New York State Health Insurance Program

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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

New York State Health Insurance Program
CVS Health: Temporary Holding Account Rebate Revenue


Issued: October 17, 2019
Link to full audit report 2019-S-27

Objective
To determine if CVS Health remitted to the State Department of Civil Service all commercial drug rebate revenue attributable to eligible prescription drug claims maintained in CVS Health’s temporary holding account. 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, 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. In accordance with the contract, CVS Health was required to negotiate agreements with drug manufacturers for 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
CVS Health improperly designated a temporary holding account, used to process certain prescription drug claims, as “non-rebate-eligible.” As a result, CVS Health did not seek rebates from drug manufacturers on claims that were, in fact, rebate-eligible. We identified $428,958 in rebate revenue that is due to Civil Service for rebate-eligible claims in the account for the period January 1, 2014 through December 31, 2018. CVS Health agreed Civil Service is due the additional rebates. CVS Health also agreed to remove the “non-rebate-eligible” designation from the account. As a result, we project Civil Service will receive additional rebates of $1.27 million attributable to rebate-eligible claims in the holding account over the next contract period of January 1, 2019 through December 31, 2023.

Key Recommendations

  • Remit $428,958 in rebate revenue to Civil Service.
  • Ensure all future rebate revenue attributable to claims in the temporary holding account (estimated at $1.27 million) is properly remitted to Civil Service.

State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236