Objective

To determine if CVS Health appropriately invoiced drug manufacturers and remitted corresponding rebate revenue to the Department of Civil Service for prescription drugs provided under the Empire Plan Medicare Rx drug benefit. Our audit covered the period January 1, 2014 through December 31, 2019.

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. Individuals who are dual enrolled in the Empire Plan and Medicare have their prescription drug coverage under Empire Plan Medicare Rx, a Medicare Part D Prescription Drug Plan with expanded coverage designed especially for NYSHIP.

Since 2014, Civil Service has contracted with CVS Health to administer the prescription drug program. Since then, the cost of the prescription drug program averaged $2.5 billion per year. In accordance with the contracts, 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. From January 1, 2014 through December 31, 2019, Civil Service received about $1.2 billion in Empire Plan Medicare Rx rebates.

Key Findings

We reviewed rebate revenue generated by Empire Plan Medicare Rx and found that CVS Health did not always invoice drug manufacturers for rebates, collect rebates from the manufacturers, or remit all rebate revenue to Civil Service. We identified $10,723,916 in rebates that is due Civil Service from CVS Health.

Key Recommendations

• Remit $10,723,916 in drug rebate revenue to Civil Service.
• Take corrective steps to ensure all the Empire Plan Medicare Rx rebate-eligible drug utilization is invoiced, collected from drug manufacturers, and remitted in a timely manner to Civil Service.