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Caremark to Pay $6 Million to Settle False Claims Act Charge

Caremark, a pharmacy benefit management company, will pay the United States $6 million to settle allegations that Caremark knowingly failed to reimburse Medicaid for prescription drug costs paid on behalf of Medicaid beneficiaries who also were eligible for drug benefits under Caremark-administered private health plans.

Caremark is operated by CVS Caremark Corporation, one of the largest PBMs and retail pharmacies in the country.

When an individual is covered by both Medicaid and a private health plan, the individual is called a “dual eligible.”

Under the law, the private insurer, rather than the government, must assume the costs of health care for dual eligibles.

If Medicaid erroneously pays for the prescription claim of a dual eligible, Medicaid is entitled to seek reimbursement from the private insurer or its PBM.

A PBM administers and manages the drug benefits for clients who offer drug benefits under a health insurance plan.

Caremark served as the PBM for private health plans who insured a number of individuals receiving prescription drug benefits under both a Caremark-administered plan and Medicaid.

Federal officials alleged that Caremark’s RxCLAIM computer platform allegedly failed to pay the full amount due on certain claims because it improperly deducted certain co-payment or deductible amounts when calculating payments.

The government alleged that Caremark’s actions caused Medicaid to incur prescription drug costs for dual eligibles that should have been paid for by the Caremark-administered private health plans rather than Medicaid.

The allegations settled arose from a lawsuit filed by Donald Well, a former Caremark employee, under the qui tam, or whistleblower, provisions of the False Claims Act.

Well will receive $1.02 million plus interest.

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