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Gold Coast Health Plan
Its Reimbursements to Pharmacies Are Reasonable, but Its Pharmacy Benefits Manager Did Not Always
Process Claims Correctly

Report Number: 2018-124

Figure 1
Gold Coast Provides Pharmacy Services to Beneficiaries Through OptumRx

Figure 1 is a flow chart that describes the relationships between health care providers, pharmacy benefit managers (PBM), pharmacies and their PSAOs, and drug manufacturers and suppliers. The flow chart is divided into three columns. The left column contains health care providers; DHCS contracts with Gold Coast, which contracts with service providers (such as doctors and hospitals). These in turn provide covered services to Medi-Cal beneficiaries. The middle column contains PBMs, pharmacies, and PSAOs. Gold Coast also contracts with OptumRx (the PBM), which negotiates reimbursement rates with chain pharmacies (such as CVS and WalMart), which provide pharmacy to Medi-Cal beneficiaries. OptumRx also negotiates reimbursement rates with four PSAOs on behalf of independent pharmacies, which also provide pharmacy services to Medi-Cal beneficiaries. Finally, the right column contains drug manufacturers and suppliers. OptumRx negotiates discounts from pharmaceutical drug manufacturers, which sell medications to pharmaceutical suppliers, which then supply medications to chain pharmacies and independent pharmacies.

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Figure 2
County-Affiliated Commissioners Voted to Award the PBM Provider Contract to OptumRx in September 2016

Figure 2 is a color-coded illustration consisting of nine humanoid figures seated around a table, representing the nine members of the Ventura County Medical Managed Care commission who voted on the PBM selection. Green coding indicates a commissioner that voted in favor of OptumRx. Red coding indicates a commissioner that voted against OptumRx. Gray coding indicates a commissioner that was absent from the vote. Along the top of the figure are the five county representatives on the commission. All five voted in favor of OptumRx. From left to right, these five commissioners are labeled: Practicing physician (Ventura County Medical Center Health System representative); County official; County of Ventura representative; Ventura County Medical Center Health Systems representative; and, Representative from County Board of Supervisors. The following four commissioners did not vote to award the PBM contract to OptumRx: Clinicas del Camino Real chief of business development; two private hospital presidents and a practicing physician who is a Clinicas Del Camino Real representative. One practicing physician was absent from the vote.

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Figure 3
OptumRx Committed Multiple Errors Before Gold Coast Took Strong, Formal Action to Correct Them

Figure 3 is a vertical timeline with two columns that shows OptumRx’s errors on the left side, and Gold Coast’s actions responding to these errors on the right. The timeline depicts the following events. From June 1 through July 24, 2017, OptumRx makes the first reimbursement error, resulting in overpayments to pharmacies totaling $3.4 million. Then, in August 2017, Gold Coast learns of the first reimbursement error and asks OptumRx to quantify the impact of the error. OptumRx makes a second reimbursement error from August 4 through September 26, 2017, resulting in overpayments of $242,000. In November 2017, Gold Coast learns of the second error and asks OptumRx to identify its cause and quantify the impact of the error. OptumRx makes a third reimbursement error from February 7th through 15th, 2018, which is similar to the first one, resulting in overpayments totaling $2.5 million. In response, in March 2018, Gold Coast sends OptumRx a formal notice stating that its performance was in default of its contract and requiring OptumRx to submit a corrective action plan. OptumRx submits the plan and recoups overpayments for all three errors. Then, in September 2018, Gold Coast approves OptumRx’s corrective action plans and closes the findings from the formal notice. Note: In February 2018, OptumRx identified additional claims affected by its first reimbursement error, which increased the amounts of overpayments from $1.8 million to $3.4 million.

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