The Office of the County Auditor engaged the services of a specialized commercial auditor, StoneBridge Business Partners (SBP), to conduct an audit of the County’s pharmacy benefit manager from January 1, 2013 through December 31, 2015. The County’s pharmacy benefit manager is OptumRx (Optum), formerly Catamaran of Illinois II, Inc. (Catamaran). During this time, the County’s self-insured plan served approximately 9,300 active, COBRA and retiree members, and Optum processed 272,826 claims for County members at a cost of $46,143,052.
SBP’s audit objectives were to ensure the overall accuracy of Optum’s claims payments and administration according to plan documents; reconcile rebate payments based on contractual terms; determine if performance guarantees have been met, or exceeded; verify claims were paid for benefit eligible members; and, confirm accuracy of clinical programs and plan edit administration.
SBP reports that:
- Claims have been adjudicated in accordance with the plan.
- Rebate minimum requirements have been met.
- Claims have been paid for only benefit eligible members.
- Optum is appropriately administering clinical and plan edit administration as required and has achieved return on investment guarantees.
However, the audit also revealed the following findings:
- Optum did not allow access to manufacturer rebate contracts, preventing SBP from completing their review and confirming if the rebate amounts paid to the County by Optum are reflective of actual amounts received from the manufacturers.
- Optum incorrectly calculated and reported performance guarantees; a recalculation of these amounts by SBP indicates that Optum did not meet certain guarantees and an estimated $88,000 is due to the County.
- Optum erroneously invoiced the County administrative and clinical management service fees, resulting in an approximate balance of $28,0001 due to the County.
In their report, SBP acknowledges that the County received amounts in excess of the minimum guarantee in each of three years addressed in the audit period, for a total amount of $2,662,701. However, during their audit, SBP was not granted access to pharmaceutical manufacturer’s contracts, and could not verify whether the County received 100% of the manufacturer’s rebates attributable to the County’s member utilization, as required by contract.
We requested that SBP estimate the potential amounts which might have been received from manufacturers. As a result, SBP re-calculated the minimum guarantees for prescription quantities filled in 2013, 2014, and 2015, utilizing minimum guarantee amounts in the current 2017 Agreement with Optum. It is noted that the 2017 Agreement reflects significant increases in minimum rebate requirements over the 2013 Agreement. SBP’s illustrative calculation is shown on page 14 of their report, and demonstrates that a minimum of $10 million in rebates may have been available to the County, or an additional $7.4 million over what was actually received, if 2017 rates were applied. However, since the records could not be reviewed, the actual amount of potential recovery, if any, could be significantly less than this estimate.
County Management and Optum’s response to the recommendations are included in Exhibit 1.
Post-Audit Additional Information:
Subsequent to completion of audit fieldwork and SBP’s final report, Optum voluntarily remitted $1,643,492 in additional rebate to the County for 2016. Optum noted that they “were able to realize additional rebate dollars based on 2016 for select Catamaran clients.” Optum acknowledged that this was an additional rebate payout, above and beyond what they originally paid. This check was received in November 2017, after Optum was fully aware of the rebate issues found in our audit for the preceding years. This additional payout by Optum was more than the total rebate amount previously paid by Optum for 2016. The total originally paid for 2016 was $1,302,463, and the amount of the November 2017 check was $1,643,492.
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