JustCare

Tag: Optum

  • UnitedHealth overbills the VA by hundreds of millions of dollars

    UnitedHealth overbills the VA by hundreds of millions of dollars

    At a recent Congressional hearing in Washington, Rep. Mark Takano (D-California), the top Democrat on the House Veterans Affairs Committee, directed a series of questions to the CEO of the health care company Optum, a wholly owned subsidiary of UnitedHeath Group. The exchange helped expose an alarming and growing problem in veterans’ health care in this country: massive overbilling by large, for-profit insurance conglomerates.

    Takano’s questioning was a master class, and you should watch it. You can see a taste of it here.

    What Rep. Takano exposed is that massive health care companies are enriching themselves at the expense of our nation’s Veterans.

    At issue is the Veterans’ Community Care Program, which facilitates medical care for veterans provided by health care professionals outside of the Veterans Health Administration (VHA).

    The program is administered by big health insurance companies, including Optum and TriWest. Data compiled by federal investigators shows that these insurers, often called third-party administrators (TPAs), overbill the government in a similar way that insurers selling Medicare Advantage plans do, as HEALTH CARE uncovered has reported.

    Department of Veterans Affairs Office of the Inspector General (OIG) February 2025 report.

    The investigators looked under the hood of these companies and found some real troubling signs. Their February 2025 report – published by the Department of Veterans Affairs Office of the Inspector General (OIG) – found that the VHA overpaid its TPAs by more than $1 billion between 2020 and 2024.

    The largest recipient was UnitedHealth Group’s Optum, which received overpayments of more than $105 million from 2020 to 2022. TriWest was overpaid $73.4 million from 2020 to 2023. The OIG found the overpayments were a result of the companies charging the VHA incorrect rates.

    For example, Optum reportedly overcharged the VHA by $783.4 million between 2020 and May 2024 for dental services provided by community care providers. Investigators said Optum was able to charge the extra amount because of a technicality in the contract: there was no language that specifically prevented Optum from charging the VHA more than it was reimbursing the community care provider for the service.

    It turns out this is not a new problem. An OIG report from 2021 found that providers providing care for veterans through the Community Care Program billed for higher paying evaluation and management services codes at much higher rates than other doctors in the same specialty. That’s evidence of upcoding. The report also found that providers were potentially double billing for services provided by entering additional codes already covered by a global surgery code. These additional codes cost the VA $59.6 million from between 2020 and 2022.

    Kudos to Rep. Takano for raising this important issue and his efforts to protect the integrity and solvency of the VA program and hold the insurance companies accountable.

    [This post was originally published on March 18, 2025 on Health Care un-covered.]

    Here’s more from Just Care:

  • Pharmacy middlemen are responsible for hundreds of pharmacy closures so far, in 2025

    Pharmacy middlemen are responsible for hundreds of pharmacy closures so far, in 2025

    Benjamin Jolley writes for substack on how the big insurers are deploying their pharmacy benefit managers (PBMs) to decimate independent pharmacies. This year alone 2,275 pharmacies have closed to date. Why? Because the PBMs, who are responsible for designing insurer formularies and reimbursing pharmacies for dispensing prescription drugs, don’t pay independent pharmacies appropriately.

    In case you’re wondering, United Health owns Optum Rx and steers lots of business to its subsidiary. It can and does apparently pay its subsidiaries high rates and other retail pharmacies low rates for the same drugs. That’s uet another way it can rip off consumers and benefit its shareholders. CVS and Cigna are alleged to engage in the same shenanigans through the PBMs they own.

    Jolley composed a dataset of pharmacies active in the National Council of Prescription Drug Programs (NCPDP) database at the beginning of this year, which were not on the database eight months later. Here’s what he found:

    • 1139 large chain pharmacies closed.
    • 1136 independent pharmacies and small to mid-sized chain pharmacies closed.
    • 298 pharmacies changed ownership.

    Jolley then created a map:

    Based on his findings, Jolley reports that employees at 2,300 pharmacies all lost their jobs. Consequently, he estimates that 23,000 people were affected, as pharmacies tend to employ an average of 10 people.

    Because 857 new pharmacies opened during the first eight months of the year, net pharmacy closures total 1,720, or 2.8 percent fewer pharmacies.

    Since January 1, 2024, according to Jolley:

    • ~5 pharmacy owner-operators have closed their businesses permanently
    • ~11 neighborhoods lost their pharmacy
    • ~110 pharmacists and pharmacy technicians have been laid off

    Why is this happening? PBMs are underpaying for drugs. Independent pharmacies are forced to pay the big prescription drug wholesalers a lot higher rates than the chain drug stores pay. Jolley supports bills in Congress to fix the PBM problem.

