Once regarded as a champion of affordable healthcare, Centene Corporation now faces accusations of masterminding one of the largest Medicaid scams in American history. Through 2025, the firm has paid more than $1.25 billion to resolve disputes with 22 states.
But as states rush to recapture misspent money, federal officials are being noticeably quiet, leaving questions about systemic failures at the top that cry out for an answer.
At the center of Centene’s scam is its pharmacy benefit management (PBM) unit, Envolve Health.
Under deceptive practices such as spread pricing and rebate tampering, Centene allegedly billed Medicaid programs extra money while reimbursing in-town pharmacies less. State investigations in Ohio, California, and Texas have revealed how the company padded out the cost of the drugs, then took the rest of the money for themselves.
The First Red Flags: Ohio’s Investigation
The unraveling started in 2021 when Ohio Attorney General Dave Yost initiated an investigation into the PBM practices of Centene. Ohio’s Medicaid program had observed discrepancies: state spending grew exponentially while pharmacies reported drug shortages.
The probe found that Centene was charging Ohio millions more than what it paid pharmacies, a tactic called spread pricing. Centene settled claims in June 2021, paying Ohio $88 million, without admitting any wrongdoing.
A Cascade of State Lawsuits
The Ohio case marked the start of a wave of lawsuits. In 2025, Centene was sued by over 22 states, including California ($215 million settlement), Texas ($165.6 million), and Illinois. Total settlements exceeded $1.25 billion, but watchdogs say the amount is hardly the tip of the iceberg. For instance, California’s audit concluded that markups by Centene cost the state tens of millions of dollars a year, which put added pressure on an already strained Medicaid system.
The Hidden Victims: Real-World Impact
Aside from the billions, the toll on human life has been staggering. In Missouri, court documents cite cases of Medicaid patients waiting in vain for insulin and asthma medication because of pharmacy payment deficiencies resulting from Centene’s PBM.
In Ohio, independent pharmacists testified of having to send away low-income patients because Centene’s PBM held up payments, which caused medication shortages.
Organizations such as Public Citizen and Accountable.US have brought to light these silent victims, pointing out that the fraud scheme did not only impact balance sheets; it put lives at risk.
Profits and Power: Centene’s Lobbying Machine
As patients struggled, Centene prospered. From 2020 to 2024, the firm grew fiercely, purchasing smaller healthcare companies and expanding its Medicaid empire. According to federal records, Centene spent more than $7 million on Washington, D.C.-based lobbying activities during this time, focusing on lawmakers and agencies that regulate Medicaid and PBM businesses.
Despite settlements in 22 states, the U.S. The Department of Justice has not brought federal criminal charges against Centene. Critics, including Public Citizen, question whether Centene’s political influence has shielded it from deeper accountability.
Is Centene the Blueprint or the Outlier?
Centene’s case is appalling but not isolated. Other PBM giants like CVS Caremark and OptumRx have faced lawsuits over similar spread pricing and rebate manipulation tactics. Analysts see Centene’s actions as symptomatic of deeper flaws in Medicaid’s use of private contractors.
As healthcare policy expert Dr. Leemore Dafny notes, “PBMs operate in a black box. Without transparency, they’re incentivized to profit at the expense of both patients and taxpayers.”
Medicaid’s Structural Weaknesses
Medicaid’s structural flaws enabled Centene’s exploitation, not by accident.
In weaker-regulated states, PBMs have long had little oversight. Spread pricing, in which PBMs bill Medicaid more than they pay pharmacies, became an accepted profit strategy.
New York and Ohio have since prohibited spread pricing in Medicaid programs. But in most states, the practice continues, masked by layers of contractual secrecy.
A Reckoning on the Horizon?
The backlash has already started. Congressional bipartisan bills now aim to place transparency requirements on PBMs, prohibit spread pricing, and subject federal oversight to Medicaid contractors. States such as New York have already implemented these reforms, removing PBMs from their pricing authority.
However, until federal authorities move decisively, including potential criminal investigations, watchdogs fear that companies will continue to exploit Medicaid’s gaps.
Conclusion
Centene’s $1.25 billion in settlements marks a historic reckoning. But for millions of Medicaid recipients, the damage lingers: missed medications, strained pharmacies, and a deepening distrust in America’s safety net.
As lawmakers and watchdogs call for reform, one thing is certain: Medicaid’s future hangs not only on the recovery of stolen dollars but also on eliminating the loopholes that permitted this fraud in the first place. Without openness and true accountability, Centene’s example won’t be an isolated case; it will be the first of a long string of corporate encroachments on public healthcare.
