All three MCOs posted losses in excess of $100 million in their first year

Financial troubles have followed two of Iowa’s three private Medicaid insurers into their second year of operation, according to documents filed with the Iowa Insurance Division this week.

Amerigroup Iowa posted a loss of $4.5 million in the first quarter while AmeriHealth Caritas Iowa lost nearly $24 million. UnitedHealthcare of the River Valley has multiple lines of business in the state and does not file financials for its Medicaid business separately.

Iowa and the three managed-care organizations currently are negotiating capitation rates — the per member per month fees the state pays the insurers to managed the Medicaid program — to begin July 1. The MCOs believe the rates they are being paid are not actuarially justified, describing the Medicaid program as “drastically underfunded” in documents last year, while the state maintain the rates — which were certified by the federal Centers for Medicare and Medicaid Services — are appropriate.

During their first year of operation in Iowa, all three insurers reported losses in excess of $100 million, with AmeriHealth Caritas Iowa suffering the greatest loss of nearly $300 million. Amerigroup Iowa reported a loss of $133 million and UnitedHealthcare of the River Valley said it lost more than $100 million.

In an effort to better control costs, AmeriHealth announced a series of changes earlier this year, including moving case management services in-house and cutting reimbursement rates to home and community-based services providers.

AmeriHealth has the highest number of Medicaid enrollees, with more than 212,000 beneficiaries, compared with Amerigroup Iowa’s 186,000 and UnitedHealthcare of the River Valley’s 168,000, according to the most recent Department of Human Services quarterly report.

The insurer also has the biggest share of the state’s special-needs population — with more than 23,300 beneficiaries receiving long-term services and supports, compared with Amerigroup’s 7,600 and UnitedHealthcare’s 6,200. The groups includes elderly Medicaid beneficiaries as well as those with disabilities receiving waiver services.

It was revealed in March that the state would establish a risk corridor for the Medicaid expansion population and the long-term services and supports population, one of the most costly groups of Medicaid beneficiaries.

In a risk corridor, the government would step in to help protect insurers from unexpectedly high losses by paying the difference if an insurer spends more in medical care than it collects in revenue.

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