CVS Caremark – Effectiveness of CVS Caremark Audits of the Empire Plan Prescription Drug Program

Issued Date
October 02, 2025
Agency/Authority
New York State Health Insurance Program

Objective

To determine whether CVS Caremark effectively audited pharmacy claims for the Empire Plan prescription drug program and remitted all recoveries owed to the Department of Civil Service (Civil Service). The audit covered the period from January 2019 through December 2023.

About the Program

The New York State Health Insurance Program (NYSHIP), administered by Civil Service, is one of the nation’s largest public sector health insurance programs. NYSHIP covers about 1.2 million active and retired State, participating local government, and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, covering over 1 million members.

During our audit period, January 2019 through December 2023, Civil Service had a Pharmacy Benefit Services Contract (Contract) with CaremarkPCS Health, L.L.C. (CVS Caremark) to administer the prescription drug program for the Empire Plan. During this period, CVS Caremark processed and paid over 156 million claims totaling over $17.5 billion. In accordance with the Contract, CVS Caremark must implement a comprehensive audit program that includes, but is not limited to, conducting on-site audits of pharmacies, providing audit reports to Civil Service, and notifying Civil Service of any allegations or indications of potential fraud and abuse. CVS Caremark conducts three main types of audits: concurrent audits, on-site audits, and Medicare Part D compliance reviews. During the audit period, CVS Caremark recovered or saved about $63.1 million as a result of the audits conducted.

Key Findings

Our audit found that improvements are needed to increase the effectiveness of CVS Caremark’s audits of the Empire Plan’s pharmacy claims. For example, CVS Caremark audits sometimes reviewed only a minimal number of Empire Plan claims and expanded field audits were not conducted on several large chain pharmacies, such as CVS and Walgreens. Additionally, CVS Caremark did not perform on-site audits of all the top 50 paid pharmacies for calendar years 2019–2023, as required by the Contract.

We also found that CVS Caremark has a different understanding of its responsibilities regarding the identification and referral of fraud and abuse than what is outlined in the Contract. According to CVS Caremark officials, the responsibility for identifying and referring fraud and abuse lies with Civil Service, not CVS Caremark. As a result, we found CVS Caremark did not refer any potential pharmacy fraud or abuse cases to Civil Service during the audit period, which likely allowed cases to go unnoticed. The Contract states that CVS Caremark must remit any overpayments due to fraud or abuse to Civil Service, regardless of whether CVS Caremark is able to recover these amounts from pharmacies. Consequently, there may be a disincentive for CVS Caremark to categorize any overpayment as fraud or abuse for the Empire Plan and to refer such cases to the appropriate authorities.

Key Recommendations

  • Work with Civil Service to improve the effectiveness of pharmacy audits by identifying and selecting an appropriate-sized sample of Empire Plan claims for review, and ensuring all of the top 50 highest-paid pharmacies are included as required by the Contract.
  • Work with Civil Service to define clear responsibilities for identifying and referring fraud and abuse.

Christopher J. Morris

State Government Accountability Contact Information:
Audit Director: Christopher J. Morris
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236