Iowa Democrats Ask Feds to Halt Medicaid Managed Care Transition

Just when it seemed that Iowa was on track to become the next state to take a deep dive into Medicaid managed care, Democrats in the state Senate are attempting an end-run on Republican Governor Terry Branstad.

The lawmakers, Sens. Amanda Ragan and Liz Mathis, have written to CMS and asked the agency to put the brakes on the state’s transition, which is scheduled to take effect January 1, 2016, for some 560,000 beneficiaries.

The senators argue that Iowa is moving much too quickly to do an effective job at delivering care, and that CMS at a minimum require the state to slow down the pace of its transition. They cite the deaths of 3 patients during the transition involving the closure of 2 state mental hospitals earlier this year, which occurred over the objections of legislators.

"If fully implemented, the governor's decision would have negative impacts on Iowa's most vulnerable citizens and Iowa's healthcare providers," the senators wrote in a letter.

Branstad needs the federal government’s approval to move ahead with the transition of Medicaid to managed care, even though the administration is moving ahead as if the transfer will take place on schedule. In mid-August Iowa’s Department of Human Services named 4 contractors as winners in the bidding process to take over pieces of the $4.2 billion Medicaid program; well-known names like Anthem and UnitedHealthcare were among them. But the senators said in their letter that contracts have not been signed.

The administration seeks to save $51 million in the first 6 months of 2016, but critics have said from the start they fear that the most vulnerable in Iowa will suffer during such a sweeping transition.

On Sunday, the state’s largest newspaper, the Des Moines Register, outlined problems that all 4 contractors have faced in other states where they have operated. Among the Register findings:

· UnitedHealthcare was fined $186,000 by Tennessee in 2010 for canceling appointments without notice.

· Texas fined Amerigroup $105,000 in 2014 for failure to notify patients of a privacy breach.

· AmeriHealth faced fines of $39,000 from Pennsylvania for slow claims processing and payments to medical providers in the years 2010 and 2012-2014.

· WellCare was fined $20,000 in Ohio for not informing patients of risks of certain procedures, including abortions and sterilizations.

The fines were self-reported by the companies in their bid documents, as required to compete for Iowa’s business. The Register found that the 4 had paid a total of $400 million in fines and penalties over the past decade, most of it in settlements and restitution to patients.

Explosive growth in Medicaid managed care, and complaints about problems with narrow networks and the inability of consumers to resolve complaints in a timely manner, prompted CMS to issue a sweeping rule proposal earlier this year. That proposed rule is pending but has received pushback from state Medicaid officials as being overly bureaucratic and too focused on reporting requirements, even though CMS lacks the manpower to handle all the data requested.

Iowa is not the only state to see some resistance to all or part of its transition to Medicaid managed care. Lawmakers in California have tried to stop the transfer of severely ill children into the program for at least another year, in light of a state auditor’s report that showed existing problems. At least 39 states have some portion of their Medicaid population in managed care.