La. sues Medicaid drug payment overseer

Louisiana’s Medicaid program has paid “grossly excessive amounts” for prescription drugs for more than 20 years because of the Fortune 500 company that oversees those payments, a lawsuit filed Thursday by the state Attorney General’s Office claims.

Molina Healthcare Inc. and subsidiary Molina Information Systems LLC engaged in “negligent, false, misleading, unfair, and deceptive acts and practices” in processing Medicaid reimbursements for prescription drugs, the lawsuit says. Louisiana spent $974 million on those drugs in the past year, and the exponential increase in drug expenses in recent years has contributed to Louisiana’s health care funding crisis, the state claims.

The lawsuit includes 16 examples of the drugs for which the state grossly overpaid. One reimbursement was supposed to be $38.87, but the state paid $413.33. Only two of the overpayment examples were less than $10.

The state is seeking an unspecified amount of damages along with legal fees and penalties.

Molina officials could not be reached for comment Friday.

The Louisiana Medicaid program is a state-administered program with federal matching funds, which pays for medical care, including prescription drug benefits for Louisiana’s low-income, elderly and disabled residents. The program covers about 1.36 million people and prescription drug benefits represent about 17 percent of Louisiana Medicaid’s annual budget, according to the lawsuit.

“We are still reviewing the lawsuit filed by the Louisiana Attorney General,” said Olivia Watkins, a spokeswoman with the state Department of Health and Hospitals. “The Department is still looking into the matter and takes our duty to protect taxpayer dollars very seriously,” she said. “We have worked well in the past with the Attorney General on similar cases.”

Louisiana Medicaid reimburses medical providers, including physicians and pharmacies, for drugs prescribed for and dispensed to Louisiana Medicaid recipients based on specific formulas.

For the last 30 years, Molina has processed Louisiana’s Medicaid pharmacy reimbursement claims. But from 1989 to 2012, Molina failed to follow the state formula for those payments. The overpayments came to light as a result of expert analysis in a recent lawsuit involving the Medicaid program, the lawsuit says.

“The defendants knew that their reimbursement formula did not comply with the state’s approved formula … and that their wrongful processing of Medicaid reimbursement payments would cause the state’s Medicaid agency to pay excessive amounts for prescription drugs,” the lawsuit says.

The lawsuit says limitations of time and space prevent listing the millions of transactions involving Medicaid prescription drugs. But the state has made Molina aware of the claims in the lawsuit, and efforts to negotiate a settlement without involving the courts failed.

The state says Molina breached its contract, committed fraud and negligence, violated the state’s Unfair Trade Practices and Consumer Protection law and the state’s Medical Assistance Programs Integrity law.

Molina was to have been replaced as the state’s Medicaid claims processor. But in March 2013, Gov. Bobby Jindal’s administration canceled a contract with low bidder Client Network Services Inc. after news broke of a federal grand jury investigation into the award of the nearly $200 million, multiyear contract to CNSI.