Louisiana’s known for its laid-back way of life. “Laissez les bons temps rouler” or “let the good times roll,” is practically the state motto.
But if you’re the nation’s largest health insurance company and you inflate prescription drug prices by billions of dollars – essentially stealing from millions of the Louisiana’s Medicaid enrollees – the good times just might stop rolling.
That’s exactly what the Louisiana attorney general is alleging of UnitedHealth Group, specifically its subsidiaries OptumRx and UnitedHealthcare. The lawsuit, filed on April 13th, says the insurer and the pharmacy benefits manager (PBM) inflated prescription drug prices by billions of dollars.
But that’s not all – there’s a whole list of shady practices in the suit.
According to an April 20th article in Modern Healthcare, Attorney General Jeff Landry claims “UnitedHealth Group was paid more money from the state because its Medicaid managed-care and PBM business arms gave it a ‘perverse incentive structure’ to balance its medical loss ratio (MLR).”
A quick refresher on MLRs: To ensure accountability between health insurance companies and patients, insurers are required by law to spend a certain percentage of every premium dollar they receive on actual patient medical claims. This medical loss ratio was implemented as part of the Affordable Care Act (ACA), and it ensures that insurers don’t deny everything and pocket premiums as profit.
In response to Landry, UnitedHealth Group claims that they have a firewall put in place so that its subsidiaries don’t compete with one another. Its health insurer entity, UnitedHealthcare, and its PBM, OptumRx, both have contracts with outside providers.
But, like most rules, there are loopholes. And, as we’ve discovered, health insurance companies and pharmacy benefit managers usually find them.
We’d also like to add—this isn’t the first time that UnitedHealth Group’s firewalls have come into question, the article claims. In fact, back in February, the Department of Justice (DOJ) sought to block Optum’s acquisition of Change Healthcare because the deal smelled of anticompetitive behavior.
But with the case in Louisiana, UnitedHealthcare is allegedly overcharging the state for prescription drugs, which in turn “distorts its MLR.”
Investigations started in 2021, and UnitedHealth Group wasn’t particularly forthcoming, using “resistance, delays and incomplete responses” to stall the investigation. (Are we surprised?) By the time the health insurance behemoth finally submitted nearly 2,200 pages of documents, the lawsuit claims that 83% of those pages “were fully redacted, violating the terms of Optum’s contract with the state.”
In addition to overcharging, Optum was also accused of ‘spread pricing,’ a practice where PBMs charge insurance companies more than what the drug costs, receiving hefty reimbursements but pocketing the difference. (FYI: Spread pricing was outlawed in Louisiana back in 2020.) The suit also says Optum charged for high-cost branded drugs but gave patients generics. (If this isn’t the definition of shady, we don’t know what is.)
UnitedHealth Group still denies all wrongdoing (if only we had a dollar for every time we wrote that). Stay tuned for more coverage on how the case shakes out.