    • H.R. 9096, the Pharmacists Fight Back Act: If passed, this bill would make payments to pharmacies fair and predictable. It would ensure pharmacies are paid based on the actual cost of goods with a 2% markup plus a cost-of-dispensing fee.
    • A Glass-Steagall for Healthcare – Glass-Steagall created a wall between community banking and investment banking. We need to do something similar with health care so that big companies can’t take advantage of competitors through passing money and business through their subsidiaries. The same company should not own both PBMs and pharmacies. Insurers should not own providers. United Healthcare owns OptumRx, Optum Specialty Pharmacy and Optum Physicians Group. CVS/Caremark owns Aetna and CVS/Pharmacy. Health Insurers should not own physician practices.
    • Robinson Patman Act enforcement – a PBM should not be allowed to charge different prices for identical products.

    Jolley explains that more than 70 percent of the money pharmacies receive is from government–Medicare, Medicaid, ACA and FEHBP and Tricare. Government needs to enact reforms to save independent pharmacies.

    Here’s more from Just Care:

  • UnitedHealth, CVS and Cigna helped fuel opioid crisis

    UnitedHealth, CVS and Cigna helped fuel opioid crisis

    [Editor’s note: I am reposting this piece because it brilliantly exposes how the drug middlemen “PBMs,” who are supposed to be delivering value to Americans, deliver value primarily to themselves and the insurers they work for. They push opioids to vulnerable Americans without prior authorization because they make hundreds of millions of dollars doing so, even when they know that these opioids are killing people.]

    A recent Barron’s exposé detailing pharmacy benefit managers’ (PBMs) backroom dealings in the opioid crisis should be read by everyone. PBMs, which most Americans encounter only indirectly through their health insurance plans, have quietly amassed enormous power over which medications we have access to — and how much they cost. This power extends not only to routine prescriptions but also, as it turns out, to some of the most devastating public health crises of our time.

    The report reveals that the largest PBMs — CVS Caremark, UnitedHealth’s Optum Rx, and Cigna’s Express Scripts — were heavily involved in the distribution of OxyContin, a drug at the center of the opioid epidemic. Between 2016 and 2017, these companies raked in more than $400 million in fees and rebates from Purdue Pharma, OxyContin’s manufacturer. That these rebates were essentially tied to the volume of opioids sold is not just alarming — it’s emblematic of how these middlemen prioritize profit over public health.

    The role of PBMs in drug pricing and availability has been contentious for years. The middlemen argue that their rebate system helps lower costs for employers and insurance plans, but this claim often falls apart under scrutiny. As Barron’s found, PBMs received as much as 19.75% in rebates from OxyContin sales, depending on the dosage and the number of pills prescribed. The higher the dosage, the bigger the rebate and profits. This system, which rewards higher utilization of a dangerous opioid, contradicts the PBMs’ – like CVS Caremark’s – own professed claims of fighting opioid abuse.

    For years, PBMs have presented themselves as crucial gatekeepers, using their clout to negotiate lower drug prices. But the reality, as the article highlights, is far murkier. PBMs, including CVS Caremark and Express Scripts, claim they pass the majority of rebates back to their clients — figures as high as 99%. Yet, these rebates are negotiated in secret, and consumers rarely see the benefits. The rebates often serve to maintain PBMs’ relationships with drugmakers, who want to secure prime placement on formularies — the list of drugs an insurance plan covers.

    The opioid crisis, as Barron’s demonstrates, could be a chilling preview of how PBM-driven rebate schemes might contribute to other drug pricing scandals. If PBMs have been willing to accept massive rebates from Purdue Pharma in exchange for keeping OxyContin widely available during a deadly opioid epidemic, what other drugs have been pushed to the forefront based on financial incentives rather than medical necessity or effectiveness?

    The documents that Barron’s obtained, many of which were previously confidential, show that PBMs had ample opportunity to stem the tide of opioid overprescribing. They could have placed stricter limitations on OxyContin or required prior authorization (which they make significant use of for medically necessary medications) to ensure that the drug was being prescribed appropriately. Instead, they allowed Purdue to maintain a stronghold on the market. According to memos, PBMs even demanded higher rebates as the opioid epidemic worsened.

