California health officials are investigating Centene for unspecified reasons following its acquisition of Magellan Health, the administrator of Medi-Cal prescriptions, according to Kaiser Health News.
California awarded a $302 million contract to Glen Allen, Va.-based Magellan Medicaid Administration in December 2019 to administer Medi-Cal prescriptions. A launch of the program was expected in April 2021.
Centene announced its intention to purchase Magellan in January 2021, and the California Managed Health Care Department approved the acquisition in December. The Medi-Cal prescription drug program then launched on Jan. 1, 2022.
The California Health Care Services Department is now investigating Centene for unspecified reasons, but is looking into the payer's role in providing pharmacy benefits prior to the Magellan purchase, according to KHN.
"DHCS takes all allegations of fraud, waste and abuse seriously and investigates allegations when warranted," a department spokesperson said in a statement to KHN.
The investigation in California follows a recent history of legal issues between the St. Louis-based payer and state Medicaid programs.
Since the start of 2021, Centene has settled with nine states over allegations it overbilled Medicaid programs for prescription drugs and services through its pharmacy benefits arm, Envolve. The payer settled with Arkansas, Illinois, Kansas, Mississippi, New Hampshire and Ohio, with the three other states not identified.
Centene created a legal settlement reserve of $1.25 billion for those settlements and any future lawsuits, according to a 2021 Securities and Exchange Commission report. In public statements, the company has denied any wrongdoing.
Centene provides coverage to about 1.7 million low-income Californians in 26 counties through subsidiaries, accounting for over 10 percent of its annual revenue.