Skip to main content
Subscribe
  • Login
  • My Account
  • Logout
  • Register For Free
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HLTH 2024
    • Sponsored Content: Vital Signs Blog
  • Opinion
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • 40 Under 40
    • Best Places to Work in Healthcare
    • Healthcare Marketing Impact Awards
    • Innovators Awards
    • Diversity Leaders
    • Leading Women
    • Best in Business Awards
    • The 2030 Playbook Conference
    • Innovations in Patient Experience
    • Leading Women Conference & Awards Luncheon
    • Leadership Summit
    • Workforce Summit
    • Best Places to Work Awards Gala
    • Diversity Leaders Gala
    • - Looking Ahead to 2025
    • - Financial Growth
    • - Hospital of the Future
    • - Value Based Care
    • - Looking Ahead to 2026
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Skilled Nursing Facilities
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
    • Sponsored Content
MENU
Breadcrumb
  1. Home
  2. Insurance
October 27, 2021 12:38 PM

5 things to know about Centene's new PBM

Nona Tepper
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Centene Corporation
    Kris Tripplaar/Sipa USA

    Centene Corp. is in the market for a new pharmacy benefit manager.

    The St. Louis-based insurer announced in June it was restructuring its Envolve PBM to serve solely as a third-party administrator, after the insurer agreed to pay Ohio and Mississippi a combined $143 million to settle allegations that it overcharged their Medicaid departments for drugs. Three months later, Centene agreed to pay another $71 million to Illinois and Arkansas to settle similar accusations.

    At least four other states are also investigating their Medicaid programs' PBMs. Centene is involved in settlement discussions with a group of plaintiffs from affected states, the insurer wrote in filing with the U.S. Securities and Exchange Commission. The company has reserved $1.25 billion for future settlements related to its now-defunct PBM Envolve. Centene said it restructured Envolve in 2019 to operate as a third-party administrator for processing customer claims and, in June, announced it will now no longer operate as a PBM.

    "There is no guarantee we will have the ability to settle such claims with other states within the reserve estimate we have recorded," the SEC filing said, adding that these proceedings are "costly and time consuming and require significant attention from our management, and could therefore harm our business and financial position."

    Download Modern Healthcare’s app to stay informed when industry news breaks.

    None of these deals represent an admission of guilt on the part of Centene, which is the nation's largest Medicaid managed-care provider with 14 million enrollees.

    The insurer had relied on Envolve and RxAdvance to manage its drug spend. Here's what the insurer is looking for in a new PBM:

    1. Centene will evaluate proposals from pharmacy benefits companies in 2022 to manage the insurer's more than $30 billion annual drug spending. The insurer plans to award the contract at the start of 2023, and is aiming to have the new PBM take over its operations by 2024. "That's going to be a huge opportunity for an external PBM," Chief Financial Officer Drew Asher told investors during the company's third-quarter earnings call on Tuesday.

    2. During the third quarter, Centene paid $229 million to transition from using the RxAdvance platform, according to an SEC filing. RxAdvance is backed by former Apple and PepsiCo CEO John Sculley, who just helped launch a Medicare Advantage-as-a-service product for health plans.

    3. The insurer is in the process of offloading other PBM platforms that it views as nonessential, vice chairman Sarah London told investors during the call. By streamlining its pharmacy operations, London said the company aims to save on administrative expenses. "On the pharmacy front, I would say we're very focused short-term on logical consolidation, as well as the rationalization of non-core platforms," London said.

    4. The company is looking for a vendor that can automate specific processes to save on costs, London said. "We have got operating model opportunities there that will go through and then a lot of process automation opportunities within the PBM space," London told investors. "When you think about the value that the PBM work can drive to the value creation program, it's obviously inclusive of the RFP but it goes beyond that."

    5. When looking for a new PBM, Centene will likely look to its competitors. UnitedHealth Group, CVS Health's Aetna and Cigna all own PBMs that are responsible for handling 75% of all prescription drug claims in the U.S. Earlier this year, Anthem and Humana also announced they were collaborating to build a new, more transparent, PBM platform. Centene previously relied on CVS Caremark to manage its drug spend. "Quality is always at the top of the list," Asher told investors about Centene's PBM needs. "Execution, the complexity of operating a complex customer such as Centene, that's pretty critical as well."

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    healthcare.gov website
    Exchange enrollment hits a new high
    mh-20250506-ai-medicare-advantage-2
    AI health risk assessments aim to boost Medicare Advantage pay
    Most Popular
    1
    Here are new state healthcare laws taking effect in 2025
    2
    Meet Modern Healthcare's 2025 Leading Women
    3
    New York-Presbyterian layoffs affect 2% of employees
    4
    Evernorth, Optum, CenterWell units buoyed insurers in Q1
    5
    Epic CEO Judy Faulkner on AI, antitrust and consolidation
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2025. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HLTH 2024
      • Sponsored Content: Vital Signs Blog
    • Opinion
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • 40 Under 40
        • Best Places to Work in Healthcare
        • Healthcare Marketing Impact Awards
        • Innovators Awards
        • Diversity Leaders
        • Leading Women
        • Best in Business Awards
      • Conferences
        • The 2030 Playbook Conference
        • Innovations in Patient Experience
        • Leading Women Conference & Awards Luncheon
        • Leadership Summit
        • Workforce Summit
      • Galas
        • Best Places to Work Awards Gala
        • Diversity Leaders Gala
      • Virtual Briefings
        • - Looking Ahead to 2025
        • - Financial Growth
        • - Hospital of the Future
        • - Value Based Care
        • - Looking Ahead to 2026
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Skilled Nursing Facilities
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing
      • Sponsored Content