Iowa once envisioned four private companies managing its formerly state-run $4.3 billion Medicaid system, which serves 600,000.
That’s down to two with one at capacity, leaving 215,000 people recently abandoned by a departing company in the lurch. Federal rules require more than one choice.
The Medicaid health program was established in 1965 (along with Medicare) to assist those with low incomes, the disabled, children and people living in nursing homes.
The federal government and states share costs. The program initially was administered by state employees, but is now managed by private companies in various degrees in 39 states, according to the Kaiser Family Foundation. The PwC consulting firm reported 54.7 million of the 70 million enrolled in Medicaid were in privately managed programs in 2016.
Iowa’s switch from a well-run state program to privatization was the brainchild of former Gov. Terry Branstad — without legislative input — in December 2015. He cited undocumented savings of $51 million in the first six months, $110 million the first year and $232 million the next — fanciful then and now.
Companies were required to spend at least 88 percent on health services — a monthly allotment for each person managed determined by numerous factors, including disability level. The remaining 12 percent — around $500 million — was for administrative expenses.
Iowa contracted with WellCare, AmeriHealth Caritas, Amerigroup Iowa and UnitedHealthcare of the River Valley to manage Medicaid.
Before the transition in April 2016, WellCare was out.
An administrative law judge recommended rejecting it for failing to disclose three executives were convicted of misusing Medicaid money and it had paid $138 million to resolve overbilling Medicare and Medicaid.
Earlier this year, the remaining three companies complained about staggering losses, each exceeding $100 million during the first year: AmeriHealth Caritas nearly $300 million; Amerigroup Iowa, $133 million and UnitedHealthcare of the River Valley more than $100 million.
Now AmeriHealth Caritas is gone, too.
The Philadelphia-based company managed care for 215,000, including most of the severely disabled. Its departure followed a dispute with the Iowa Department of Human Services, which wouldn’t provide the data to justify Medicaid payment rates.
According to the Des Moines Register, AmeriHealth market president Cheryl Harding wrote then-DHS Director Chuck Palmer in June that the state’s rates “do not support a sustainable Medicaid managed-care program.”
The dispute focused on 11,250 people in the Intellectual Disability Waiver program requiring expensive services, including adult daycare to remain at home. Based on a consultant’s report, AmeriHealth — which managed 80 percent of that group — maintained it was shorted $53 million for nine months in 2016.
On the other hand, AmeriHealth didn’t make a great impression.
It had threatened to stop reimbursing the 2,000 physicians and practitioners in the Mercy Health Network, a group of Catholic hospitals and clinics including Covenant Medical Center in Waterloo and Sartori Memorial Hospital in Cedar Falls.
Neal Siegel, a former West Liberty financial consultant who suffered severe brain injuries after a hit-and-run bicycle crash, sued the state after AmeriHealth cut his home health-care reimbursement from more than $7,000 to nearly $3,000. Six other Medicaid recipients are part of that action.
Amerigroup has informed the state it can’t take any AmeriHealth’s patients, which — even if UnitedHealthcare can — violates federal rules requiring more than one option.
Meanwhile, privatization complaints have abounded, including the failure to pay providers in a timely fashion and cuts in services. During a three-month period ending last March, they soared from 343 to 1,268.
Earlier this month, UnityPoint Health, which includes Allen Hospital in Waterloo, notified its nearly 54,000 Medicaid patients they could need new health-care providers because of a contract impasse with Amerigroup. (The Mercy Health Network resolved contract differences with AmeriHealth last spring after warning its 123,000 Medicaid patients.)
Now the DHS has given the Medicaid reins to Michael Randol, formerly head of KanCare, Kansas’ privatized Medicaid program, which the Obama administration determined was “substantially out of compliance.”
The Wichita Eagle reported, “The state’s failure to ensure effective oversight of the program put the lives of enrollees at risk and made it difficult for them to navigate their benefits, the investigators found. They cited concerns about the transparency and effectiveness.”
Among the findings, “Public feedback consistently describes a lack of engagement and adversarial communication from the state.”
Republican Gov. Sam Brownback blamed political bias, but Rachelle Colombo, the Kansas Medical Society’s director of government affairs, disagreed. “These are not new issues that are being brought to light. They deserve serious reconciliation,” she said.
That doesn’t inspire confidence in Randol, aside from Kansas’ mind-boggling governmental incompetence.
With Gov. Kim Reynolds predicting, “We are anticipating another tough budget year,” it will be imperative for privatization supporters to right the Medicaid ship as soon as possible.