    As the article suggests, this isn’t merely a historical issue. The opioid crisis may have peaked in the late 2010s, but its effects are still being felt today. And the practices of PBMs — opaque rebate deals, backroom negotiations and a relentless focus on profit — are still very much in place. While Purdue Pharma and its executives have been held accountable through legal settlements, PBMs have largely escaped similar consequences. The lawsuits against PBMs for their role in the opioid crisis are still ongoing, and CVS Caremark’s $5 billion settlement, finalized last year, didn’t even require an admission of wrongdoing.

    This begs a larger question about the pharmaceutical supply chain as a whole. If PBMs have the power to negotiate how drugs like OxyContin are covered, and if their decisions are driven by maximizing profits through rebates, can they really claim to be stewards of affordable health care? (Regular readers of this newsletter should roll their eyes at that question.)

    For too long, PBMs have operated with little transparency. As the Barron’s investigation shows, this secrecy has allowed them to profit handsomely from one of the deadliest public health crises in U.S. history. The opioid crisis could be the most egregious example of PBM malfeasance, but it’s far from the only one. As long as PBMs continue to operate without appropriate oversight, the American public will remain vulnerable to their influence over drug prices — and, by extension, their health.

    Here’s more from Just Care:

  • Republican Congressman accuses drug middlemen execs of perjury

    Republican Congressman accuses drug middlemen execs of perjury

    You might not know what a PBM–Pharmacy Benefit Manager–is, but PBMs are among the biggest companies in American, profiting handsomely from driving up your drug costs. A Republican Congressman, Rep. James Comer, who chairs the House Committee on Oversight and Accountability is going after PBM execs for misleading the Committee with findings that are at odds with the facts, reports Page Minemyer for Fierce Healthcare.

    The three biggest PBMs, which control more than 80 percent of the pharmaceutical market, are Optum Rx, owned by UnitedHealthcare, CVS Caremark, owned by CVS, and ExpressScripts, owned by Cigna. Among other misrepresentations and alleged perjuries, their execs would not concede that their companies steer patients to affiliated pharmacies or pharmacies their companies own.

    Congressman Comer said that the execs could be punished financially and sent to jail for as many as five years for their alleged perjuries. That might be a first. As a general rule, low-income individuals spend more time in jail for petty theft than executives at big companies that gouge Americans financially, harm them physically, and worse.

    But, Congressman Comer lets the PBM execs off if they “correct the record.” Based on Express Scripts’ response to Fierce Healthcare, it sees nothing inaccurate with the representations of its executives. Its spokesperson talks about how Express Scripts reduces the cost of medications, without mentioning that the bulk of those savings go into its pockets and the pockets of insurers. PBMs too often drive up costs for individuals.

    Congressman Comer focuses on the harm these PBMs inflict on local independent pharmacies through their bad acts. And, he appears to want to do something about that. If course, in a world with negotiated drug prices, which is the only way to address outrageous prices and prevent monopoly pricing, these companies would serve no useful purpose. That’s the world that Congressman Comer should be helping to create, not undermining. But, that’s not where Republicans in Congress stand. They uniformly opposed the drug price negotiation provision for Medicare in the Inflation Reduction Act.

    Here’s more from Just Care:
  • FTC criticizes Rx middlemen in new report

    FTC criticizes Rx middlemen in new report

    In a health care world filled with insane prices and complexities, the prescription drug middlemen, sometimes called Pharmacy Benefit Managers or PBMs, are at the top of the “is this even possible” list. The Federal Trade Commission or FTC criticizes PBMs sharply in a new 71-page report, reports Reed Abelson and Rebecca Robbins for The New York Times. Only when the government negotiates prescription drugs prices will we see fair prices for prescription drugs; PBMs would cease to exist.

    So that we’re all on the same page: In a better world, PBMs would negotiate lower drug prices from pharmaceutical companies so that health insurance companies could pass on those savings to their members. In our world, the big health insurance companies own the PBMs and pocket all or most of the savings for themselves. Insured Americans end up paying more for their drugs in many cases than people without insurance. Sometimes, their insurers direct them to use higher cost brand-name drugs (because the pharmaceutical manufacturers pay the PBMs a fair bit to steer people to those drugs); people’s insurers might not even offer the generic substitute or do so at a higher copay.

    PBMs keep drugs prices so high that, in many instances, even with a Medicare Part D prescription drug benefit, you will pay less for the full cost of your prescription from Costco or using GoodRx than the Part D copay. PBMs also sometimes overcharge people for the cost of drugs.

    What the FTC says: “[T]hese powerful middlemen may be profiting by inflating drug costs and squeezing Main Street pharmacies.” They “wield enormous power and influence” and their practices “can have dire consequences for Americans.” The only quibble I have with that statement is the “may be;” PBMs profit substantially from these tactics.

