In April 2016 three for-profit companies took over management of Iowa’s Medicaid program. 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.
Zach Boyden-Holmes/The Register
The leader of a large Iowa mental health agency, who once defended the state’s shift to private Medicaid management, now says the new system is forcing his company to cut all of its workers’ pay and lay off about 25 of them.
Optimae LifeServices President Bill Dodds said the agency has faced serious payment problems under Iowa’s privately managed Medicaid system, which took effect in 2016. He also warned that cuts in Medicaid payments to agencies like Optimae mean some Iowans with serious mental illness, including convicted sex offenders, aren’t being monitored as closely as they used to be.
Optimae LifeServices is a statewide agency that serves Iowans with disabilities, mainly mental illness or intellectual disabilities. Most of its clients live in homes or apartments, though some live in care facilities run by Optimae.
The agency notified most of its 1,500 workers June 6 that their pay was being cut by 10 percent. Managers’ pay was cut by 15 percent, and four top executives, including Dodds, had their pay cut 20 percent. “We decided that if we’re going to have to do this, we should feel more of the pain,” Dodds said of company leaders.
Dodds said in an interview that his agency’s immediate problems were sparked by a payment dispute of about $1.3 million with UnitedHealthcare, one of three national companies Iowa hired last year to manage its $4 billion Medicaid program. Dodds said UnitedHealthcare sent notices last spring that it was challenging the costs of about 100 clients, but it mailed the letters to a small Optimae field office instead of to the company’s Fairfield headquarters, as spelled out in their contract. Dodds said he didn’t know about the issue quickly enough to head off an interruption in payment for services.
When The Register asked UnitedHealthcare about the dispute, the management company said it was working to resolve the matter. But it also indicated it was taking extra precautions with Optimae, which in the past has been accused of overcharging Medicaid.
“UnitedHealthcare is working to ensure that Iowans’ tax dollars are spent wisely, efficiently and only for the services for which they are intended,” spokesman Jesse Harris wrote in an email to the Register. “Audits conducted by our Provider Integrity Unit as well as multiple investigations by the State’s Medicaid Fraud Control Unit have uncovered significant irregularities and other discrepancies by this provider, which have required that we employ additional scrutiny.” He was referring partly to a 2012 case in which the state temporarily suspended some of Optimae’s Medicaid payments over concerns that it had been overpaid for some services.
Dodds said he was an Optimae employee but had not yet bought the company when the 2012 case cropped up. He said the dispute involved payment for psychiatric services, which Optimae had believed were billed correctly. “There was no intent to defraud,” he said.
Dodds said the UnitedHealthcare dispute compounds financial problems, including from slow payments from all three managed-care companies, which put his agency more than $1 million in the hole.
Dodds said he’s not inherently opposed to managed-care companies overseeing Medicaid spending. In fact, he once worked at the Iowa Department of Human Services, and helped set up the long-running arrangement under which Magellan coordinated mental-health care. In 2015, he wrote a column in the Des Moines Register predicting good things from Iowa’s then-pending shift to managed care for the entire Medicaid program. “We believe the program is likely to greatly benefit customers, while achieving the worthwhile policy objective of slowing the growth of tax dollars required for the program,” he wrote at the time.
His views have changed. He said this week that the state focused too much on saving money and not enough on improving quality. The managed-care companies, which complained of losing hundreds of millions of dollars last year, have clamped down on the number of hours they’ll cover for in-home aides who help people with disabilities cope, Dodds said.
That means some people with chronic mental illness, including people who were convicted of sex abuse, are not being monitored as closely as they used to be, he said. Some of them wind up becoming unstable, and need hospitalization or a placement in an institution. “But then it’s that same old issue, where there’s no room at the inn,” he said.
Dodds said his agency has become more discriminating in which clients it will accept. It can’t afford to take many who need around the clock supervision that won’t be covered by the Medicaid management companies, he said. Society needs agencies like his to take on people with complicated issues, he said. If not, he said, “they’ll wind up back on the hospital or in jail or out on the streets.”
Dodds said he hopes to restore his employees’ pay rates to previous levels once Optimae works out its billing dispute with UnitedHealthcare, which could take months. He doesn’t expect to be able to offer them back pay, however, and he knows that some of them will likely leave because of the cuts.
That’s exactly what Shelley Onnen did. Onnen, who lives in Perry, said she worked for Optimae on and off for about three years. She visited clients in their homes, and took them out in the community.
“I love the work. I love the organization,” she said. “I just can’t work for 90 percent of our wage.”
Onnen said she was making $11.50 per hour from Optimae. She said she quit and took a job with a similar agency.