In April 2016, three for-profit companies took over management of Iowa’s Medicaid program. Then-Gov. Terry Branstad says the program is saving the state money, but the companies say they are losing money. Critics worry about a loss of services.
State administrators aren’t telling the public or legislators why negotiations over hundreds of millions of dollars in Medicaid spending are dragging on for weeks after the talks were supposed to conclude.
The administrators also won’t estimate how much more money the cash-strapped state might have to shell out to private Medicaid management companies as a result of those talks.
The Iowa Department of Human Services has been negotiating behind closed doors for months over how much more it will pay three national companies to manage the state’s $4 billion Medicaid program. The companies, Amerigroup, AmeriHealth Caritas and UnitedHealthcare, started running the program last year. They have complained they are drastically underpaid, and they have described the situation as a “catastrophic experience.”
Any state agreement to pay more to the Medicaid management companies could worsen Iowa’s stark budget problems, which already have forced cuts in many public programs.
The new Medicaid management rates were supposed to take effect July 1. When Jerry Foxhoven became the Department of Human Services’ director in June, he predicted the negotiations would conclude by the end of July. In an interview Wednesday, he said he now hopes they’ll be completed within a few weeks.
“I’m frustrated,” he said. “We would love to have it done.”
Medicaid is a joint federal and state program that covers health care for about 600,000 poor or disabled Iowans. The management companies are supposed to be paid a set amount per participant, with which they are to pay for care and services.
Foxhoven said he couldn’t specify what the negotiation roadblocks are.
“It’s everything,” he said.
The issues include payment rates and whether the state should give the companies more leeway in how they oversee care of the affected Iowans, he said.
“The (companies) want to look at, ‘What stops us from being able to manage care properly?’ We need to look at, ‘What protects the Medicaid recipients the most?’” he said.
Foxhoven expressed hope that the negotiations would not lead to significantly higher payments from the state to the companies.
“Part of my job is to make sure that we don’t have to pay more money than we can afford,” he said.
Iowa’s shift to privately managed Medicaid has been intensely controversial. Supporters, including Gov. Kim Reynolds, say it is saving the state hundreds of millions of dollars while leading to more effective, efficient care. The supporters point to a recent national report showing Iowa’s Medicaid managed-care program was ranked second nationally in patient satisfaction. Detractors, however, say the shift to private management has led to service cuts and hassles for patients and care providers.
At a meeting Tuesday of a Medicaid advisory council, state Sen. Joe Bolkcom asked Iowa Medicaid Director Mikki Stier whether she could say anything about the progress of her agency’s talks with the private management companies.
“No,” she replied, “we’re still in negotiation.”
Bolkcom, D-Iowa City, asked Stier to estimate how much longer the talks might last. She declined.
“We are trying to come to that resolution,” she said.
Bolkcom, who has been a vocal critic of Iowa’s decision to hire private Medicaid managers, told the advisory council he was puzzled by the “opaque” talks.
“It’s like top secret,” he complained.
In an interview after the meeting, the senator expressed frustration about the situation.
“It’s pretty clear the (management companies) have an appetite for more state money. And it’s pretty clear the department’s going to hold all this information close to their vest until they no longer can,” Bolkcom said.
Bolkcom also disagrees with administrators’ refusal to disclose estimates from a consulting firm the state hired to analyze how much more money the companies need to keep covering nearly 600,000 poor or disabled Iowans who use Medicaid. When asked this week if he believes those estimates from Milliman should be public, the senator replied, “absolutely.”
The Des Moines Register has been seeking access since March to the Milliman estimates. The human services department contends it doesn’t have to release the materials because they are “drafts,” which are exempt from the state records law.
The Register contends the consultant’s reports aren’t exempt from the open records law, which says documents cannot be considered confidential drafts if they are used “in the formulation, recommendation, adoption, or execution of any official policy or action of a governmental body.”
According to the company’s contract, which the department released Thursday in response to an open-records request, Iowa’s Medicaid program has agreed to pay Milliman up to $2 million this year for its consulting work, including helping set payment rates to the management companies. The contract says Milliman employees’ fees may range from $190 to $425 per hour.
While the payment rate talks for this fiscal year grind on, state administrators are still waiting to hear if federal officials will approve a plan to protect the Medicaid management companies against excessive losses. Under that “risk-corridor” plan, the state would kick in up to $10 million and the federal government would spend up to $225 million to help shoulder unexpected losses.
The risk-corridor plan came to light in March, after a Des Moines Register open-records request led to release of memos about it. Department of Human Services spokeswoman Amy McCoy said Thursday the federal government has not decided whether to approve the plan.