Iowa’s Medicaid program has been the subject of controversy since the state hired private insurers to manage it, starting in 2016.
Tony Leys, tleys@dmreg.com
Iowa administrators are still negotiating how much they’ll pay national insurance companies to run the state’s $5 billion Medicaid program in fiscal year 2020, which starts Monday.
Hundreds of millions of state and federal dollars are on the table in the extended contract negotiations between state officials and the insurance companies. The companies, also known as managed care organizations, cover nearly 600,000 poor or disabled Iowans on Medicaid.
The same thing happened last summer. Payment negotiations stretched into August, nearly two months after the insurance companies’ contracts took effect for the year. The Iowa Department of Human Services wound up agreeing to give the companies a $344 million raise — an 8.4% increase in state and federal money — for fiscal year 2019.
Medicaid Director Mike Randol said in an interview Wednesday the negotiations for next fiscal year are going well. “We’re very close to finalizing those,” he said.
He declined to estimate how much more money the state will have to spend on the program, but he said any increase would include money for initiatives legislators approved, such as higher reimbursement rates for nursing homes that care for Iowa Medicaid members.
The closed-door contract negotiations grind on as Iowa’s privatized Medicaid program continues to draw debate. Supporters, including Randol and Republican Gov. Kim Reynolds, say private management saves money over what Iowa would have spent on a state-run Medicaid system, as it did until 2016, and provides more effective care. Critics, including many health-care agencies, patient advocates and Democratic legislators, say Medicaid privatization has led to cuts in services without producing promised savings.
UnitedHealthcare has withdrawn from Iowa’s program, effective July 1. Despite receiving the 8.4% pay raise last summer, the once-largest managed care company in Iowa said it continued to lose millions of dollars covering about 425,000 Iowans on Medicaid. Iowa Total Care, a company owned by the national insurer Centene, is taking its place.
Iowa Total Care is expected to cover about 230,000 Iowa Medicaid members starting July 1, state officials said. Amerigroup, which has participated in Iowa Medicaid since the program was privatized in 2016, is slated to increase its membership from about 200,000 to about 345,000.
Randol said the two companies are prepared to cover health care for their members. Both firms have hired enough staff members, set up bill-paying systems and signed contracts with a sufficient number of hospitals, clinics and social service agencies, he said. “I’m very confident they are ready to provide service starting July 1,” he said.
Some Iowans who depend on Medicaid are skeptical.
“I don’t believe them, because of their track record,” Rick Durham of Ankeny said. “I just don’t believe they have everything in place.”
His son, Ben Durham, 40, has autism and an intellectual disability. Medicaid pays for his care, which includes oversight from an aide much of each day.
Ben Durham’s Medicaid coverage previously shifted to UnitedHealthcare from AmeriHealth Caritas, a managed care company that left the state in 2017 after it complained of losing hundreds of millions of dollars here. With the shift, Durham was assigned a new case manager, and it was a difficult adjustment, his father said.
The agency providing day-to-day care for Rick Durham’s son has been squeezed by lower payments under privatized Medicaid, he said. The agency plans to save money by moving Ben Durham from a house with just one roommate to a house with three roommates, his father said. Such a change can cause stress, which Ben Durham responds to by injuring himself, including biting himself, his father said.
Rick Durham suspects the remaining two managed care companies are demanding large raises from Iowa officials, who can’t afford to have yet another insurer back out of the controversial program. “They’re going to hold the state hostage,” he said.
Amerigroup is the last of the original three insurers that agreed to cover Iowans when the state Medicaid system was privatized in 2016. Durham worries Amerigroup will pull out if it doesn’t get what it wants from negotiations. “Our choice has already been limited to two. What’s going to happen when the next one leaves?” he said.
Federal law requires the state to offer at least two choices of insurers for people on Medicaid. Randol said he’d like Iowa to eventually have three. He said the two here now are committed to the effort.
“I’m very confident that both Iowa Total Care and Amerigroup will be here long term for Iowa Medicaid,” he said.
Amerigroup spokespeople did not respond to four Des Moines Register requests for comment in the past two weeks. Financial reports the company filed with state officials indicate Amerigroup’s Iowa operations edged into the black late last year after deep financial losses in previous years.
State Rep. John Forbes, D-Urbandale, serves on a committee overseeing the Medicaid system, and said Amerigroup and UnitedHealthcare are in a dominating position in the negotiations. “We’re kind of going into this blind. With only two MCO’s in the mix, they kind of control the game.”
Forbes, who owns a pharmacy, has been a vocal opponent of privatized Medicaid. He said he’s seen the effects of patients and care providers struggling to be reimbursed for services. He’s concerned that Amerigroup might bail out of Iowa if it doesn’t get as much money as it wants.
Reynolds’ spokesman, Pat Garrett, said the governor shares Randol’s confidence that Amerigroup and Iowa Total Care are committed to serving Iowa’s Medicaid system.
“Contract negotiations with the managed care companies are in the final stages, and we look forward to them being finalized,” Garrett wrote in an email to the Register. He acknowledged that Medicaid costs will rise for the coming fiscal year. But, he said, “a significant portion of supplemental funding will go towards oversight measures as well as funding for critical adult and child mental health initiatives. The governor is committed to an integrated, coordinated health care system that has the resources to help those in need.”
The July 1 shift in Medicaid management companies comes two weeks after Reynolds ousted Randol’s boss, Department of Human Services Director Jerry Foxhoven. The governor won’t say why she asked for Foxhoven’s resignation, beyond saying “a lot of factors” went into her decision.
When a reporter asked why she made the change right before the complicated Medicaid transition, Reynolds said she was confident that the process was going well under Randol’s direction. “It’s fine,” she said. “We’re in good shape.”
Tony Leys covers health care for the Register. He can be reached by email at tleys@registermedia.com or by phone at 515-284-8449.
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