Objective

To determine if CVS Health invoiced and remitted commercial 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 June 30, 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 prescription drug program costs more than $2 billion annually. 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 audit period, Civil Service received more than $850 million in commercial drug rebates (rebates exclusive of Medicare Part D rebates).

Key Findings

We reviewed the rebate revenue generated from agreements with six drug manufacturers 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. As a result, Civil Service is due $2,240,798 in rebates.

Key Recommendations

• Remit $2,240,798 in rebate revenue to Civil Service.
• Ensure all of the Empire Plan’s rebate-eligible drug utilization is invoiced, collected from the manufacturers, and remitted in a timely manner to Civil Service.