Caremark pays to settle Medicaid fraud in 5 states

Caremark LLC, a division of CVS Caremark, has agreed to pay $4.25 million to five states to settle allegations that it defrauded Medicaid programs by billing them for prescription costs paid by private insurers.

Massachusetts will receive the largest share of the settlement, $2.6 million. Other states receiving payments to settle similar fraud allegations are Arkansas, California, Delaware, and Louisiana.

“This settlement is the result of an investigation into allegations that Caremark failed to properly handle and reimburse pharmacy claims for certain customers in the Commonwealth, leaving MassHealth to foot the bill,” Massachusetts Attorney General Martha Coakley said in a statement. “Our office will continue to safeguard the taxpayers’ investment in programs designed to provide care and treatment to our most vulnerable citizens.”

According to investigators, Caremark failed to reimburse Medicaid for payments received for “dual eligible” patients, who are members of Medicaid and also have access to private insurance.

By law, when Caremark receives payments from both Medicaid and a private insurer, it is required to keep the payments from the private insurer and refund Medicaid.

Investigators claimed Caremark, in many cases, pocketed both payments. Caremark allegedly committed the fraud by inappropriately rejecting Medicaid claims citing a number of reasons, including that paper claim forms were used and medications were dispensed at out-of-network pharmacies.

The investigation was prompted by a Caremark whistleblower, Janaki Ramadoss, who will receive $505,680 from the federal government and additional shares from each of the states.