark allegations, the business administering the private benefit also controlled the calculation the government said left Medicaid short. The operational knowledge sits with the people who understand how that calculation works.

The Claims Records Behind the Deduction

For this kind of health care reimbursement case, we connect the patient’s coverage, the prescription Medicaid paid and the private plan’s reimbursement calculation. The useful account follows the same claim through those records. It explains the amount due, the copayment or deductible applied and the resulting payment.

An eligibility employee may understand why the private coverage applied. A claims or benefit-configuration employee may understand the rule that produced the deduction. A reimbursement or audit employee may be able to connect that output to the amount Medicaid received. These are different views of the same transaction, and we use them to build the case with the insider.

We also examine any internal explanation of the deduction and any review of its effect on Medicaid payments. Those records can connect the calculation to what the company knew about the money it allegedly left unpaid.

That is where an employee’s knowledge can become the basis of a whistleblower case. The records show the calculation. Someone who worked with it can explain why the company used it and how it affected government money.

The Caremark Settlement and Whistleblower Reward

The Justice Department announced a $1.02 million award to the whistleblower from the recovery.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Other Pharmacy Benefit Manager Cases Follow Different Payments

Rite Aid and Elixir’s rebate-reporting case concerned manufacturer payments reported to Medicare as service fees. The government alleged that retained rebates received that label even though manufacturers had not negotiated those fees. That treatment affected Medicare Part D reconciliation. The Caremark Medicaid case instead followed a deduction from reimbursement for a prescription the public program had already paid.

For a pharmacy benefit manager insider, the distinction starts with the transaction you know: the claim being reimbursed or the manufacturer rebate being reported. We build the case around that transaction and the government money it affected.

You Know Why the Deduction Was There

If you understand how a pharmacy benefit manager’s claims system left Medicaid carrying a private plan’s bill, talk with our whistleblower experts about the calculation you saw. We work beside you to build the case and bring in Medicaid fraud whistleblower lawyers who understand PBM reimbursement systems. Your knowledge of the payment decisions belongs at the center of that work, from the first conversation through the pursuit of a recovery.