    The FTC has not sued a PBM yet. But, the PBMs and the big insurers who own them have taken notice and now worry that they will be sued for anticompetitive conduct. Until there’s a Democratic majority in both houses of Congress and a Democratic president, it seems unlikely that our federal government will block their bad behavior. The Republicans appear to have no interest in reducing drug prices.

    Who owns the three biggest PBMs? CVS Health owns Caremark, UnitedHealth Group owns Optum Rx and Cigna owns Express Scripts. These three PBMs control about 80 percent of the prescription drug market in the US.

    It seems to me that the only way to stop the PBMs from driving up drug costs is to put them out of business. In an ideal world, the US would negotiate drug prices as every other wealthy nation does. PBMs would lose their value. Americans would not be victims of PBM abuse.

    As you might expect, the PBMs disagree strongly with the FTC’s report. They are huge corporations, and they will fight back as hard as they can. They correctly claim that they have enormous leverage to bring down drug prices. But they fail to acknowledge that once they negotiate lower prices, they pocket most, if not all of the savings, and/or pass the savings on to the health insurers who own them.

    The evidence speaks volumes: The PBMs have pharmacies that send mail-order drugs to patients. The FTC found that PBMs paid their pharmacies a lot more for two generic cancer drugs than it would cost to buy these drugs directly from a wholesaler. As a result, in less than three years, they made $1.6 billion in revenue from these two drugs.

    Here’s more from Just Care:

  • United Health now controls 1 in 10 physicians

    United Health now controls 1 in 10 physicians

    Steph Weber reports for Medscape that UnitedHealthcare’s owner, UnitedHealth Group now controls–either owns or otherwise works with–one in ten physicians. Concerns are mounting about corporate control of health care. Treating physicians are no longer in full charge of patient care as insurers increasingly overrule their treating decisions.

    Legally, insurers are not allowed to interfere in the practice of medicine. But, what does that really mean? It apparently does not prevent insurers from telling physicians how much time to spend with their patients or who to refer them to if they need to see a specialist–anti-competitive behavior. It also does not stop insurers from providing financial incentives to their physicians to withhold or otherwise delay costly care.

    UnitedHealth now controls around 90,000 of the 950,000 physicians in the US. It is adding multispecialty physician groups in large numbers. These physicians all work for Optum Health, a subsidiary of UnitedHealth.

    UnitedHealth’s ownership or control of these physicians is endangering people’s health. There’s no good independent data to evaluate the consequences of UnitedHealth’s ownership of these physicians. Based on the horror stories reported in the press–from insurer use of AI to conduct massive denials of care without regard to particular patient needs, to inappropriate withholding of payment to hospitals and “ghost” networks–UnitedHealth is interfering in the practice of medicine to the detriment of its enrollees.

    Some experts suggest that there could be some good in what UnitedHealth is doing. But without data to conduct independent assessments and with mountains of horror stories, these experts are likely dreaming. Insurer control of physicians means putting profits ahead of patient needs, with potentially horrific consequences.

    One recent study published in JAMA finds that private equity ownership of physician groups has driven up health care prices. That study looked at dermatology, gastroenterology, and ophthalmology practices. Several other studies have had similar findings, including one on private equity ownership of dental practices. Nursing homes, emergency medicine, urology and cardiology practices are all being taken over by private equity and corporations.

    The Biden administration has focused some attention on anti-trust issues, but it seems that the anti-trust train left the station a long time ago and undoing the damage that has already been wrought would be a very heavy lift. Moreover, when insurers hire physicians, rather than acquiring them, they are not subject to anti-trust laws.

    The dangers to patient health from the corporatization of healthcare are potentially massive, with costly care particularly hard to come by. Insurer ownership or control of physician practices is hurting physicians as well. They may no longer be able to practice the medicine they think is in their patients’ interest.

    Recently, UnitedHealth and Humana have been sued for using AI algorithms to deny patient care, overruling treating physicians, and overlooking the particular needs of their enrollees in Medicare Advantage plans.

    Here’s more from Just Care:

  • Will the DOJ let UnitedHealth control more of the US health care system

    Will the DOJ let UnitedHealth control more of the US health care system

    Why would the biggest health insurer in the nation buy a health care data analytics company? More  knowledge, more power, more ability to drive profits its way. So, unsurprisingly, UnitedHealth plans to buy Change Healthcare. Will the US Department of Justice allow it and give UnitedHealth even more control of the US healthcare system?

