Centene settles with Texas over conduct first detected in Ohio

Texas became at least the 12th state to settle potential claims that healthcare giant Centene defrauded that state's Medicaid program, state Attorney General Ken Paxton announced earlier this week.

The deal will pay the Lone Star State $166 million to release it from claims similar to those first alleged in Ohio in March of 2021.

Centene, the nation's largest Medicaid managed-care contractor, provides such services in Ohio and Texas under the names Buckeye Health Plan and Superior HealthPlan, respectively.

In the Ohio suit, Attorney General Dave Yost accused Centene's Buckeye of using its pharmacy middlemen to overcharge taxpayers by millions for prescription drugs.

That investigation followed reporting in 2018 by The Columbus Dispatch showing that a year earlier, Buckeye charged the state $20 million for services provided by its drug middleman. But those same services appeared to have been rendered by a separate company — CVS — that was also paid, the story said. Both Centene and Buckeye denied that they were double-dipping.

In its settlements with Ohio and Texas, Centene has emphasized that it doesn't admit wrongdoing, and it continues to do business in both states.

In a statement, Paxton said the Texas settlement shows that his office is serious about stopping fraud.

"Protecting taxpayer funds and the financial integrity of the Texas Medicaid program is a top priority for my office," he said. "The results we achieved in this case send a clear message to providers that Texas expects transparency from its Medicaid partners as required by Texas law."

An anti-fraud message from the Texas AG might sound ironic because Paxton has been under felony indictment on charges of securities fraud since 2015. Like Centene in its settlement with Texas, Paxton denies wrongdoing in his criminal case.

When he announced the settlement here, Ohio AG Yost said that as part of the deal Centene agreed to pay Ohio at least as much as it did every other state.

The Texas settlement with Centene is twice as large as the $88 million it paid Ohio. But it's unclear whether that means Ohio will get more money.

That's because the promise appears to be on a per-enrollee basis or something similar. The Ohio settlement says, "The Centene entities shall not enter into any other settlement agreement with another state regarding conduct the same as or similar to the conduct alleged in the Ohio action that contains a recovery calculation methodology more favorable than that contained in the settlement agreement and release."

Superior Healthplan's website says it has 1.7 million enrollees in Texas, while Buckeye's says that 300,000 Ohioans use its services to get benefits from Medicaid, Medicare or through insurance marketplaces. So if the relative number of Medicaid enrollees is the basis for the Centene settlements, Ohio's is much bigger than the one Texas announced.

When Centene last year announced settlements with Ohio and Mississippi, it said it was setting aside $1.1 billion to settle such claims with more than 20 states.

Kaiser Health News this week reported that in addition to Ohio, Mississippi and Texas, Arkansas, Illinois, Kansas, New Hampshire, New Mexico, and Washington are known to have settled so far. California, Florida and South Carolina may be negotiating settlements, the news organization reported.