Objective

To determine if CVS Caremark appropriately invoiced drug manufacturers and remitted corresponding rebate revenue to the Department of Civil Service for prescription drugs provided under the Empire Plan. The audit covered the period from January 2019 through December 2022.

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 about 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 over 1 million members.

Since 2014, Civil Service has contracted with CVS Caremark to administer the prescription drug program. From 2019 through 2022, the cost of the prescription drug program averaged almost $3.3 billion per year. In accordance with the contracts, CVS Caremark 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 2019 through December 2022, Civil Service received over $2 billion in Empire Plan commercial drug rebates (rebates exclusive of Medicare Part D rebates).

Key Findings

We reviewed rebate revenue generated by Empire Plan commercial claims and found that CVS Caremark did not always invoice drug manufacturers for rebates or collect and remit all rebate revenue to Civil Service. Based on judgmental samples of 10 manufacturers and 25 drugs, we identified $1,160,286 in rebates that is due to Civil Service from CVS Caremark.

Key Recommendations

• Review the $1,160,286 in drug rebate revenue identified as due to Civil Service, and remit as warranted.
• Take corrective steps to ensure all the Empire Plan’s rebate-eligible drug utilization is invoiced, collected from the drug manufacturers, and remitted in a timely manner to Civil Service.