Managed Care Pharmacy Benefit Services – Aetna
Learn how the AI-generated research projects were createdOverall Conclusion
CaremarkPCS Health, LLC (Caremark) and Aetna Better Health of Texas Inc. (Aetna) employed unallowable pricing models to reduce prescription expenses, and Aetna incorrectly reported expenses on its financial statistical reports to HHSC.
Source Document
Audit Scope
Texas Medicaid and CHIP pharmacy benefit services during state fiscal years 2020 and 2021 (Sept. 1, 2019–Aug. 31, 2021 for 2020; Sept. 1, 2020–Aug. 31, 2021 for 2021).
Key Findings Summary
CaremarkPCS Health, LLC employed an unallowable pricing model using an end-of-year effective rate adjustment to reduce final payments to pharmacies, resulting in spread pricing and misrepresentation of costs to Aetna.
Aetna Better Health of Texas Inc. employed an unallowable pricing model (effective rate pricing) with Caremark that reduced payments to Caremark and created overpayments, leading to spread pricing.
Aetna incorrectly reported prescription expenses on its Financial Statistical Reports, overstating expenses in 2020 and 2021 due to misreported administrative fees, rebates, and offsets, and failure to capture rebates and adjustments.
AI-Assisted
AI Scope Summary
This audit evaluated whether Aetna and Caremark had controls to ensure net reimbursements to pharmacies, accurate reporting to Texas HHSC, and compliance with the Uniform Managed Care Contract for Texas Medicaid and CHIP pharmacy benefits during state fiscal years 2020 and 2021. It found unallowable pricing practices and reporting deficiencies, with scope limitations due to Caremark access restrictions, and recommended actions to exclude Texas Medicaid and CHIP from effective rate adjustments, end spread pricing practices, improve reporting, and enhance oversight.
AI-Generated Insight
The audit found that both Caremark and Aetna used end-of-year effective rate adjustments to reduce pharmacy costs, resulting in spread pricing and misreporting of expenses. A scope limitation due to Caremark restricting access hindered full verification of pricing calculations. The report recommends contractual updates, stronger oversight, and ensuring pass-through pricing and accurate reporting to HHSC.
Audit Objectives
Determine whether Aetna and Caremark had processes and controls in place to ensure payments and reimbursements for managed care pharmacy benefit services were based on net reimbursements to pharmacies.
Determine whether those payments and reimbursements were accurately reported to the state of Texas.
Determine whether the payments and reimbursements complied with the Uniform Managed Care Contract and other applicable requirements.
Audit Findings (3)
CaremarkPCS Health, LLC employed an unallowable pricing model using an end-of-year effective rate adjustment to reduce final payments to pharmacies, resulting in spread pricing and misrepresentation of costs to Aetna.
Aetna Better Health of Texas Inc. employed an unallowable pricing model (effective rate pricing) with Caremark that reduced payments to Caremark and created overpayments, leading to spread pricing.
Aetna incorrectly reported prescription expenses on its Financial Statistical Reports, overstating expenses in 2020 and 2021 due to misreported administrative fees, rebates, and offsets, and failure to capture rebates and adjustments.
Recommendations (4)
Caremark must exclude Texas Medicaid and CHIP services from prohibited effective rate pricing adjustments; not engage in spread pricing; report accurate final prescription expenses to Aetna; provide HHSC and OIG access to records and systems.
Aetna must exclude Texas Medicaid and CHIP services from effective rate pricing adjustments; ensure its PBM does not engage in spread pricing; report accurate final prescription expenses to HHSC; ensure HHSC and OIG have access; increase oversight of the PBM function.
Aetna must reimburse the funds collected via effective rate adjustments to the state of Texas; exclude Texas Medicaid and CHIP services from effective rate pricing adjustments; report accurate final prescription expenses; follow HHSC reporting instructions.
Aetna must report affiliate administrative expenses at cost or with fair market value documentation; capture and report accurate Texas Medicaid and CHIP prescription expenses and administrative fees including rebates and offsets; follow HHSC instructions.