Objective

To determine if CVS Health remitted commercial drug rebate revenue related to Empire Plan drug utilization in accordance with its contract with the Department of Civil Service. Our audit covered the period January 1, 2014 through December 31, 2018.

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), provides health insurance coverage to over 1.2 million active and retired State, participating local government, and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, covering nearly 1.1 million members. Civil Service contracted with CVS Health to administer the Empire Plan’s prescription drug program for the period January 1, 2014 through December 31, 2018. The cost of the prescription drug program averaged $2.4 billion per year during the contract period. In accordance with the contract, CVS Health was required to negotiate agreements with drug manufacturers for rebates, discounts, and other consideration (herein collectively referred to as “rebates”) and remit the rebate revenue to Civil Service. During the contract period, Civil Service received more than $1 billion in commercial drug rebates (rebates exclusive of Medicare Part D rebates).

Key Findings

We reviewed discrepancies between the drug rebates that CVS Health invoiced versus collected from drug manufacturers and found CVS Health did not always collect and remit all rebate revenue to Civil Service. As a result, Civil Service is due $453,029 in rebates.

Key Recommendations

• Remit $453,029 in drug rebate revenue to Civil Service.
• Take corrective steps to ensure all of the Empire Plan’s rebate-eligible drug utilization is invoiced, collected from drug manufacturers, and remitted in a timely manner to Civil Service.