Centene CEO Sarah London addressed alleged issues with Magellan's Medicaid pharmacy benefits rollout in January during the company's first-quarter earnings call April 26.
In April, California health officials said they were investigating Centene for unspecified reasons following its December acquisition of Magellan Health, the contracted administrator of Medi-Cal prescriptions, according to Kaiser Health News.
The California Health Care Services Department said it is specifically looking into the payer's role in providing Medi-Cal pharmacy benefits prior to the $302 million Magellan purchase.
"DHCS takes all allegations of fraud, waste and abuse seriously and investigates allegations when warranted," a department spokesperson said in a statement to KHN.
During the first-quarter earnings call, Ms. London was asked about reports claiming the Magellan Medi-Cal launch went poorly.
"The team out there worked very, very closely with the state in those early days of go-live and has been performing very, very well since mid to late February. There are zero backlogs in authorizations, and I think has built a really positive relationship with the state through that collaboration," Ms. London said. "There were challenges out of the gate, but I think the team recovered incredibly well. 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."
Ms. London was also asked about whether she believes the rocky start will affect the awarding of Medicaid contracts later this year.
"Relative to the request for proposal, California is a very important state for us, and we have — throughout the Magellan acquisition process, throughout the Rx go-live and throughout our bid process — have been very focused on making sure that we are aligned with the state and meeting their expectations and looking to exceed their expectations," Ms. London said.
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.