    The American Hospital Association wants the Justice Department to stop the purchase because UnitedHealth will have too much “sensitive data.” In this instance, the public should be squarely aligned with the AHA because UnitedHealth will have even greater ability to drive up costs and restrict access to care if this merger goes through.

    Krista Brown and Olivia Webb report for The American Prospect that if the Justice Department permits UnitedHealth and Change to merge, it would have serious consequences for doctors, patients and the US health care system. UnitedHealth would have “access to all its competitors’ business secrets.”  The merger would allow UnitedHealthcare to steer more people to its own doctors. It could create inequities among people who wanted to buy insurance. It’s likely to undermine the public health further.

    UnitedHealth already has over 70 million members in the US, and it has contracts with 6,500 hospitals, and 1.4 million health care providers. Among other things, it owns Optum, a  data analytics subsidiary, Optum Rx, a pharmacy benefit manager, and Optum Bank, which gives patients loans. It also owns DaVita’s dialysis doctors.

    Through its Optum subsidiary, UnitedHealth is on a path to taking over the US healthcare system single-handedly. UnitedHealth could literally establish a private single-payer entity over time, with the purchase of Change Healthcare.

    So what exactly does Change Healthcare do that is so valuable? It is the insurers’ middleman. It reviews the claims doctors submit for payment to determine whether they are legitimate and accurate. Claims they reject are money in the insurers’ pockets. To do its job, Change’s employees know exactly what each entity with which it contracts covers, what each provider bills, and what each insurer pays. In short, Change has mountains of data between doctors and insurers and pharmacies and insurers.

    Optum currently performs these services for UnitedHealth. But, a merger with Change would mean that the company that has been independent of UnitedHealth–the only other large company that performs these services–would be owned by UnitedHealth and no longer independent.

    Right now, there is a “firewall” between Optum and UnitedHealth to protect against anti-competitive practices. But, as the American Hospital Association argues, it easily could be the case that “sensitive and strategic information sharing” goes on between Optum and UnitedHealth. After all, Optum’s employees work for UnitedHealth and not for its competitors, and they know that.

    If Optum merges with Change Healthcare, UnitedHealth will be able to prioritize its physicians and otherwise design its health insurance to look better than its competitors. There’s no evidence that costs would come down; if history and experience are considered, there’s lots of reason to be concerned that costs will go up. Moreover, there is a legitimate fear that Optum’s racially biased data–discovered in 2019 as leading to the possible undertreatment of Black patients– would lead it to discriminate against people of color and poor people and charge them more for their health care.

    Let’s hope that the Department of Justice decides that the dangers of allowing this merger outweigh any possible benefits.

    Here’s more from Just Care:

  • Warning: Your drug copay may be higher than the drug’s cash price

    Warning: Your drug copay may be higher than the drug’s cash price

    It’s bad enough that lack of competition empowers drug companies to set prices sky high for so many important drugs. And, not surprisingly, one in four people in the U.S. say that they struggle to pay for the drugs they need. It turns out that, if you have drug coverage, your drug copay may be higher than the drug’s cash price, and your pharmacist won’t tell you.

    Bloomberg news reports that pharmacy benefit managers PBMs, which contract with pharmacies to pay for drugs on behalf of your health plan, force pharmacists to charge you the insurer’s copay, even when the pharmacy sells the drug for less.  These PBMs or at least Optum Rx and Catamaran, owned by UnitedHealth Group and Humana’s subsidiary PBM, forbid pharmacists from telling you that you’ll save money if you don’t use your insurance to get the drug.

    How does the deal between the PBM and the pharmacy work exactly? The pharmacy turns over the difference between the copay and the actual cost to the PBM. And, according to KARE11, the PBM shares in the profits with the health plan.

    For example, KARE11 found at pharmacy:

    • Doxycycline copay: $46.14 v. cash price $26.95.
    • Venlafaxine copay: $67.13 v. cash price: $24.99

    The extent to which the health plan benefits from these PBM “clawback” contracts is not clear.  But, we’re talking real money. Because of these deals between PBMs and pharmacists, consumers are handing over hundreds of millions of dollars to the PBMs. Not surprisingly, there are more than a dozen lawsuits against insurers contracting with PBMs that are leading people to pay more for their drugs than they should.

    If you are struggling to pay for your drugs, you might consider buying your drugs online or abroad, as millions of Americans are now doing.

    And, if you want Congress to rein in drug prices, please sign this petition.

    Here’s more from Just Care: