Attorneys general from Massachusetts, Connecticut, Oklahoma and Indiana have filed a lawsuit against CVS Health claiming that it submitted "false and fraudulent claims" to state Medicaid programs.
The AGs say CVS Health charged these programs higher prices than they offered to the general public for the same drugs.
Specifically, the complaint alleges that CVS offered lower drug prices to cash-paying customers through a discount program administered by a company called ScriptSave, but did not report the discounted rates to state Medicaid programs.
CVS, the AGs allege, hasn't submitted its customary prices available to other payers on prescription drug claims to Medicaid since 2016, resulting in state Medicaid programs overpaying CVS when compared with other health plans, the complaint said.
"When pharmacies offer discounted drug pricing to its customers, they must also charge MassHealth that same low price," Massachusetts Attorney General Andrea Joy Campbell said in a statement, referring to the state's Medicaid program. "At a time when costs are sky-high, our taxpayers should not have to foot the bill for pharmacies' inaccurate price reporting."
The complaint alleges that CVS has contracted with ScriptSave to administer discount card programs for former customers of CVS's discount card program, Health Savings Pass, and at former Target pharmacies, which CVS acquired. Customers with those ScriptSave discount cards often received lower prices than MassHealth, according to Campbell.
In a statement emailed to Healthcare Finance News, CVS Health said it strongly disputes the allegations that its prices were inaccurate or inflated.
"We've always been transparent with Medicaid programs concerning the prices we were submitting," CVS said. "The four states involved in this lawsuit have never issued guidance to pharmacies contending that third-party discount card prices constitute a pharmacy's Usual and Customary (U&C) prices.
"For the last several years, many pharmacies, including CVS Pharmacy, have been named as defendants in other U&C lawsuits accusing the pharmacies of having submitted inflated U&C prices. In the cases involving CVS, we've prevailed many times, including by dismissal of the plaintiff's allegations by the court and by verdicts from juries or final awards by arbitrators."
THE LARGER TREND
CVS Health saw profit and revenue grow over the past year, but the company's insurance arm, Aetna, is struggling and will exit the Affordable Care Act individual markets in 2026.
Aetna has exited the ACA market before. In 2018, Aetna joined other insurers in leaving or downsizing its footprint, as premiums rose and insurers lost money. In 2021, Aetna re-entered the market, with former CEO Karen Lynch saying at the time that the market had stabilized and resolved earlier "structural issues."
Yet Aetna has struggled since its reintroduction into the ACA exchange and posted an adjusted operating income loss of $924 million in 2024.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.