- Centene CEO Sarah London addressed concerns surrounding a subsidiary's implementation of California's new Medicaid prescription drug program after news reports chronicled members struggling to get access and approvals to needed medications.
- "There [is] zero backlog in authorizations," London said Tuesday on a call with investors. California Department of Health Care Services spokesman Anthony Cava confirmed, telling Healthcare Dive there is no backlog in prior authorizations or approvals for medicines within the state's prescription drug program run by Centene subsidiary Magellan Health.
- Separately, Cava confirmed that the department is currently investigating Centene regarding alleged overbilling for Medicaid pharmacy services in California following actions and settlements in other states.
Shortly after Gavin Newsom was sworn in as California's governor in 2019, he sought to tackle the high cost of prescription drugs. To harness the scale of buying in bulk for the state's roughly 13 million Medicaid enrollees, Newsom brought Medicaid prescription purchasing under one umbrella through an executive order.
Magellan Health was later awarded the statewide contract for pharmacy services, known as Medi-Cal Rx. Magellan estimated the contract would deliver annual revenue between $70 million and $80 million, according to a Nov. 7, 2019, filing with the U.S. Securities and Exchange Commission.
Medi-Cal Rx went live in January. That same month, Centene completed its $2.2 billion acquisition of Magellan.
"There were challenges out of the gate, but I think the team recovered incredibly well. And, you know, you'd have to ask California, but at least the signals we're getting from them is that they're very happy with the collaboration and the partnership," London said on Tuesday's call.
She added that the Magellan team in California worked closely with the state in the days after Medi-Cal Rx went live and said "it's been performing very, very well since mid- to late February."
The challenges in California come on the heels of Centene reaching settlements in a number of other states regarding allegations of overbilling Medicaid programs.
Centene reached a no-fault settlement with New Hampshire and agreed to pay the state $21.1 million in January. Centene has reached similar settlements in other states, including Illinois, Ohio and Mississippi. Centene previously disclosed that it has set aside $1.25 billion to resolve these disputes, according to its annual report filed with the SEC.
California's health department that oversees the Medicaid program is aware of the settlements elsewhere and said it "takes all allegations of fraud, waste, and abuse seriously and investigates allegations when warranted," according to the statement provided by Cava.