Pennsylvania Audit Reveals Medicaid Overpayments

A performance audit by Pennsylvania Auditor General Timothy L. DeFoor revealed that taxpayers overpaid $7 million in Medicaid prescription drug benefits in 2022 due to inadequate oversight by the Department of Human Services (DHS) and practices known as spread pricing by pharmacy benefit managers (PBMs). The audit highlighted that PBMs charged higher amounts to insurance plans than what they paid pharmacies, effectively profiting from the difference. DeFoor criticized the lack of monitoring and transparency, asserting that PBMs are exploiting the system. Although DHS officials disputed the findings, claiming the fees were legitimate 'transmission fees' rather than spread pricing, DeFoor emphasized that these charges are effectively the same. The audit called for legal changes to improve accountability and definitions around these pricing practices. More than 2.8 million Pennsylvanians rely on the Medicaid program, which is significantly affected by these financial discrepancies.